Johannesburg, 5 October 2023 – Redefine Properties (JSE: RDF), one of South Africa's greenest Real Estate Investment Trusts (REITs), said yesterday in its 2023 ESG investor update that the business 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 REITs are operating remains challenging," notes 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."
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 says that Redefine’s water reduction strategy has already resulted in significantly lower water consumption. In the next two years, Redefine is targeting a cumulative 140ML reduction of its water footprint across its SA buildings. This will be achieved through a combination of initiatives that include rainwater harvesting facilities (with five new facilities planned for Gauteng), the rollout of smart water meters, and 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 loadshedding and rising energy prices, is focused on reducing electricity consumption through behavioural interventions, energy efficient lighting retrofits, and renewable energy installations. Redefine has a solar photovoltaic (PV) footprint of 40.2MWp currently installed in SA, with 39.6MWp of potential rooftop solar PV installations identified across the EPP portfolio.
The path to net zero
Keke says Redefine’s green building journey, which goes back to 2012 when the company obtained its first Green Star SA certification, provides 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 on the health and wellbeing of our occupants.”
"Our environmental efforts are driving cost reductions," Keke explains. "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."
Through upcoming initiatives such as the green lease rollout, these will become revenue drivers in due course. Keke adds, “We have evidence of international tenants and brokers prioritising Green Star rated offices, which makes our buildings more competitive in a tough environment.”
An evolution from CSI to making community impact
When it comes to CSI, Keke explains, "Our approach to CSI has evolved into an impact-driven socioeconomic development (SED) 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."
Redefine's 2030 vision is to ensure that socioeconomic development initiatives are in place for communities in over 50% of its buildings and achieve cumulative targets of 1 000 000 people impacted directly and 1 000 additional jobs created.
The new approach will ensure sustainable, quantifiable impacts (with short- and long-term targets) that positively impact stakeholders, the property sector, and the communities in which Redefine operates.
Keke states that Redefine's focus on impact creation allows the company to mitigate key socioeconomic risks. "Socioeconomic development initiatives that are impact focused help us manage the risks of socioeconomic instability caused by unacceptable levels of unemployment, poverty and inequality. Initiatives such as the Maponya Mall Community Hub focus on youth skills development to prepare a pipeline of new entrants to the job market, which helps reduce unemployment."
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.
Keke said that tenant buy-in and cooperation are essential for the company to achieve its energy, water and waste reduction goals. As such, Redefine has engaged several of the national retailers, who occupy a combined gross lettable area of 574 613sqm, on the ESG strategy and opportunities to collaborate on environmental and social initiatives.
Similarly, the ability to finance the low-carbon transition of its assets is critical to enabling Redefine's ESG strategy. Its sustainable finance facilities provide the company with an avenue to leverage its ESG performance to access sustainable finance markets.
Recently, Redefine issued a green bond that was oversubscribed 1.9 times, with R1.9 billion received in bids, resulting in an upsized allocation to R1 billion 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.
Redefine continues to participate in the S&P Global Corporate Sustainability Assessment and GRESB indices. It is taking steps to incorporate the IFRS S1 and S2 Standards, and the JSE Sustainability Disclosure Guidelines into its sustainability reporting.
