GRESB RE sector leaders: Dexus

As one of Australia’s most ferocious bushfire seasons wrought havoc on rural towns and communities at the dawn of 2020, Dexus, the country’s largest office landlord, was monitoring air quality inside many of its office towers.

The level of smoke haze in the central business districts of Sydney, Melbourne and Brisbane had reached levels considered by health authorities to be dangerous. 

“The bushfires were a clear indication of the changing climate, and reinforced the urgency to take action,” says David Yates, Dexus executive general manager for sustainability. “As a leading owner of office space, we need to ensure that people in our buildings are safe. We regularly communicated with our customers to let them know the conditions and when it was safe to go outside and catch public transport.”

In coming years, it is conceivable that Dexus’ next-generation office towers will be powered 100% by renewables and have glass façades that act as photovoltaic panels to capture solar energy. Building materials, such as concrete, will be sourced and manufactured sustainably.

For more than three decades now, mitigating the risk of climate change has become part of the culture of the company. In its Towards Climate Resilience report, released in June 2020, Dexus outlined three different warming scenarios and the actions and strategies needed to deal with them:

• An orderly decarbonisation (limited to 1.5°C warming by 2100) that adapts the role of buildings for a low-carbon economy; 

• A disorderly decarbonisation (around 2°C warming by 2100) that incorporates policy shocks enacted after years of delay;

• A failure to decarbonise (may exceed 3°C warming by 2100) that illustrates how polarisation and protectionism may curb the low-carbon transition.

Dexus has adopted a science-based emission-reduction target that sets out a pathway for scope 1, scope 2 and scope 3 emission-reduction plans. While its own reports provide useful guidelines and ambitions, Yates says, the company has gone further.

Since 2015, Dexus has reduced its emissions on a like-for-like basis by 20%, and is moving towards net-zero emissions. Dexus currently aims for net zero by 2030, but is continuously assessing the possibility of bringing the target closer.

“We have set a new target to source at least 70% of our electricity from renewables by 2025,” Yates says. “Our plan is to totally phase out reliance on black energy and be 100% renewable by 2030.” 

Economically, decarbonisation has started to pay off. Since 2008, Dexus has saved more than A$164m through enhanced energy efficiency. 

“Technology will drive sustainability,” says Yates. He speaks of an innovation in construction by Canadian clean technology company, CarbonCure, which injects recycled carbon dioxide into fresh concrete to reduce its carbon footprint. This technology is one of a suite of measures being invested in by the Taronga Ventures innovation ecosystem, of which Dexus is a founding real estate partner. 

“Sustainable development is more than embodied carbon in concrete,” he says. “It is also about natural ventilation that helps decrease the need for air-conditioning by bringing fresh air into a building. We are also looking at façades and their ability to generate solar power.” 

So far, 1m sqm of Dexus office space has been retrofitted for energy efficiency to achieve a minimum 5-star NABERS Energy rating. Yates says analytics provide a critical tool to identify energy savings opportunities across all Dexus buildings.

Modern slavery, a relatively new issue, is now also one of Dexus’ top ESG priorities. “With modern slavery, the high-risk areas are in cleaning, security, construction and the procurement supply chains,” Yates says.

“We have an internal working group made up of different functions – including the teams responsible for the procurement of hard and soft services, and development materials. If we are acquiring glass façades from China, for instance, we want to be sure that it is produced using the right processes, and that we can identify whether modern slavery exists in our supply chain.

“This is an extremely important issue, and we take a concerted approach to ensure that we have the right structure in place for detection.”

Yates says the company uses cleaning contractors that are certified by the Cleaning Accountability Framework, a body set up to eradicate worker exploitation. But it is more than certification, he says. “You want to go down the supply chain and have appropriate systems in place, so that if say a cleaner feels exploited, they have the ability to let us know.”

Pension funds have entrusted Dexus with more than A$15bn of their capital to invest responsibly for sustainable returns. “We listen to our investors and incorporate their perspectives in our programmes,” says Yates. “Climate resilience and emissions reduction are a few of the hottest issues at the moment.

“Investors are not interested in greenwashing. They want companies to make progress on ESG risks and opportunities and create sustained value so that their investment is protected until the money is needed to pay out benefits to members. Our investors are investing on behalf of their members, who are, themselves, becoming more vocal about ESG issues.”