No real competition For now, however, Australia provides the global benchmark for sustainable property, according to the EREI, and the high number of responses to the global survey indicates that environmental performance is important for Australian managers. The story is different overseas. The number of unresponsive participants in the EREI survey – only 29 per cent of managers contacted answered the survey – indicates that many managers do not take environmental performance seriously or are unaware of its potential, and were likely to be green underperformers. The silver lining here, Eichholtz says, is the “untapped potential” for these managers to increase shareholder value by lifting their environmental standards. The managers’ sluggish environmental performance is partially due to a “dearth of financing mechanisms and proper rent contracts,” plus a lack of awareness of the merits of energy efficiency among building owners and their financiers. Also, “a financial crisis focuses property managers on immediate survival,” he adds.

The poorest performers were managers in Asia, the US, Germany and southern Europe. They accounted for many of the 133, or 67 per cent, of managers defined by the researchers as “green laggards” – those that have no environmental policy in place, and do not apply environmental metrics. The next largest population is the “green talk” managers, with 41, or 21 per cent, of respondents, who show some awareness of the benefits of investing in sustainability technologies and practices, but do not take action. Fewer in number than the laggards and talkers, the “green stars”, which account for 20, or 10 per cent, of managers, set ambitious environmental targets, implement measures to improve the environmental performance of their properties, and regularly assess their actions. The remaining 2 per cent, the green “walk” managers, are good at implementation and measurement, but do not shine in the management and policy sector.

The survey also uncovered an alarmingly low use of environmental metrics by managers. Only 37 managers [19 per cent] gauged the energy consumption of their total property portfolio in 2007 or 2008, while 16 per cent only measured water usage, and just 12 per cent measured waste. Only 76 respondents use “smart meters”, which collect information about energy consumption to set targets for reducing energy use. Another finding was that listed property companies are better environmental performers than their unlisted counterparts, perhaps because they operate under greater disclosure requirements and are more prone to public scrutiny. “The only exception was Australia, where listed and unlisted property investors really knew what they were doing. First you get to know what you’re doing, and performance will follow.” Dedicated office funds generated the highest score, since most energy-efficiency technology that first appeared on the market was designed for office buildings. But residential properties do not often qualify for incentives to improve energy efficiency, and are generally poor performers, despite their management company and market of origin. The survey will be done again in the first quarter of 2011.