27 minute read
THOUGHT LEADERSHIP | THE RETAIL RENAISSANCE
THE RETAIL RENAISSANCE
Sustainable buildings: charging behind the mantra of adapt or die
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Today retailing is standing either on the edge of a renaissance, or the edge of a precipice. The retail business may be able to relate to the former – the model of shopping malls by 2030 will be substantially different from those of the era that preceded it, and with an even greater potential for success.
WORDS Heloise Mgcina
Liberty Midlands Mall is the largest shopping centre in the Midlands area, with 193 tenants.
Liberty Midlands Mall
Covid-19 has naturally focused its attention on the quality and safety of indoor spaces – but this has been a long time coming, with studies illuminating how the buildings we inhabit for work or residence and the air we breathe, can help or hinder our daily health and performance. And while the last 24 months have been a time of immense challenge, it has also been one of opportunity in this space. Today, retail has a unique opportunity to rethink the concept of retail space and experience, to design the blueprint for the future of retail.
Building new operational guides and planning for the built environment, the retail sector is creating a significant opportunity for building owners, managers, and occupants to create smart, digitally connected spaces with the well-being of people at its centre. It has also fast-tracked digital transformation and the commitment to creating truly safe, sustainable and smart spaces with resilience built into key fundamentals. Retail leaders must become architects of a new model for transformation to adapt then enliven more relevant and in-demand experiences to outperform peers.
As such, the retail property industry has a robust future, provided it has a clear operational strategy – one that successfully harnesses three change drivers: environmental sustainability, the social element which incorporates digital transformation, and technology as well as ethical business conduct through governance.
DRIVING ESG IMPACT
The success of the retail business is its resilience, but resilience is only achieved when business underpins its commitment to ESG (Environmental, Social and Governance). Through such thinking, property owners can reduce exposure to commercial risk and asset obsolescence by ensuring that their assets are future ready as everything is inextricably linked. Gone are the days when business resilience and success was measured solely by its profitability.
The E in ESG was once upon a time downplayed.
The E in the ESG triad is equally the most important in achieving resilience, with growing studies showing that investors who are focused on companies with sustainable operations, an integral part of strategic thinking, often perform as well or even better than those who focus on conventional growth.
The commercial and retail property sector has made significant strides in its commitment to minimising its environmental impact, through its efforts to protect and preserve our natural resources. Liberty Two Degrees (L2D) is one such company that has made bold commitments to its sustainability targets to achieve; net-zero waste by 2021, net-zero water by 2025 and net-zero energy by 2030.
All the resources to achieve such targets exist today for any company, dependant on whether they are willing to invest to achieve them. Part of what investors analyse in establishing the sustainability of companies, is the business’s ability to continually improve their environmental impacts, implementing sustainable and long-term cost savings and a reduced footprint.
As a business case, Eastgate Shopping Centre reduced its carbon footprint by over 16 000t of CO2 emissions annually through an investment in a solar plant, which will generate 1.8MW of energy. This will power the centre’s lighting, air-conditioning units, lifts and escalators.
Other initiatives available within the L2D portfolio include solar trees, which continue to provide an efficient option for energy generation,
Eastgate Shopping Centre.
the implementation of rainwater harvesting systems, dual plumbing, condensation water harvesting and advanced low-flow toilets – which in total have saved 60-million litres of water throughout the L2D portfolio in a single year.
When it comes to environmental and climate protection, business both contributes and suffers. With targeted investments, business can actively help reduce harmful emissions and lower consumption of natural resources. It is to be keenly noted that climate change increasingly affects business-model development. The changes in consumer behaviour, the increasing changes in regulatory requirements and new climate-friendly technologies are changing the composition of global markets – placing much significance on the mantra of adapt or die.
UTILISING TECH TO EVERYONE’S BENEFIT
And what about technology? Technology is rewriting operating models turning challenges into opportunities for improvement and innovation, which is likely to pave the way for years to come. Cloud computing is helping to reduce the amount of carbon dioxide emissions, potentially preventing more than 1-billion metric tons of CO2 from 2021 through 2024, according to a forecast from International Data Corporation (IDC).
