Building the greenwashing perception

Many major Australian companies willingly spruik their green credentials but while sustainability reports are separated from the rest of their business, most moves will be seen as greenwashing.

Over Easter I perused the sustainability reports of major Australian companies involved in residential and industrial property development. Some are major construction companies. Others manage properties or invest significant funds in them. Most have been producing sustainability reports for between 5-10 years.

Many report against the Dow Jones Sustainability Index or the FTSE4Good Global Index.  Some have won Australian Sustainability Awards or Green Globes.

There is little doubt that the majority of reports provide higher levels of transparency than in the past. The glossy photos are purposefully evocative – new enviro-friendly houses seen across a parkland lake, dogs being walked through a leafy arbor, children happily splashing in a community swimming pool. Far more important, the narrative is now more persuasive than a few years back.

Driven by an increasing array of global reporting mechanisms, international certification standards, environmental recognition awards and the advocacy of non-profit ‘Green Building’ organisations, property developers now seek to tell their side of the story. As a result the interested public can get a better understanding of the initiatives embraced by sustainable development.

Australia’s leading property developers now see it as important to demonstrate to a range of stakeholders (employees, investors, governments and customers) that they take their environmental and social responsibilities seriously. Although ‘sustainability’ and ‘green’ are notoriously vague concepts, most reports are at least implicitly premised on the Brundtland definition of a generation ago: namely that sustainable development “meets the needs of the present without compromising the ability of future generations to meet their own needs.”

The difficulty is that such worthy sentiment can be translated into practice in countless different ways. For many developers the focus is on reducing the energy and water intensity of property development, utilising the use of recycled materials, ensuring waste and pollutant minimisation or promoting biodiversity conservation. Passive solar design, biofiltration, intelligent water use and green design are the watchwords. Some developers focus on greenfield sites, others on urban renewal.

All, to varying degrees, place an emphasis on neighbourhood enhancement. Indeed some sustainability reports link that goal to a range of community initiatives and charitable activities, often undertaken under the complementary rubric of corporate social responsibility or, increasingly, as part of their environmental, social and governance (ESG) agenda. A number of developers now also have a role in providing or funding education programs on sustainable living.

The sustainability reports suggest that change continues apace. In the last few years residential developers have become far more aware of the need to measure the carbon footprint created not only during the construction of properties, but also through their long-term impact as homes. More durable and smaller houses, by providing more energy-efficient living, can significantly reduce the carbon emissions associated with urban development.

The reports suggest that sustainable development is, in part, a reaction to a rising tide of regulatory controls, imposed by all levels of government and responsive to new international standards. However, it’s also clear that responsible developers do not simply seek to anticipate the increasingly complex legislative frameworks within which they need a license to operate.

There is increasing recognition that government interventions reflect a shift in public mood. One of the fastest growing asset classes in recent years has been ‘socially responsible investors’ who seek to screen their portfolios and often show a preference for ‘sustainability funds’ or ESG-compliant investments. Similarly, there is an emerging minority of ‘ethical consumers’ who want to buy in ways that help the planet, whether it is coffee, sports shoes ... or homes.  There is an expanding market that is attracted to the ethos of sustainable development.

It is far too easy to be cynical about the motives of residential property developers as they embrace sustainability and seek recognition for their green credentials. The truth is that the most responsible companies recognise that commitment to positive environmental initiatives can have a positive economic return over the longer term. They genuinely believe that sustainability is good for business.

The difficulty, as I see it, is that having a separate sustainability report (often sitting side-by-side with a corporate responsibility report) creates a sense that the initiatives, important as they are, represent merely a bolt-on to the business of business. It is too easy for critics to dismiss the environmental ethos simply as a ‘greenwashing’ by corporate communications – a means to burnish reputation by presenting a positive brand image to the public.

Peter Shergold is the Macquarie Group Foundation Professor at the Centre for Social Impact.