0:09

Hello and welcome to Talking Property,

0:12

our CBRE podcast series where

0:14

our team of experts, our clients, and

0:16

industry specialists share insights

0:19

into the way we live , work, and

0:21

invest through the lens of commercial real

0:23

estate. I'm Su-Fern Tan, CBRE's

0:25

Pacific Head of ESG, and

0:28

I'm your host for this latest Talking

0:30

Property episode. It's the first

0:33

in a planned ESG in conversation series

0:35

in which we'll talk to clients about their

0:38

strategies, successes, and

0:40

challenges as they develop their ESG strategies,

0:43

future-proof their portfolios, and

0:45

focus on innovation. Today

0:47

I'm talking to EG Funds Management

0:50

with the Head of ESG, Ian Lieblich, Fund

0:53

Manager Linh Pham on the line.

0:55

I'm also pleased to welcome Sarah

0:58

Mathews, CEO of the Little BIG Foundation,

1:00

a not-for-profit funded by EG.

1:03

Thanks everyone for joining me today.

1:06

Thank you, Sue . Thanks for having us.

1:07

Thanks for having us.

1:09

Ian, I'm going to ask you a little later

1:11

about EG's broader ESG strategies,

1:13

but I was hoping that you could first tell

1:16

us a little bit about EG's building

1:18

good philosophy to tackle loneliness

1:20

and create better connections in new development

1:23

projects. We hear so

1:25

much about the 'E' in ESG, but it's so

1:27

good to see the 'S' also taking centre

1:29

stage at EG's Flour Mill development

1:32

in Sydney.

1:33

Of course, and Sarah and

1:35

Linh can of course go into more detail.

1:38

But broadly speaking, the building

1:41

good philosophy of BIG of

1:43

the Little BIG Foundation is

1:46

focused on this desire to leave a

1:48

legacy, to be a light on

1:50

the hill, as our CEO and founder likes

1:52

to say, and return good

1:54

to all stakeholders, not just to

1:57

shareholders. A lot of ESG strategies

2:00

and, and visions are to do

2:02

good in both the environmental and the social sense.

2:04

And as you said, this really focuses

2:06

on the social idea, the idea

2:09

that by fostering connections

2:11

and relationships, bringing people

2:14

together across our investment portfolio, we

2:17

can return good to all communities

2:19

and building good for all, not just

2:21

those who are either employed at EG

2:23

or invested in EG or who are tenants

2:26

in EG buildings, but everybody

2:28

within the community that we touch.

2:30

Thanks, Ian and Linh and Sarah, I

2:32

believe you were both involved in the

2:34

establishment of the Little BIG Foundation.

2:37

Can you tell us how it came about?

2:39

So, as part of any residential sales campaign,

2:42

most property companies would host

2:44

events, markets, and anything else with,

2:47

or with the purpose of encouraging people to

2:49

visit the sites. And, you know,

2:51

done correctly, a lot of these initiatives may

2:53

also spark a conversation with a new neighbour

2:56

or perhaps enable a new connection.

2:58

However, what these marketing initiatives

3:01

lack is that they only actually have

3:03

one KPI and that KPI

3:05

is to drive sales and sales is

3:07

the only outcome that is measured. But

3:10

you know, what if we can do two things, both

3:12

sell apartments and also encourage a

3:15

place where people know their neighbours, a thriving

3:17

community, and not just until we've

3:19

sold the last apartment, but forever and

3:22

beyond. So what if we can also

3:24

measure the social impact into the future?

3:26

You know, selling the final apartment at our

3:28

Summer Hill Flour Mill development and

3:31

lockdown happen in very quick succession, and

3:33

we wanted to continue the work that Sarah and

3:36

the Little BIG Foundation started. And

3:39

from here, Sarah really took the lead from that point

3:41

onwards.

3:42

EG's always had a really big emphasis on

3:45

placemaking and community building through their

3:47

residential projects. And that's played

3:49

out in lots of different ways over the years,

3:51

whether it's meet the neighbour's events or starting

3:54

farmer's markets or food festivals.

3:56

But 2020 really gave

3:59

the developer opportunity to pause for thought

4:01

and think about social connection

4:03

and loneliness. They , you know, these apartments

4:05

existed because of the work that they had

4:07

completed and were never intended

4:09

for people to live in them 24/7 and

4:12

never go within more than five

4:14

kilometers from home. So, you know, it

4:16

really gave an opportunity to think about the

4:18

loneliness and social connection and

4:20

your neighbours being your number one stop

4:23

point in connection in your world around you.

4:26

So, you know, that's sort of where it

4:28

all started. It looks quite different today to,

4:30

you know , both that sales period of

4:33

community building and also that 2020

4:35

lockdown period of community connection. But

4:38

that underlying theme is still strong.