FUTURE SMART SPACES
From the use of AI technology to foot-counting systems to ticketless parking technologies and personalised experiences available in the retail space, consumers are well accustomed to these. It is therefore no doubt that the responsible capturing and collation of data is of utmost importance for consideration by businesses who use such technologies. Responsible
practices should be ingrained in the culture of each business operation to avoid social harms.
While the industry offers diverse opportunities for the use of technology to drive efficient ESG practices, some retail players have yet to take advantage of such technology to analyse behaviour, get closer to customers and utilise technology for optimised performance and cost reduction. While every retail destination is unique, technology should be helping to build a complementary strategy for those managing the space, those occupying it and those enjoying it.
The influence of the other two factors in the ESG triad should not go unnoticed. Good corporate governance (G) and social engagement (S) often also influence and reinforce a company’s efforts to protect the natural environment. From an investor perspective, the S can also have a positive effect on the portfolio’s risk profile, while good corporate governance (G) can be an additional positive influence on performance.
A strategic and long-term focus on the social element provides a unique opportunity to help rediscover the role of our industry in society and our purpose as built environment owners and managers.
Understanding the G in ESG is critical, as governance risks and opportunities will likely increase as social, political, and cultural attitudes continue to evolve. Governance, as a license to trade, is vitally important for a sustainable future and should not be conducted in a tick-box exercise manner. Governance, which ensures ethical business conduct and balances the requirements of all stakeholders, plays a significant role in policymaking for sustainable practices in business conduct and achieving efficiencies.
When looking at the retail industry we are taken to an industry future that has never looked better – with Good, Smart, Inclusive and Safe Spaces at their core.
Heloise Mgcina has a track record of over 20 years in marketing and communications. She has worked across several industries including telecommunications, professional services and banking and on multiple brands such as Vodacom, Procter & Gamble and WesBank.
Heloise Mgcina, marketing and communications executive, Liberty Two Degrees (L2D), Exco member, BCom (UNISA).
TAKING A STRATEGIC VIEW TO ESG CREATES SHARED STAKEHOLDER VALUE
First Green Building Council of South Africa certified retail portfolio
L2D super-regional assets awarded Gold Level status for operational excellence
We have developed a deliberate strategy to driving our ESG efforts and we have aligned our vision and purpose accordingly. We believe IMPACT°, our ESG value proposition, reinforces our competitive advantage to quality, business growth and sustainability, while creating shared value for all our stakeholders.
We integrate IMPACT° into our strategic processes in the following ways: • Policies and risk management systems incorporate
ESG components • Board oversight to ESG practices, with effective measurement tools and risk indicators • Integration into strategic planning • Deliberate pursuing of initiatives and services that consider an ESG impact • Ensure strict ESG requirements are met by suppliers in all operations • Leveraging of internal and external ESG practices to ensure alignment and that L2D People live the company’s ESG practices
We have developed and continue to develop capacity around IMPACT° as a priority and a key driver to value creation.
WATER
ENERGY
WASTE
OUR NET-ZERO ROAD MAP
The pandemic has provided a new opportunity to reset our environmental future, presenting ways in which we can rebuild and renew. It is imperative that as government and the private sector focus on rebuilding, opportunites to accelerate the transition to a cleaner economy are also considered. As Liberty Two Degrees, we are commited to Net Zero waste by 2021, Net Zero Water by 2025 and Net Zero Carbon by 2030.
SHAPING A GREEN ECONOMY
Following on from the GBCSA’s recent Planet Shapers event, +Impact chatted to experts in the field about green bonds, sustainable finance, and the current economic climate.
WORDS Nicole Cameron
With trillions of dollars of expenditure globally going towards supporting green infrastructure, affordable clean energy, and responsible consumption and production, there is much evidence that both the public and private sector are prioritising the SDGs (Sustainable Development Goals) set out by the United Nations according to Agenda 2030.
Given that we are now in the last decade to reach these goals, it is critically important that the global economy gears itself towards sustainability. “Financial markets are now actively responding to climate issues,” affirms Professor François Viruly, property economist and lecturer at the University of Cape Town. “Previously it was in response to legislation, but now investors are pushing this agenda.”
Green bonds, an instrument used by governments and companies to raise money by borrowing from investors – the proceeds of which are directed to projects or assets with environmental benefits – are seen as a method to accomplish green goals. “The data shows that green bonds are increasingly popular, with most falling into sectors like energy and transport, which have high CO2 emissions. We also are starting to see green bonds in emerging countries, especially in the East,” says Prof Viruly.
