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How multidisciplinary and lifecycle thinking delivers ESG excellence

Sustainability By Isuru Hettiarachchi, Principal Sustainability Consultant – 19 April 2022

Hands cradling soil with a young plant and having an overlay of icons related to environment, social and governance (ESG).

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Isuru Hettiarachchi sporting his coat and blue tie.

Isuru Hettiarachchi

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Just a few years ago, discussions around sustainability were often focused on the now-typical green building approaches of energy-efficiency, on-site renewable energy, water-efficiency and reducing toxins in materials, fixtures and finishes. Today, however, the language is shifting to centre ESG (environment, social and governance) as the sustainability leadership approach.

This interconnected and interdependent set of values and benchmarks requires a new way of looking at projects and their design and delivery. For a start, to address ESG effectively, a lifecycle lens is essential.

From the environmental perspective, stewardship of resources both in the materiality of an asset and the resources required to operate and maintain it is essential. This is not only from the environmental impact perspective but also in respect of social and governance factors.

For example, one of the basic tenets of Ecologically Sustainable Development is inter-generational equity. This is ensuring that today’s decisions do not compromise the ability of future generations to enjoy the same standard of living and opportunities as the current generation.

From a social and regenerative perspective, conserving resources is vital. This also has a governance aspect too. Australia is signatory to numerous international conventions and agreements that commit us as a nation to ethical practices including:

  • Reducing carbon emissions in alignment with the targets of the Paris Agreement
  • Protecting biodiversity in alignment with the UN Convention on Biological Diversity
  • Phasing out the use of ozone depleting substances such as HFC refrigerants under the Montreal Protocol and the Kigali Amendment
  • Eliminating Modern Slavery from supply chains
  • Protecting the rights of all members of our society as outlined in the UN Declaration of Human Rights
  • Protecting the rights and respecting the culture of First Nations Peoples in accordance with the UN Declaration of Rights of Indigenous Peoples

There are also the other national and international regulations around financial practices, fiduciary duty, disclosure of risks, managing potential conflicts of interest and honest business practices.

When organisations address these matters in a piecemeal way, especially if they aim for minimum or token compliance, it can seem onerous and difficult. This siloed approach can make the entire process unnecessarily challenging. It’s like the difference between speaking to a dozen people individually and speaking with them as a group.

This is where an integrated, best-practice approach delivers major benefits. If an organisation or project aims for the level of leadership exemplified by a tool such as Green Star or Living Building Challenge, all the relevant ESG factors will – by necessity – be addressed.

Similarly, taking a multidisciplinary approach to design and delivery which has sustainability embedded as a first principle will achieve the best outcome far more easily than an approach that relies on each discipline to add an element of sustainability that is presented as an optional extra.

Sustainability is now an intrinsic part of design and should not be treated as an afterthought or optional extra. The world’s largest banks, capital funds and investors are seeing the benefits of incorporating ESG considerations into their capital allocation decision-making. This is particularly true for assets that are expected to have a multi-decade operational life such as build-to-rent residential, retail centres, healthcare facilities delivered under a PPP model, educational institution buildings, public assets, and infrastructure.

One of the key drivers for the increased ESG scrutiny is the awareness that many of the major international agreements have specified target years for achieving the required changes in practices, approaches, and supply chains. The Kigali Amendment to the Montreal Protocol, for example, has set milestones and benchmarks for reductions in the use of refrigerants that deplete ozone and those with high global warming potential. The Paris Accord commits us as a global society to achieving net zero by 2050 – at the very latest.

Let’s look at the example of a build-to-rent development. If a project was to commence this year (2022), and by the time it attained DA approval, construction and commissioning is complete and tenants have begun to shift in, it is likely to be 2025 or so. And because this asset is expected to be operational for 30 years at least, it will need to be net zero within its lifetime.

While it is entirely possible to retrofit upgrades to existing buildings to improve performance and transition them to net zero, framing the initial scope, design and delivery for new assets as net zero-ready needs to be the new business as usual. This ensures an asset delivered now remains relevant well into the future. This means ensuring the asset optimises building fabric, passive solar, thermal efficiency, energy efficiency and all-electric operations from the outset. This brings us back to the importance of multidisciplinary design.

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