After years of industry-led research and development, the Property Council of Australia has launched the pilot phase of its voluntary social sustainability reporting tool.
The Collective Social Impacts Framework, built in consultation with industry stakeholders, is designed to measure and report the benefits or harms of construction projects, precincts and assets.
Launching the tool at a PCA event on Friday, Lendlease head of responsible sourcing Ro Coroneos was adamant that the tool is not in its final form. While the tool is usable, PCA will continue to develop it through industry feedback during this financial year.
“It’s a pilot, it’s a pilot, it’s a pilot,” Coroneos told attendees.
The framework builds on existing industry standards including Green Star, UNSDGs, WELL and GRESB.
Projects eligible for the tool include residential, industrial, commercial and retail developments larger than $50 million or refurbishments over $30 million.
Each participating organisation can submit up to five projects completed in the previous 12 months.
The collective social impacts framework is not a rating tool or scoring system, according to its developers, with Coroneos affirming that some social impact metrics “can’t be measured in dollars”.
However, investors, lenders, shareholders and insurers are increasingly looking to ESG reporting as information material to financial decision-making.
Richard Boele, social impact services partner at KPMG, told attendees that “something fundamental has changed in capital markets.”
“I was talking to a major bank, and their debt provider is asking about their approach to ESG.”
Increasingly sophisticated quantitative ESG data, as well as narratives built from qualitative ESG data, are “so powerful, and helpful to decision-makers”, according to Boele.
“Particularly, I would suggest, capital decision-makers,” he said.
“That's why this framework is inviting you in, to have a look at those key areas where we might not have the silver bullet in terms of how exactly to measure. This framework gives us a place to come together and share experiences, and investors are working on this as well.”
While the PCA says that participants will benefit from more reporting to capital markets, there is still work to be done.
“I don't want people to misunderstand and think the tool is giving you a black-and-white kind of solution, because it is something that we're going to have to build on progressively over time as it comes more sophisticated and matures,” Coroneos said.
“But it will be the stimulus for those very pointed, informed, important conversations with [financial decision-making] stakeholders around those issues.”
Frameworks to measure, monitor and report ESG risks continue to proliferate, and policymakers globally are seeking to forge consensus on appropriate mechanisms. Corporate regulators have also stepped up their focus on ESG risks and disclosure in recent years.
ASIC is supporting the work of the International Sustainability Standards Board; APRA continues to nudge companies into voluntary disclosure of climate-related financial risk under the TCFD framework; and the ACCC has made “consumer and fair trading issues in relation to environmental claims and sustainability” a top priority for 2022-23.
According to Boele, the ACCC has recognised that investors, particularly retail investors, are increasingly reliant on ESG reporting information.
Some social impact disclosures are already mandated in Australia, particularly under the Modern Slavery Act (2018), which requires businesses with consolidated revenue over $100 million to report, monitor and address modern slavery risks in their supply chain.
The new federal Labor government has previously made commitments to legislate requirements for large companies to publicly disclose their gender pay gap.
The government has also indicated it intends to implement the recommendations of the 2020 Respect at Work report, which will likely place some demands on companies to disclose sexual harassment data.
Existing frameworks and certification schemes, such as the Green Star rating system, take some social impacts into account.
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