Sustainability Matters: A Guide to ESG Ratings in Australian Building Construction

The concept of Environment, Social, and Governance (ESG) is becoming increasingly popular in Australia’s building construction domain. 

ESG signifies the three central factors that evaluate the sustainability and ethical consequence of an investment in the long term. ESG rating systems can help investors, occupants, and other stakeholders make informed decisions in the construction domain. 

In this blog post, we’ll provide an overview of ESG in Australia’s building construction domain and explore various rating systems available, including NABERS Energy, NatHERS, BASIX, and Green Star. 

What is Environment, Social, and Governance (ESG)?

ESG refers to the three critical factors that assess the sustainability and ethical impact of an investment in the long term. These three factors are:

• Environment: refers to the impact of the investment on the natural environment. This includes the use of energy and resources, waste management, and greenhouse gas emissions.
• Social: refers to the impact of the investment on the surrounding community. This includes the well-being of occupants, the impact on the local economy, and the involvement of stakeholders.
• Governance: refers to the impact of the investment on the governance of the organisation. This includes transparency of the organisation, accountability of the organisation, and the management of risks.

In the context of building construction, ESG rating systems can help investors, occupants, and other stakeholders make informed decisions about the sustainability and ethical impact of buildings.

Building Ratings Prevalent in Australia

NABERS- National Australian Built Environment Rating System 

The National Australian Built Environment Rating System ( commonly known as NABERS) measures the environmental performance of buildings. NABERS ratings are based on a scale of one to seven stars, with seven stars (commencing from May 2023) representing the highest level of environmental performance. 

NABERS ratings are used to measure the environmental performance of a building in terms of energy efficiency, water utilisation, waste management, and indoor environment quality.

NABERS energy and water ratings can be used by building owners and managers to understand the environmental performance of their buildings and identify opportunities for improvement. 

NABERS ratings can also be used by tenants to choose environmentally sustainable buildings.

NatHERS- Nationwide House Energy Rating Scheme

The Nationwide House Energy Rating Scheme (popularly known as NatHERS) evaluates the energy efficiency of residential buildings. NatHERS ratings are based on a scale of zero to ten stars, with ten stars representing the highest level of energy efficiency. 

NatHERS assessment measures the energy efficiency of a building in terms of heating and cooling requirements.

NatHERS ratings can be used by home buyers to choose energy-efficient homes. NatHERS can also be used by builders to design and construct energy-efficient homes.

BASIX- Building Sustainability Index

The Building Sustainability Index (BASIX) is a rating system that measures the environmental performance of residential buildings in New South Wales. BASIX ratings are used to measure the environmental performance of a residential dwelling in terms of water usage, energy efficiency, and thermal comfort.

BASIX ratings can be used by home buyers to choose environmentally sustainable homes. BASIX ratings can also be used by builders to design and construct environmentally sustainable homes. NatHERs assessment is an integral component of the BASIX report and certificate. 

Green Star

The Green Star rating system by the Green Building Council of Australia is a rating system that measures the environmental performance of buildings. 

Green Star ratings are based on a scale of one to six stars, with six stars representing the highest level of environmental performance. 

Green Star ratings are used to measure the environmental performance of a building in terms of energy efficiency, water usage, waste management, and indoor environment quality.

Green Star ratings can be used by building owners and managers to understand the environmental performance of their buildings and identify opportunities for improvement. Green Star ratings can also be used by tenants to choose environmentally sustainable buildings.

When to Use Each Rating System?

NABERS, NatHERS, BASIX, and Green Star are all rating systems that measure the sustainability and environmental impact of buildings. However, each rating system has a specific focus and is used in different contexts.

• NABERS is primarily used to measure the environmental performance of commercial buildings, including office buildings, retail spaces, and hotels. 

• NatHERS is primarily used to measure the energy efficiency of residential buildings, including single-family homes and multi-unit residential buildings. 

• BASIX is primarily used to measure the environmental performance of residential buildings in New South Wales. 
• Green Star is a comprehensive rating system that measures the environmental performance of all types of buildings, including commercial and residential buildings. 

Wrapping Up

ESG rating systems are becoming increasingly important in Australia’s building construction domain. These rating systems can help assess the sustainability and ethical impact of buildings, which can help investors, occupants, and other stakeholders make informed decisions. 

NABERS, NatHERS, BASIX, and Green Star are all rating systems that measure the sustainability and environmental impact of buildings. Each rating system has a specific focus and is used in different contexts. 

By understanding the differences between these rating systems, building owners, managers, tenants, and homebuyers can make informed decisions about the environmental impact of buildings.