Everybody needs good Nabers

An Australian energy-rating scheme is so commonplace in the country’s commercial property market that government and commercial tenants insist they will only occupy buildings with a minimum standard. Hywel Davies looks at how Nabers transformed a sector and made the country’s property companies among the greenest in the world

Should we take a leaf out of Australia’s book? Nabers provides a star rating to a building or tenancy based on 12 months of operational performance data

Globally, buildings use 40% of the world’s energy, release 40% of its carbon emissions and use 20% of the available drinking water, according to the World Economic Forum.

In Europe, buildings account for 46% of energy use. Legislators the world over are trying to make buildings more energy, waste and water efficient.

Australia’s government and industry have been working together to improve the energy efficiency and wider sustainability of commercial buildings for more than 10 years. They have successfully developed a rating scheme for buildings based on measured performance, which is now widely adopted in the country’s commercial property sector. Consequently, Australian property companies are now acknowledged to be some of the greenest in the world.

The National Australian Building Environmental Rating Scheme, or Nabers, provides a simple indication of how well one building is managing its environmental impacts compared with similar buildings, enabling owners to measure their assets against those of market competitors. Once an occupier understands the environmental impact of a building or tenancy, it is possible to identify how to make that building or tenancy more sustainable.

Nabers provides environmental rating tools for energy, water, waste and indoor environment, to measure the actual operational performance of existing buildings and tenancies.

The scheme covers commercial offices, shopping centres, hotels and homes, although only offices are covered by all four tools.

One common argument in the UK around energy or environmental rating tools relates to the so-called ‘landlord-tenant divide’. Landlords are concerned that operational energy ratings do not distinguish between the energy-using habits of the landlord and their tenants, while Energy Performance Certificates measure the efficiency of the fabric and fail to address operational energy use.

In contrast, Nabers can be used to rate the performance of a tenancy, the base building or the whole building. The tenancy rating includes only the energy or resources that the tenant controls. A base building rating covers the performance of the central services and common areas, which are usually managed by the building owner or landlord.

A whole building rating covers both the tenanted spaces and the base building, and is typically used in an owner-occupied building, or where there is inadequate metering to obtain a base building or tenancy rating.

Key to achieving this for energy is a rigorous protocol for measuring the energy used in the various parts of the building, with a comprehensive metering strategy. Often the landlord and tenant have separate supplies, and meters. In this respect, at least, the Nabers approach is unique, and allows the ratings to use real, measured energy (or water) use data to communicate the result in a clear and simple way, based on star ratings.

The result is a credible programme of building-performance star ratings, which are used in the Australian market to drive better performance by recognising the best, and challenging the rest to follow suit.

Far from trying to suppress evidence of operational performance, the property sector in Australia is embracing the scheme

Nabers uses engineering information – primarily energy use in kilowatt hours – and communicates it in a way that non-engineers, especially finance directors, can understand and act upon.

Nabers gives a star rating to a building or tenancy, based on 12 months of measured operational performance data for energy, water or waste.

To compare the building fairly against its market peers, the rating takes into account the climate in which the building operates, its hours of use, the level of services provided, the sources of energy supplying it, and its size and occupancy.

It then compares the performance of the building or tenancy to benchmarks representing the performance of similar buildings in the same location, and calculates a star rating reflecting the performance relative to those comparable buildings.

A six-star rating demonstrates market-leading performance, while one star means the building has considerable scope for improvement. Nabers ratings are valid for 12 months, and the annual review ensures they accurately represent current operational performance.

A rating prepared by an accredited assessor confirms what is working well and what could work better. It allows meaningful improvement targets to be set for the building or tenancy, and also allows the rating to be publicised. Self-assessment is a quick and easy way to get an idea of how well a building or tenancy is performing, but this cannot be promoted or published.

Nabers star ratings are now common language in the Australian marketplace, with government and many commercial tenants insisting that they will only occupy buildings or tenancies that have a minimum standard. This, in turn, is driving investors to favour the greenest properties and their managers, and is transforming the commercial property market in Australia. Far from trying to suppress evidence of operational performance, the property sector in Australia is embracing the scheme – in contrast to some recent efforts by government in London.

It seems Australia is better than England at more than just rugby. Is it time for the UK to learn from Australia’s building rating scheme and look to develop one that measures real performance and recognises it?