Property Flash


October 5 2023

This is a guest piece by Redefine Properties

Redefine Properties (JSE:RDF) said on Wednesday in its 2023 ESG investor update that it is scaling up ESG initiatives to optimise performance and strengthen resilience in a challenging operating environment.

“While there are signs of improvement, the environment in which South African real estate investment trusts are operating remains challenging,” said Anelisa Keke, chief sustainability officer at Redefine.

“Our ESG strategy responds to sustainability-related risks through scalable interventions, providing an opportunity to not only de-risk our portfolio, but to create and preserve value for ourselves, our tenants and other key stakeholders,” she said.

Environmental efforts target climate risk and drive cost reductions

The update noted an extreme risk of baseline water stress throughout most of Redefine’s South African portfolio, while EPP, its retail-centric Polish property investment platform, has several environmental transition risks, with recent and upcoming EU regulations requiring buildings to improve their energy performance levels in the next few years.

Keke said that Redefine’s water reduction strategy resulted in significantly lower water consumption. In the next two years, Redefine was targeting a cumulative 140ML reduction in its water footprint across its SA buildings. This will be achieved through a combination of initiatives including rainwater harvesting facilities, with five new facilities planned for Gauteng, the rollout of smart water meters and through the installation of Propelair toilets, which use up to 80% less water per flush than ordinary toilets.

Meanwhile, Redefine’s energy management strategy, which responds to the elevated risk of extended load shedding and rising energy prices, is focused on reducing electricity consumption through behavioural interventions, energy efficient lighting retrofits and renewable energy installations. We have a solar PV footprint of 40.2MWp which is currently installed in SA, with 39.6MWp potential rooftop solar PV installations identified across the EPP portfolio.

The path to net zero

Keke said Redefine’s green building journey, which goes back to 2012 when the company obtained its first Green Star SA certification, provided valuable guidance to implementing net zero building practices.

“Our Green Building programme is part of a long-term journey towards achieving net zero and demonstrates to our stakeholders that our certified assets have a positive impact on the environment, as well as the health and well-being of our occupants,” she said.

Redefine has 186 active Green Star SA certifications across its SA property portfolio in the short term and new buildings will meet net zero standards from 2030 onwards.

“Our environmental efforts are driving cost reductions. We are starting to see an increase in net operating income as a result of certain on-site environmental initiatives, which count positively towards valuations,” said Keke.

Through upcoming initiatives such as the Green Lease rollout, these will become revenue drivers in due course.

An evolution from CSI to making community impact

“Our approach to CSI has evolved into an impact-driven socio-economic development strategy that forms part of the company-wide impact framework. This strategy ensures that the design and operation of our assets respond to community needs and that our business activities transform lives,” said Keke.

Redefine’s 2030 goal is to make sure that socio-economic development initiatives are in place for communities in over 50% of all buildings and achieve cumulative targets of 1 000 000 people impacted directly and 1 000 additional jobs created.

Sustainable finance, stakeholder buy-in critical to achieving ESG strategy

Redefine said that employee buy-in has allowed the company to scale up critical ESG initiatives. All Redefine employees will be trained on Green Building certifications in SA in 2023/24. This upskilling allows the company to offer a compelling service to tenants who want to expand their ESG initiatives.

Tenant buy-in and cooperation is essential for the company to achieve its energy, water and waste reduction goals. Redefine has engaged several of the national retailers, who occupy a combined gross lettable area of 574 613 square metres, on the ESG strategy and opportunities to collaborate on environmental and social initiatives.

Recently, Redefine issued a green bond that was oversubscribed 1.9 times, with R1.9bn received in bids, resulting in an upsized allocation to R1 bn across three, five and seven years. The proceeds raised will be used to refinance eligible green assets, across its property portfolio, that align with the group’s overarching, long-term climate-resilient framework.

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