CONSIDERING THE GREEN BOND
The rationale behind corporate interest in green bonds is multi-faceted. Companies are aware of the signal that is given out when they undertake a green bond, of a positive impact on environmental and social sustainability. This, in turn, has a positive impact on the share price, with growing evidence showing The data shows that green bonds are increasingly popular, with most falling into sectors like energy and transport, which have high CO₂ emissions.
that companies that aim to incorporate social and environmental governance are generally well-run. While the potential for green bonds to be issued as a type of “greenwashing” exists (as a tool for good marketing with no real sustainable intention), as the process involved is complicated and can be expensive, not many corporations would go to these lengths. The third reason relates to financial returns and pricing, with corporations showing interest if there is a premium on a green bond.
With the first green bond having only been issued in 2014, there are mixed reviews about how much more or less expensive this type of loan is. Dirkje Bouma, group treasurer of Growthpoint Properties, says that green bonds give an economic upside of up to 0.2% compared to a normal bond, which attracts a greater diversity of investors seeking environmental impact. “Moreover, the reputational benefits are significant; in Growthpoint’s case the company has been able to add green credentials to their existing brand, as well as being able to offer investors the opportunity to display empirical evidence that they are abiding by the principles of responsible investing. This is alongside the quantifiable, anticipated environmental benefits.”
Takusa Consulting and Services has enjoyed rapid growth as a Consulting Engineering Practice in the past decade. As at Q4, 2018, the Company has handled project whose cumulative value is over R427 million.
Established in 2006, Takusa Consulting and Services offers an array of cross-sector services as summarized below:
ENGINEERING
| Electrical + Electronic. Mechanical. Civil + Structural. Project Management. Eng Draughting.
ARCHITECTURE
| Architecture. Interior Design. Property Development. Draughting.
ENERGY + ENVIRONMENT
| Energy (En) audits, En Management + Consulting.
Implementation of En efficiency solutions | Environmental rehab + Water monitoring
Over the years, the Company has partnered with its Clients’ in the implementation of successful projects underpinned by innovation, value-add and quality.
Our approach to project execution is second to none. Internal work processes, technical guidelines and internal peer-review of project deliverables places Takusa Consulting and Services ahead of the pack. The Company also observes PMBOK closely and in turn all five process groups and the ten knowledge areas are applied to project delivery. To remain ahead, registered professionals are accountable to project deliverables.
Takusa Consulting and Services is 100% black owned. The Company is ISO 9001:2015 accredited and a proud member of the Consulting Engineers South Africa (CESA), the Green Building Council of South Africa (GBCSA) and Fire Protection Association (SA).
www.takusaconsulting.co.za
SUSTAINABLE CONCRETE REPAIR MORTARS
The NEW Sika MonoTop® reduced carbon footprint range
■ Complete range to back-up specifications ■ Extensive certificate data base - live dynamic loads, resistivity, etc. ■ Save time - no need to wait between layers or between product application ■ Reduced dust formation ■ Meeting LEED requirements
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Shameela Soobramoney, chief sustainability officer at the Johannesburg Stock Exchange (JSE), pointed out the distinction between sustainable finance, which encompasses models, products, markers and ethical practices to deliver resilience and long-term value in each of the environmental, economic and social aspects, thereby contributing to the delivery of the SDGs and climate resilience. “Responsible investment, on the other hand, is strategy and practice to incorporate environmental, social and governance (ESG) factors on investment decisions and to encourage active ownership of these by borrowers and investors,” she says.
When looking at the ESG investments in numbers, it’s possible to see growth of, on average, 25% since 2014, across countries like Japan, Australia and Canada. The total combined issuances in 2020 was $554.3-billion, with $222.6-billion directed towards green, and $164.2-billion and $127.6-billion towards social and sustainability respectively. Locally, issuance volumes of close to R6-billion have been in the bond market since 2019 to date.
In March this year, South African private healthcare provider, Netcare, in partnership with Standard Bank, listed the continent’s first self-labelled sustainabilitylinked bond on the JSE. They raised a R1-billion, three-year, unsecured note priced at 5.4%. The funds
raised through the bond will enable the healthcare group to fulfil its sustainability objectives of reducing its carbon footprint, by procuring more renewable energy and further improving its water efficiency, among other things.
