Knight Frank launches sustainability reporting platform as mandatory reporting requirements loom15 November 2023
New mandatory sustainability reporting requirements being rolled out in Australia from the start of the next financial year will see real estate investors, occupiers and managers scrambling to gather the necessary data in time, according to Knight Frank.
Knight Frank Head of ESG Jenine Cranston said it was important for businesses to get on the front foot now so they aren’t caught off guard when their reporting deadlines hit.
“Mandatory sustainability reporting is upon us,” she said.
“For some time many organisations have been doing voluntary reporting, which has been largely story telling around what they have been doing for the environment, people and the planet.
“Now, however, there will be compulsory reporting with a requirement for hard data on emissions, that will go alongside financial statements in a company’s annual report.
“First cab off the rank are large businesses, which will need a report with audit-ready data to show what their emissions are, which is going to be transformational for property.
“This is the biggest change in financial and company reporting in a generation, and will have a huge impact on real estate occupiers, investors and managers.”
On 26 June, the International Sustainability Standards Board released its new sustainability standards, and on June 27, Federal Treasury proposed the implementation of mandatory climate-related disclosures in Australia, which will affect all entities in a phased-in approach.
The proposed timeline for mandatory sustainability reporting is:
• Group 1 (consisting of organisations satisfying two of three criteria – more than 500 employees, more than $1 billion in consolidated gross assets and more than $500 million in consolidated revenue) – to start in FY2025
• Group 2 (consisting of organisations satisfying two of three criteria – more than 250 employees, more than $500 million in consolidated gross assets and more than $200 million in consolidated revenue) – to start in FY 2027
• Group 3 (consisting of organisations satisfying two of three criteria – more than 100 employees, more than $25 million in consolidated gross assets and more than $50 million in consolidated revenue) – to start in FYI 2028
In calculating their carbon footprint organisations will need to look at what they can control, which is the emissions in properties they own and/or lease, as well as how much – and what type of – electricity they use.
They will also need to look at what they can’t control – the emissions of suppliers – which makes up the biggest proportion of their carbon footprint. In turn, this will lead to suppliers being forced to lower their emissions as entities look for those with the lowest carbon footprint.
Ms Cranston said many businesses had no idea what their carbon emissions were, but there are ways to gather the data, particularly through reporting platforms.
“Almost every business will be impacted by the mandatory reporting requirements, and there is no way to avoid it, so the best thing to do is to just start the process of gathering the data now,” she said.
“Many businesses will be thinking they have several years to get their reporting in place, but if they don’t get started now they will either find that large businesses to which they supply their services will be demanding to know their emissions and targets or they could find the date sneaking up on them when it is time to conduct their own reporting.
“People at the forefront will be jumping on this now to ensure they are not scrambling at the end.
“The key is having access to data – without data you can’t measure anything, report or take positive action to minimise your emissions.
“Businesses will need to build internal capacity to gather the data, which will be a challenge, but reporting platforms are available to help.”
The reporting changes come as Knight Frank launches its new ESG Data Management and Reporting Solution, called Prism, powered by Trellis. The full data management solution comes with support from Knight Frank’s ESG specialists.
Benefits of the software are that it will provide a central repository for ESG data, saving time for users through the use of AI to digitise large volumes of data. The solution also includes user-friendly reports, with the software producing audit-ready data suitable for mandatory sustainability reporting.
“We are adopting this software to service a need for our clients who will have mandatory, legislated reporting requirements starting within months, at the start of the 2024-25 financial year,” Ms Cranston said.
“Prism is a single source of truth for real estate owners and investors’ emissions data.
“It will have easy to use, convenient storage of energy, water and waste data that doesn’t require businesses to manage it, with proven capability to manage data risk and perform at scale.
“There are some frustrations with manual systems and existing reporting software and we believe this will be an easier system for users.”
Knight Frank’s Australian ESG team will remove friction from a complex data management process by providing ongoing support with Prism, as well as oversight and onboarding, which will align with its other ESG services such as decarbonisation pathway and building optimisation advice.
“We don’t just send you a box of software – we will guide businesses through the entire process from data gathering to reporting,” said Ms Cranston.
“Regardless of whether an organisation falls within the criteria for the new mandatory sustainability reporting standards in Australia, we are seeing that organisations will need to reduce their carbon footprint – and demonstrate this through accurate reporting – to attract capital, tenants and employees.”