Big banks, fast food operations and up-market fashion retailers are some of the worst environmental performers, according to an ecological footprint analysis of hundreds of retail tenancies carried out by The Footprint Company.
Company founder and chief strategist Caroline Noller said the results show there is a gap between corporate sustainability mantras and the reality of retail energy use and materials impact for some firms.
Dr Noller told The Fifth Estate she had undertaken a hybrid lifecycle analysis of energy use and embodied energy in materials and real estate of around 600 retail tenancies to assess the ecological footprint of each business, which was then converted into One Planet equivalents.
One of the major findings was that the big banks have a far larger footprint than smaller banks or industry credit unions largely due to the size of branch retail spaces and style of fitout. Dr Noller said the big banks might want to consider learning from the smaller institutions regarding how to operate efficiently.
The bank with the largest footprint was a branch of one of the major banks in North Sydney. It was operating at four times the size of the smallest footprint, which belonged to an industry credit union branch in Darwin.
“With the big banks, the individual branches are a significant component of the corporate footprint,” Dr Noller said.
“Why do they need to have branches that are 300 square metres in size? The industry credit unions, for example, have much smaller branches, and they have much smaller footprints.
“You need to look at the business proposition of real estate, fitout and energy use. Smaller credit unions are more cost-conscious, and where their ecological footprint is good in terms of energy use, it is also good for their business.”
Dr Noller said the big banks appeared to be ignoring their real estate impact, how that affects profitability, and how it translates into the need to impose higher fees and charges simply to pay for real estate costs.
“The future is small, light, more progressive, flexible and ecologically efficient banks,” she said.
“Some of the outtake of our work is the smaller banks have got it right. They get more business returns and are already environmentally sound, and that’s the real sweet spot for sustainability; that’s the triple bottom line.
“It’s one thing talking about the brand proposition being sustainable, but there’s still an awful lot of room for improvement with the big four if they pay attention to the retail footprint.”
Other key trends
The Footprint Company has carried out a major project for GPT, assessing all the retail tenancies across the GPT retail centre portfolio. The lifecycle analysis identified some clear trends in terms of fashion, electrical and food retailers, and their energy and lifecycle challenges.
Dr Caroline Noller
Food retailers hungry for energy
The LCA of food retailers showed that the worst performers were using the equivalent of six planets. Dr Noller said this footprint comprised 50 per cent energy used by and embodied in equipment, and 50 per cent the embodied energy of materials in the fitout.
“Some of the materials footprint comes down to meeting food hygiene rules, so there is extensive use of stainless steel and vitrified ceramic tiles, and these are the worst of the worst from an LCA perspective in terms of materials as they are hard to recycle, highly processed and expensive,” Dr Noller said.
In some cases, food chain head office policies are driving design and fitout decisions for individual stores, making it extremely difficult for them to choose more planet-friendly materials.
Electrical retailers
Electrical retailers range from the lower energy-using stores generating 18 kilograms of CO2 a square metre of gross lettable area through to 38kg of CO2 a sq m GLA.
“These are often larger format stories of between 20 sq m to 300 sq m, and some of the results of the footprinting don’t account for the devices,” Dr Noller said.
One major brand, for example, turns off TV monitors and screens overnight, but does not turn off devices such as mobile phones, instead leaving these on permanently in sales displays.
High fashion, big feet
The fashion retailers on average are making a 0.7 planet footprint. However, at the top end of the scale, the stores that have high energy use and high embodied energy in the fitout have a footprint equivalent to 2.4 planets.
Dr Noller said a new trend in the last six months had been the increasing presence of high end overseas brands opening retail stores. She said these tended to have a smaller footprint than the high end Australian brands, as the foreign firms are more conscious of external stakeholder activism around corporate sustainability.
The big picture – smaller footprints mean bigger profits
Dr Noller said having the ability using the lifecycle analysis method to look at the lifecycle impacts and footprint of business over a 10-year period generates data that suggests a sustainability strategy can have greater efficacy both ecologically and economically through saving on space. By occupying less space, it translates into both a saving on costs and a positive impact on sustainability.
“The Nirvana of sustainability is finding the most cost-effective solutions that are ecologically sound,” she said.
“Having sustainable design at the heart of every new piece of property saves you money.”
Dr Noller said people are “driven by wanting to be good environmentally”, and that the key to assisting them to look at lifecycle assessment is broader engagement.
“The Green Building Council of Australia Lifecycle Assessment Innovation Challenge at least has people thinking about LCA,” Dr Noller said.
One of the upsides for business of the hybrid LCA footprinting method is it gives a broader set of benchmarks than just energy use. Noller said that while a business may not be energy efficient, an analysis may show they are doing brilliantly in other aspects of their operations, such as low-carbon materials or small retail area footprint and resource-efficient fitout.
The big obstacle to change
Dr Noller said one of the obstacles to improved sustainability across the retail sector was that maintaining the status quo takes less effort.
“When doing nothing is your major competition, how do you compete with that? Inertia through fatigue is the challenge we’re focused on,” she said.
“When doing nothing is your major competition, how do you compete with that?”
“How do we get people to take the first step when life is busy?”
Where to from here
The Footprint Company is currently preparing some case studies to assist them to work with tenants on more sustainable design, and is maintaining an ongoing working relationship with GPT.
“Everybody on average is still above one planet in terms of their footprint,” Dr Noller said.
The average baseline currently equates to the need for 950 sq m of planet in terms of resources to support each square metre of retail space.
“That’s the impact we’re seeing just from retail stores.”
GPT has been applying the results of the footprinting to right size operations and eliminate excess services for new centres.
“GPT are using our application for all their tenancy renewal and development applications. It is a productivity tool and an engagement tool for them to use with their customers, the retail tenants in their shopping centres. It assists with aligning tenants to the GPT corporate sustainability policy,” Dr Noller said.
“At the end of the day, GPT see a synergy between the tenant having a lower energy use and GPT having lower retail centre operational costs; it benefits both parties. Using the application they can point out opportunities to improve.
“For GPT the return on investment on the program has been significantly larger than they perhaps expected – they have seen a 200-300 per cent ROI.”
“For GPT the return on investment on the program has been significantly larger than they perhaps expected – they have seen a 200-300 per cent ROI.”
And the next step
Dr Noller said the company is now working with other real estate investment trusts on how they can benefit from the information and software to improve processes and project delivery.
“From our point of view, we now have all this data and can see the trends in retail. Now we are looking at other layers, for example materials, so we can go to the materials manufacturers and work with them,” Dr Noller said.
Fundamentally, the data allows Dr Noller to compare and contrast how different brands – be they banks, burgers or bikinis – stack up and match their own brand propositions in terms of sustainability. Further, she said that where the big multi-store brands are concerned, there is the potential for major sustainability impacts.
“The major brands have an opportunity to make a much broader impact in the community given how much real estate they take up,” she said.
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