RMB also issued the largest South African rand denominated sustainability bond, the first of its kind to African state-owned company Rand Water. RMB are also partnering with Redefine for the largest sustainabilitylinked bond in the real-estate sector, while Standard Bank and Woolworths partnered to execute the first sustainability-linked loan in the country to the retail sector. Nedbank listed a R125-million unsubordinated green bond on the JSE, while ABSA launched their green home loan through Balwin Properties.
THE INVESTOR UNIVERSE
Arvana Singh, head of sustainable financial solutions at Nedbank, posed the important question of how ESG integration and the flow of capital can be incentivised into areas of the economy where it is needed most. The investor universe is made up of a number of funders: traditional asset managers, who are looking for commercial returns, and impact investors, who are willing to trade off a slight decrease in return in exchange for change and impact. The third type of investor, interested in blended and catalytic financing, generally falls to developmental financial institutions interested in driving the impact agenda. “These investors are increasingly using financial intermediaries, like Nedbank, to achieve this goal. This does require additional transparency and origination of eligibility criteria, as well as impact reporting, which means that organisations that promote ESG goals are generally more compliant, and their governance is better.”
While anything linked to renewable energy and water saving is seen as favourable by investors, Soobramoney says that while many are quite aware and willing to consider adaptations, this doesn’t always translate into action. “In financial markets, the short-term perspective dominates, and the ‘internalise profit and externalise cost’ mindset needs to be addressed,” she says. Another challenge is that the initial costs of obtaining green finance are high, due to external verification requirements, and this will prove more difficult for smaller or local businesses. “And then there is still a fairly acrimonious relationship between the public and private sectors, meaning that the collaboration necessary to make the SDGs achievable has not been actualised yet,” Soobramoney adds.
Despite the challenges in the current economic climate, there is certainly an opportunity for smaller companies to be nimble and to look at the SDGs – if the company’s primary purpose is green, then a revenue data-collection process can identify what percentage of revenue is attributed to activities that are congruent with the green economy. This means that smaller organisations can approach markets and raise capital, by virtue of their sustainability agenda.
The experts agreed that there is evidence of investor engagement with banks; their equity holders are encountering pressure and trying to make impactful changes. This is reflected in the broader ESG industries or those with a climate or social focus, where they’re experiencing a level of liquidity and market capital, and this translates to a desire to outdo their competitors or appease their investors.
If corporations aimed to evolve sustainable finance structures with embedded sustainability performance targets that reach further than just climate risk, it would be possible to see more exponential growth. Another opportunity would be the evolving accounting and reporting standards and regulations to enable the measurement of true societal profit and loss.
Finally, the experts agreed that there is an opportunity for greater accountability of our ecosystem’s limits. Business models cannot continue the way they are, both from a risk perspective as well as from an environmental perspective. Given South Africa’s innovative nature, embracing responsible investing and sustainable finance will go a long way towards building not only a better economy, but also a greener economy.
AIR-CONDITIONING AND INDOOR AIR QUALITY
There is concern that the coronavirus can be spread via air-conditioning systems, and many are turning to consultants and service providers to determine how to mitigate this.
WORDS Edward Hector, SFI Group
Some suggestions include increasing ventilation rates, upgrading filtration to HEPA filters and creating a purge cycle to introduce fresh air. Also, a redesigned chilled water air handling unit system to avoid the return of air that is in the current system, essentially creating what is called a full fresh air system. The goal is to minimise design change, while considering that most current systems are compliant designs in terms of National Building Regulations.
The World Health Organisation (WHO) focuses on the particle size and amount you breathe in which is called Particulate Matter (PM). The larger the PM, the less risk is present as your body protects itself through mechanisms, such as coughing and sneezing. The smaller the size of the PM, the greater the risk because the body is unable to prevent the particle from entering, and a pathogen ends up in your bloodstream it can spread airborne viruses and diseases.
To combat the danger of small airborne pathogens, you need to know which PMs are present and we have sensors that can measure IAQ by measuring CO2 levels, PM and Volatile Organic Compounds (VOC). CO2 is caused through exhalation and the HVAC system design may have to be reviewed, based on occupancy levels while the source of VOCs may be internal and also have to be addressed at source. Other external factors contributing to poor IAQ may be CO produced by vehicles or SO2 produced by factories.