4:40

Thanks, Sarah . And the statistics around

4:42

loneliness are really stark . Pre-pandemic,

4:45

one in four Australians acknowledged that

4:47

they regularly felt lonely, and

4:50

that's skyrocketed to one and

4:52

two at the height of covid. Leading

4:54

Little BIG, you've had the opportunity

4:57

to tackle that at the Flour Mill. So

4:59

why is loneliness the focus for the

5:01

Little B.I.G Foundation?

5:02

Yes, it's a good question. I guess , loneliness is

5:06

interesting. It's, you know, not just that physical

5:08

sense of being alone, but an

5:10

emotional feeling that your social needs are

5:12

not being met. And that's obviously completely

5:15

subjective and different for everybody, but

5:18

it's something that we're really focused

5:20

on because it has such a significant

5:23

impact on both your physical and

5:25

mental health beyond the experience

5:27

of loneliness itself. So, you know, it's

5:29

been compared to smoking 15 cigarettes

5:32

a day or having sort of upward of five or six drinks

5:34

a day for your physical health. It's

5:36

also a major precursor to more significant

5:39

mental health issues. It's

5:41

sort of that first stop point , and we talk

5:43

a lot about the wobble. You know, everyone

5:46

is going to have periods of their life where

5:48

they wobble a little bit, where they feel unsteady,

5:50

they go through some form of a crisis, maybe

5:53

they change jobs or they change cities. Maybe

5:55

there's a relationship change that causes

5:57

you to feel a little less connected

5:59

than you were previously and, and not

6:01

your best self. And if we have

6:03

a community around people that can kind of just steady

6:06

them through that period, then we can look

6:08

at preventing more significant issues around

6:11

depression and even suicidality. It's

6:13

also has an economic impact

6:16

for us all. So, you know, loneliness alone,

6:18

not depression, not complex mental health,

6:20

not schizophrenia or any interventions

6:23

at that kind of end of the mental health spectrum,

6:26

is costing the Australian economy $2.7

6:28

billion per annum , which was sort of a conservative

6:31

estimate put out last year by Curtin University.

6:33

So, you know, prevention is always better

6:36

than a cure. And if we can help

6:38

people steady when they're feeling that

6:40

kind of wobble, then we can have a

6:42

huge impact at that economic level as well.

6:45

That's amazing. And can you tell us a little bit

6:47

about the difference that that is making to

6:49

residents and the local community at the Flour Mill

6:51

and how you are measuring social

6:54

impact?

6:55

Yes, definitely. I mean, we measure lots

6:57

of different things and I think as we

6:59

sort of said at the start, this is not

7:01

a well worn path yet. We're still sort

7:03

of figuring out social impact measurement,

7:06

but we track all of our outputs. We look at the

7:08

number of events we run, the number of programs we're

7:10

offering numbers of volunteers and where they

7:12

come from within the local community and their

7:14

proximity to the physical Little BIG house,

7:17

participation rates and frequency of attendance at

7:20

events. And we look at all of those things because

7:22

there is a lot of research showing that the

7:25

more social identities that you form amongst

7:27

your own life, the more kind of resilience

7:30

you have and kind of strengthening of your

7:32

mental health. So we look at those sorts of things, but

7:34

we also look at our self-reported outcomes.

