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As corporate Australia seeks to address greenhouse gas emissions and other climate-related risks, alignment of ESG targets is increasingly at the centre of conversation.
According to the latest research from ASCI, 61% of ASX200 companies have committed to Net Zero targets, up from 48% last year, with medium-term targets (i.e. targets that mature between 2026-2039) in particular on the rise.
However, with targets fast-approaching for many businesses and experts saying the climate crisis is worsening, it’s clear that businesses can’t do it alone. Especially when it comes to Scope 3.
There are three types of emissions that contribute to a business’ carbon footprint. Scope 1 emissions are those directly created by an organisation, like burning fuel in a company-owned fleet of vehicles or in a gas-powered furnace within a building it owns and operates. Scope 2 emissions are created indirectly from purchased energy, such as using grid-supplied electricity used to turn the lights on at your workplace.
But what are Scope 3 emissions? And why is reducing Scope 3 emissions so hard?
Simply put, Scope 3 emissions encompass all the other indirect emissions created by other companies, such as vendors and suppliers whose goods and services are being procured as a result of business activities. For example, the fuel consumption of a third-party truck that’s transporting materials to a development site would contribute to Charter Hall’s Scope 3 emissions.
Scope 3 emissions alone make up 65-95% of most companies’ carbon impact and are a lot more complicated to reduce and manage.
This is particularly true in the construction of industrial facilities, which is a high emitter of carbon due to the infrastructure required for manufacturing – from energy-intensive warehouses and operational machinery, through to automotive and transport requirements.
To successfully reduce Scope 3 emissions, ongoing alignment of ESG objectives between business partners is key. And we are leveraging our active partnership approach to achieve this.
At Charter Hall, we’ve set near-term and long-term Scope 3 emissions reduction targets, so it’s more important than ever that we actively partner with our tenant customers and suppliers on tackling emissions to become more sustainable.
From efficiency to design, material supply to operations, sustainability comes in many forms with every building element able to contribute to a positive sustainability outcome. Our Midwest Logistics Hub facility in Melbourne is a prime example of this. Whether it's through sufficient building insulation to reduce energy use, recyclable materials to increase landfill diversion or efficient equipment to reduce environmental impact, each aspect of this building has been considered through a sustainability lens. We've delivered benefits for us and our customers through our partnerships with eco-suppliers Vicbeam and Alex Fraser.
Vicbeam, a Melbourne-based timber supplier with an Australia-wide market, specialises in environmentally sustainable timber sourcing and advocates for responsible management of native forests. For MidWest Logistics Hub, Vicbeam sourced environmentally friendly Australian-grown radiata pine, replacing emissions-intensive structural steel for the café and courtyard. This led to a significant reduction in embodied carbon, with emissions lowered by 15-20% across the final precinct within the broader estate.
Vicbeam Business Development Manager, Shane Morrison said, “We recognise how sustainably sourced timber helps decarbonise supply chains. That’s why we value our relationships with partners like Charter Hall. We know our cooperation ensures a real-world reduction of emissions and creates beautiful spaces.”
Leading provider of sustainable construction materials, Alex Fraser, helped to reduce emissions through their revolutionary Green Roads asphalt product, which incorporated 20% of recycled asphalt.
An Alex Fraser spokesperson commented, “Our purpose has always been to build greener roads and infrastructure, which is shown to reduce the carbon footprint of major infrastructure projects by up to 65%. At MidWest Logistics Hub we used the green asphalt product in the light duty car park design, which helped Charter Hall save approximately 300 kilograms of carbon emissions – the equivalent of taking one passenger vehicle off the road for about eight months.”
Despite the product’s use on a small area of the site, it marks the first step in rolling out green asphalt across our national development portfolio and can help us reduce 12 tonnes of carbon emissions per year on new developments.
From an energy perspective, the 700sqm warehouse is being provided to the main hub thanks to the 20KW PV solar panelling, while the café features 24KW solar panels and 10KW battery storage facility targeting the facility to be carbon neutral in operation.
Further, 4.1MW of solar systems have already been installed at the site, equivalent to powering over 790 average households in Australia. This equates to a reduction of over 4,000 tonnes of carbon emissions per annum.
Paul Davy from dsquared Consulting, says, “The greenhouse gas emissions reduction from the combined energy initiatives is estimated to be 20% lower than a reference case building built to 2019 Deemed-to-Satisfy standards and without the benefit of solar panels. This is greater than 100% lower with the benefit of solar PV.”
The Australian Federal Government released draft legislation earlier this year to introduce mandatory climate-related reporting requirements for large and medium-sized companies, including disclosure on the quantity of their indirect value chain – or Scope 3 emissions.
This calls on businesses to step up their diligence and transparency in clearly identifying what is contributing to their Scope 3 emissions and how they plan to address it through their ESG reporting.
Charter Hall Head of Group ESG, Andrew Cole, said: “Property is an emissions-intensive industry, particularly Scope 3 emissions. While this presents challenges, there is an opportunity to lean into partnership-driven innovation to develop solutions that make a material impact in progressing toward a Net Zero economy.”
“Our approach to ESG remains authentic, practical and targeted.”
To read about what sustainable solutions our partnerships are creating elsewhere, check out our case study about the office design at our Light Horse Logistics Hub.
To learn more about our sustainability initiatives and approach to Scope 3 emissions, visit our Sustainability page.