Research shows improved ventilation rates can improve cognitive ability. We need to manage ventilation more dynamically to have optimum results under varying ambient conditions and occupancy levels. This is crucial as we minimise fresh air intake to lower energy consumption since bringing hot air into a building requires additional cooling, and vice versa. We may be compliant with ventilation and fresh air, but we could still have poor IAQ.
THE IMPORTANCE OF VENTILATION SYSTEMS
As vaccinations roll out and we return to life in the “new normal”, IAQ and ventilation will be a key determining factor in convincing people to return to public spaces. Outdoor air pollution is intrinsically linked to indoor air quality. A study showed that pollution from power plants and vehicles caused close to 9-million deaths globally in 2018 while the total number of Covid deaths is approximately 4.5-million.
Our respiratory systems are affected by PM due to pollution and is a global issue we need to pay attention to. This is particularly relevant in South Africa, where coal-fired power stations are prevalent without scrubbing technology.
Industry needs to lead towards healthier IAQ. We need to increase ventilation rates above regulated minimum standards. Approximately 65% of exposure to outdoor air pollution occurs indoors. It is clearly important to consider both indoor and outdoor air quality.
THE IMPACT OF POOR IAQ
Particulate matter: a complex mixture of small, solid particles and liquid droplets causes poor IAQ. Inhaling elevated levels of PM can lead to a multitude of health problems. Exposure to high levels of PM is the leading source of mortality among all outdoor air pollutants.
HOW TO IMPROVE IAQ
Poor system design of the air-conditioning system can accumulate mould which leads to high levels of PM filtering through indoor air over the years. Ducting systems designed with the correct quantity of air arriving at the designated destination, by minimising leakages, drops in pressure and ensuring optimal distribution routes can filter out PM and keep air ducts clean which contributes to improved IAQ. Improved filtration and the use of UVC Germicidal Irradiation as well as Bipolar Ionisation are technologies gaining ground for air purification in large air-conditioning systems.
Facilities management interventions along with increased government regulation will make HVAC systems and IAQ the priority for building operators, achieving a healthier working environment, improved cognitive ability and productivity due to the reduction in the spread of pathogens within the workplace.
MEASURING WHAT MATTERS
In response to the demand of the South African property sector, the GBCSA developed the Energy Water Performance Tool to measure the performance of buildings with greater accuracy for enhanced efficiency and water and energy risk mitigation.
WORDS Melissa Baird
Professor Anthony Turton has long warned of the economic impacts South Africa faces due to its critical water issues. According to Turton, “South Africa became a waterconstrained economy in 2002, when the National Water Resources Strategy determined that we had already allocated 98% of our water.” Added to this allocation issue, are the complications of climate change, which has affected the annual run off. In a nutshell, South Africa does not have the water it needs to grow its economy and create jobs.
A trusted source in the building sector in Johannesburg is under no illusions about Gauteng’s watershed fed by the Orange, Tugela, and Vaal rivers. It is at 100% and there is no capacity to increase usage. This water constraint will have severe impacts on buildings that do not have water efficiency measures in place.
Growthpoint sponsored the development of the GBCSA Energy and Water Performance (EWP) tool for benching existing office buildings in 2011. It now uses the GBCSA’s EWP benchmarking to unlock greater resource efficiency at The Terraces in Cape Town. This building achieved a 4 Star Green Star Existing Building Performance (EBP) certification in March 2018, valid for three years. However, since certification, there has been no improvement to its energy and water performance, and thus the focus has shifted to benchmarking it with an EWP certification.
Using the EWP tool to evaluate office buildings is an integral part of Growthpoint’s performance standard. In many cases, an EWP score provides the necessary motivation to retrofit a building or change building management practices. The EWP benchmarking evaluation provides a handy tool to help scale up a building to Green Star rating standards. It is also one of several key factors – including location, tenancy, amenities, and others – that Growthpoint considers when categorising a specific property asset as a long-term hold.
Making its buildings’ EWP scores available on the Growthpoint App empowers the broking community to share this information with potential tenants. Greater resource efficiency inevitably leads to greater cost efficiency and increases the positive impact offices can make on meeting a tenant’s own ESG strategy objectives. Armed with information about how a building’s resource efficiency measures up, tenants can make good decisions about their offices.
