The 'greening' of buildings

These days we frequently hear about new commercial buildings which contain a host of green features, wind turbines, underfloor air-conditioning, blackwater recycling, green scapes - just to name a few, which are leading to real reductions in greenhouse emissions. But what about the 330 million square metres of existing commercial buildings around Australia? Most of these are more than 25 years old and account for approximately 10% of Australia's emissions.

The Institute in its submission to the Henry tax review suggested encouraging green behaviour through tax policy. It specifically recommended the introduction of specific provisions such as increasing depreciation rates for emissions-reducing capital expenditure.

Recently, the Labor Government announced a proposed new investment allowance for existing commercial buildings. In the proposal businesses will be able to claim a one-off 50 per cent tax deduction for capital works that improve energy efficiency of existing buildings. These could include initiatives such as, energy efficient lighting or air-conditioning.

The tax break will provide a real incentive for businesses to start upgrading commercial buildings across Australia. If the proposal goes ahead it will not be long before we start to marvel at the transformation of two star buildings into four or even five star eco-friendly developments.

I truly hope that this is the start of further measures that could be introduced through the tax system to complement other carbon reduction initiatives. The Institute would strongly support any tax reduction measures that would further contribute to the 'greening' of Australian businesses.

Could your building and business benefit from such measures? What ‘green’ measures are currently in place at your organisation? I would love to hear from you.

Successful business drives sustainable growth

A recent study of nearly 1000 CEOs, business leaders, and academics conducted by Accenture and UN Global Compact has identified a uniform theme that good performance on sustainability amounts to good business overall. Sustainability is no longer just a case of good deeds, but a good business case.

93% of CEOs surveyed see sustainability as important to their company's future success. Although sustainability is supported by the business case and is becoming part of the business strategy for many organisations, there are still hurdles to overcome in executing the strategy. The survey identified five conditions needed to enable sustainability to be integrated throughout a company, and become part of its organisations DNA. These conditions include:

• Reform to education in order to create sustainability skills and mindsets in executives and workforces
• Financial reforms to enable sustainability to be incorporated into valuations by investors
• New concepts of value and performance need to be developed to measure positive and negative impacts of sustainability strategy.

Chartered Accountants are uniquely placed to develop solutions to some of these hurdles. They have the skills and ability to measure value and develop metrics which will assist both the company itself, and its investors in understanding the impact of the sustainability strategy.

The impact of sustainability on core business metrics such as revenue growth, cost reduction, risk management and reputation should be measured. CFOs and finance departments need to embrace the sustainability strategy and provide the 'real story' that investors can understand, rather than a company's sustainability story being told only in terms of marketing or public relations.

Once the metrics are right the next step is ensuring the reporting process is also right. The sustainability performance needs to be integrated into a company's general business reporting. (See the Institute's Broad Based Business Reporting initiative for more information).

Yes integrated reporting is coming and sustainability reporting will be part of this story.