Risk management in the real estate development projects

After over a century of rapid industrialisation, our world is once again on the brink of change.
 
As the impacts of climate change become more apparent, people are demanding far more from the businesses they support. Many consumers want to see profits backed by purpose and now have unprecedented access to information about the environmental and social impacts of the products they buy and the brands they subscribe to. Investors also are increasingly looking for companies to integrate sustainability into their strategies, aligning environmental and social goals with financial performance to drive long-term value and resilience.  
 
The time for radical industrialisation is over. The age of radical accountability has begun.
 
In its landmark 2022 Our Future World report, the CSIRO identified sustainability, technology and consumer empowerment and trust among seven “megatrends” expected to substantially reshape our world over the next 10 years.
 
While the past decade has been characterised by the emergence of the experience economy and demand for personalised services, the coming decade will bring a strong consumer and citizen push for trust, transparency, fairness and environmental and social governance, CSIRO researchers predict.
 
Nicky Sparshott, most recently the Global Chief of Transformation for Unilever agrees. In August 2022, under her leadership, Unilever ANZ became one of the first organisations of its size to achieve B Corp certification, for which it regularly undertakes rigorous, independent assessments of its sustainability, social impact, accountability and transparency.
 
For Unilever ANZ, Sparshott says B Corp certification simply makes business sense — ensuring the business is on track to meet shareholder requirements in the short- and medium-term, while also delivering long-term growth opportunities for its household brands like OMO, TRESemmé, Continental and Streets ice cream.
 
“I think there’s good business logic in better serving the consumers’ needs by being a business that not only has amazing products and services but also brings them to market in a way that is much more conscious and responsible than ever before,” she says.

“There is an increasing consciousness and desire amongst people in the community to see improvement in this [ESG] space. I think everybody wants to be able to make their own personal contribution but they don’t often know how.”

The ESG agenda is gaining traction all across the Australian economy. Nationally, the number of certified B Corps has doubled since 2021 to 571 businesses across 85 industries, ranging from consumer products to construction, agriculture and pharmaceuticals.
 
Meanwhile, ESG reporting standards are maturing, with regulators like ASIC, the Australian Treasury, Australian Accounting Standards Board and International Sustainability Standards Board developing new frameworks for businesses to measure and track their impact, including Scope 1, 2, and 3 emissions.
 
Scope 3 emissions are those attributed to a business not due to its own activities and energy use, but from the activities of business partners both up and down the supply chain. According to Alison Webb, Head of Customer Strategy at Lendlease, the implications of Scope 3 emissions reporting are profound, and will require significant changes to how we collaborate across our supply chains. 
 
“We are already seeing a rise in requests for more data, and more reliable data, from our customers when it comes to sustainability” Webb says. “That’s only going to accelerate, and that’s where we’re likely to need to rethink the way we share information and insight across businesses. We need to look at how we can open up and share data in a secure and safe way.”
 
As one of the largest property groups in Australia, Lendlease has been on the front line of ESG data requests, particularly in the past year as many of their customers’ decarbonisation strategies progress. With as many as 3 in 4 large enterprises in the Sydney CBD actively working towards net zero targets according to 2023 market research from JLL, Lendlease now provides tenants with annual sustainability reports for each of its precincts, as well as an eco-concierge that provides one-on-one advice on how businesses can reduce waste and operate more efficiently.

“With the upcoming regulatory changes, we expect the frequency and extent of data requests to grow, and so we’re preparing for how we can best support our customers on this journey in a measured and productive way,”  Webb says. “We are all reliant on [sharing data with] each other so that we can not only track our impact, but also transform in response to what we learn.” 

As ESG practices and standards mature, Webb expects more businesses to turn to automation to help collect, verify and share data, and importantly to generate better insights from the data they collect.

The growing importance of ESG in the corporate sector is reflected in how it has grown from a minor marketing function, to a risk management issue, to ultimately coming under the purview of the board.
 
While ESG reporting takes time, Sparshott’s experiences at Unilever have taught her that impact tracking is not just another “cost of doing business”, but a strategic necessity.
 
Generational shifts may accelerate this change, with the ASX last year finding younger investors more likely to actively consider ESG factors than Generation X and Baby Boomers.
 
By 2030, when millennials become the largest source of income and consumer spending in Australia, businesses can expect to face a much higher demand for the “triple bottom line” of People, Planet and Profit — and more opportunities to create value for investors, customers  and staff if they can do impact tracking well .

No matter where a business is on its sustainability journey, Sparshott says there will always be room for improvement, with leading brands continually pushing the boundaries of what consumers and investors can expect from the businesses they support.

“Delivering your core business through responsible, ethical, and innovative means is critical to building businesses that are future-fit and built to last. 

“But being a purpose-led business is not a set-and-forget exercise. That spirit of continuous improvement is really important. Just because we decide that ESG is important doesn’t make us experts, but we can lean into it, be curious, upskill, and bring in those who have experience to drive progress.

“Both can be achieved together: you can make a dollar and make a difference, ensuring your business is resilient for the future.”

This Insights piece is part of series titled ‘A New Age of Work’, created by Lendlease in partnership with TEDxSydney. See more: https://www.lendlease.com/au/what-we-do/workplace/a-new-age-of-work/