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Commonwealth Bank Rolls Out Green Loans For Cairns Business

Green finance has started gaining momentum in the commercial property industry following the recent unveiling of a new loan product primed to incentivise landlords into upgrading their buildings to reduce carbon emissions by at least 30 percent.

The Commonwealth Bank of Australia recently announced that property owners could now top up their commercial property loans by up to 20 percent, with no line fees and zero establishment fees, whenever they want to finance a major sustainability upgrade.   

The first of its kind, this loan is available to the commercial property sector and is offered by a leading retail bank.

To qualify, buildings must have a star rating improvement under the National Australian Built Environment Rating System (NABERS) or minimise the property’s emissions by at least 30 percent.

A 3-star rating is considered ‘average’ when it comes to energy efficiency performance with six stars being the highest rating received by market leaders within the industry.

Most players in the commercial property sector have started responding to the new shift in demand experienced among corporate tenants and commercial buildings investors who are now more interested in greener properties.

Buildings in Australia account for more than half of electricity consumption and about a quarter of the carbon emissions.

Sustainable change across the industry

According to Clare Morgan, executive general manager of business lending at CBA, sustainability upgrades are commercially viable since they increase the value of properties and reduce operational costs.

Despite being a difficult time especially for buildings experiencing lower occupancy or reduced foot traffic, it can also be an ideal time for businesses to undertake property improvements and building upgrades to meet the demand.

Currently, about two-thirds of commercial buildings with offices are rated below five stars in terms of energy consumption, Ms Morgan said.

The NABERS system is designed to analyse the energy efficiency of a building as well as its water consumption, carbon emissions, indoor water quality and waste management.

“The only way to get a better NABERS rating is to use less energy. If you install flashy technology that looks really good but doesn’t reduce energy and carbon emissions, it won’t help the environment, and it won’t get you a better NABERS rating.”

NABERS director Carlos Flores

Building upgrades include installation of solar panels, storage battery, and water recycling systems, as well as upgrating insulation, ventilation and window or door designs.

Reducing emissions by 30 per cent within two years takes a lot of effort and it’s not going to happen by accident.

The fine print of the loan contract will serve as an environmental KPI with the energy targets expected to be met in a stipulated timeframe.

For instance, if your building had a three-star NABERS Energy rating level, then you would have to set a certain target to achieve at least 4.5 stars by a given date.

NABERS director Carlos Flores

Even though offices and shopping centres have the most NABERS ratings, the system also includes hotels, apartments, hospitals, data centres and soon expected to cover the retirement living and residential aged care industry.

The best thing about this new loan is its substantial size and availability to diverse parties. It’s certainly a debt instrument specially designed to deliver sustainable transformation within Australia’s commercial property sector.

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