Lincoln house is one of the four buildings in the Epsom Downs office park, situated in Bryanston.
The project achieved 7/10 targeted points for energy and 7/10 targeted points for water.
“Over the past decade, Green Star certifications have gained greater recognition and desirability among tenants and investors, and they are key to our goal of certifying 20 buildings as net-zero for carbon, water, waste, and ecology, which is an essential element of Growthpoint’s carbon reduction target,” says Grahame Cruickshanks, head of sustainability and utilities at Growthpoint Properties.
“We see EWP as a non-negotiable starting point for benchmarking an office building’s energy and water performance and believe a suitable EWP tool would add tremendous value for industrial and retail properties too. Every building can benefit from a complete benchmarking exercise.”
Over to Emira who assigned WSP to assess their building portfolio in the face of water and energy risks. Emira are leaders in forward thinking and how to improve the rating and performance of a property portfolio. After a full assessment of the portfolio, with its incumbent discoveries, these properties were identified.
Lincoln house is one of the four buildings in the Epsom Downs office park, situated in Bryanston, Johannesburg. It is a two-storey (GF + 1) commercial office building with a gross floor area of 1937.65m². The project achieved 7/10 targeted points for energy and 7/10 targeted points for water, which equates to an overall Energy & Water Performance v1 rating of 14/20 in Round 2.
Lone Creek Building B is situated in Waterfall, Lone creek office park in Midrand, Johannesburg. It is a twostorey commercial office building (GF + 1) with a GLA of 1 252.81m². The project achieved 8/10 targeted points for energy and 2/10 targeted points for water, which equates to an overall Energy & Water Performance v1 rating of 10/20.
Alison Groves, regional director of building services at WSP Africa emphasises how vital it is for building operations managers to have an effective measurement tool that will enable them to assess the water usage of their buildings. As the saying goes, “If you can’t measure it, you can’t manage it.” Her opinion is mirrored by Cruickshanks who adds, “Working with the EWP tool initiates a shift towards a measurement mindset and inspired the development of our own measuring tools, enabling us to make an even bigger difference as a result. This foundational measurement and information have enormous impact and value at a strategic and operational level.”
Up until now, there has been no explicit requirement to measure water and energy use and although SANS10400-XC is on the horizon; it is relatively far into the future (considering it has been in process for the last 10 years). Groves believes that the EWP will be the first step towards legislation of water consumption in new properties. She emphasises how vital it is: “You need to take responsibility for your water sources as if they are the only water you have, and report leaks and install automated irrigation systems. A running tap left unattended for four days can lose 55 000 litres of water.”
Hlologelo Manthose, sustainability consultant at WSP is enthusiastic about the tool and its capabilities. She says, “The EWP tool helps to assess the type of data the building managers receive and question it and understand what it means in relation to how the building is performing. Often the info has only been used for billing purposes, but this tool helps you assess your building’s performance over time – starting with a baseline to help map the water and energy consumption. This helps identify not just the
Lone Creek Building B is situated in Waterfall, Lone Creek Office park in Midrand, Johannesburg.
anomalies and where they have been performing badly but also helps measure improvements against historic building performance. It is a great tool for property managers and facility managers.”
Due in early October, the EWP scores of these buildings will show how they compare to industry benchmarks. The goal is to identify the areas where there is room for improvement, make the improvements and measure their impacts.
The data compiled for the EWP benchmarking process will point to opportunities to improve the water performance of a building through rainwater harvesting and installing recycling measures.
The EWP water score will inform the future-proofing strategy for a building recognising that water security, availability and quality will face significant pressure in the coming years.
For more info: https://gbcsa.org.za/certify/energy-
water-performance/
As an early adopter and established leader in green building certification, Growthpoint recognises the value of benchmarks and certifications, even though they are not yet formally used by the property valuation community, which has yet to attribute a clearly defined metric to a green certification in property valuation. This is likely to change as more independent and indisputable evidence emerges supporting certified green buildings’ superior performance and value. The MSCI South Africa Green Annual Property Index, for instance, continues to support the investment case for greencertified offices vs noncertified offices. The green building and real estate communities are working hard with the valuation community to incorporate these benchmarks in valuations.
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