7:38

So the AIHW, the

7:40

Institute of Health and Welfare, are measuring the

7:42

number of days a week someone feels lonely

7:45

at a national level. So we are asking that same question

7:47

here and of all of our communities

7:50

to get a sense of how that kind of compares to

7:52

national measures and what's happening differently

7:55

or similarly here. And also the number

7:57

of neighbours, people know that kind of number

7:59

of sense of connections they feel they

8:01

have within their community. So we

8:03

benchmark that against national data, we

8:06

baseline it against our own data, and

8:08

those are kind of the, I guess those metrics that look

8:10

really great in a report. But what's

8:12

really important to us is individual stories as

8:14

well. It's the, you know, the couple who

8:16

are new to Sydney who are, you know, starting

8:19

to build relationships in the local

8:21

area with their neighbors through coming

8:23

along to co-working or attending speed

8:25

friending. It's the, you know, the co-parenting,

8:28

you know, newly separated mum who values

8:30

having a yoga class on a Saturday where they

8:32

go for coffee afterwards to kind of fill

8:35

in those Saturday mornings that they may

8:37

not have the children with them anymore. Or it's the,

8:39

the 20-something that lives in the one bedroom apartment

8:41

that works from home now because we, a

8:43

lot of us are doing that, a lot of businesses haven't

8:45

given their employees the option to

8:48

come back to an office. And so attending

8:50

board games night on a Tuesday night for

8:52

a couple of hours might be the only face-to-face

8:54

interaction they have for the entire

8:56

day. So, you know, those stories are

8:59

really important to us. Of course,

9:01

the other one is the, you know, the three people who visit

9:03

our safe space, which is Fridays and

9:06

Saturday nights. A minimum of three people

9:08

who are feeling at, at risk of serious loneliness, depression,

9:11

or suicide that, you know, have nowhere else

9:14

to be and they can be here when they're feeling that

9:16

way. So you know, those stories and how that

9:18

kind of plays out, just coming into

9:20

this, actually I bumped into someone who told me

9:23

a new person has been coming along to the board games

9:25

night for the last few weeks, and he's now started

9:27

a kind of monthly movie club and a

9:29

group of people are now going to the cinema together once

9:32

a month outside of what we're doing, irrespective

9:34

of our work. That kind of has formed

9:36

a group that spans beyond the programs

9:39

we offer.

9:40

Amazing work. And Sarah

9:42

, I'd love to get your views on the difference

9:44

between placemaking and

9:47

creating connections. Too often I

9:49

think developers add some retail

9:51

to a development and stage a

9:53

few events as a way to tick a box, but we

9:55

know it goes a lot deeper than that.

9:58

Yes, absolutely. Look, getting the retail

10:00

mix right is an art form and

10:04

definitely a huge part

10:06

of it and it can be quite important, but I

10:08

think for too long sort of councils and developers

10:11

or even event planners, they're focused on

10:13

that placemaking, putting on those showy events

10:15

that look really great on a video and make

10:17

us all feel really good about the work that we've done.

10:20

But that isn't necessarily resulting

10:22

in any form of connection forming. It's

10:24

great for that sense of community and that sense of place,

10:27

but what we've found is that events

10:29

that have less than 20 people in attendance

10:32

that kind of focus on a more of a niche interest

10:35

area is where the kind of more

10:37

deeper bonds actually form. Those are the

10:39

relationships that span beyond

10:41

showing up to an event and actually go out

10:43

into that real world and continue into

10:46

your lives . So yes, we do both.

10:48

We definitely , we still put on the food festivals

10:50

and we have a fortnightly market and we

10:52

have a Christmas tree sale every year where we raise

10:54

money for charity and people can volunteer

10:56

and get involved in that as well. But

10:59

things like the parents group or the life

11:01

drawing classes or even speed friending

11:04

is where those deeper connections are made.

11:06

Wonderful. And on the broader

11:08

topic of ESG, Linh, what

11:10

are your investors focusing on when it comes

11:13

to responsible investments and what

11:15

are some of the questions you get asked?

11:17

Thanks, Su-Fern. There are lots of funds labelled

11:19

as ESG funds in the industry. However,

11:21

based on a New York University study

11:24

of these funds reviewed, although 97%

11:27

of these funds had an environmental

11:29

objective, only 14%

11:32

had a social objective. So,

11:34

you know, investors are really well-read on the

11:36

measurement of environmental factors. So

11:38

what Sarah and the Little BIG Foundation is working

11:41

towards on social impact measurement

11:43

really resonates with the investors here.

11:46

It then comes down to, you know, how we

11:48

break down the ES and G

11:50

into quantifiable criteria, and

11:53

you know, that's not always easy. I

11:55

lead EG's Delta Fund, so our

11:57

EG Delta ESG property fund.

11:59

Sorry, that's a bit of a mouthful. And

12:02

you know, one of the things that the fund

12:04

has done is define the

12:07

set of ESG criteria.

12:10

So, you know, what we wanted to

12:12

create was a fund that

12:14

very much had the intention to

12:17

solve environmental and social goals,

12:20

which is why we launched the EG Delta fund and

12:23

even with its predecessor fund in 2016.

12:26

So we wanted a clearly defined set

12:28

of quantifiable impact outcomes

12:31

for each asset that we acquired. And

12:33

then instead of benchmarking these assets against

12:35

other assets in other funds, perhaps

12:38

in another sector, which may be even

12:40

another jurisdiction, what we

12:42

wanted to do was always set the benchmark

12:44

for each asset to be against its

12:47

historical self. So what it was when

12:49

we acquired the asset, so we can really

12:51

focus on measuring the impact

12:54

that we affect over time.

12:56

And have investors responded well

12:58

to this, Linh?

12:59

They have. So the

13:01

initial investors of the Delta

13:03

Fund actually collaborated in forming

13:07

the Delta framework. So, we worked

13:09

with them in defining the environmental

13:12

objectives of the fund and also the social

13:14

objectives of the fund. And,

13:16

you know , we recognise, our investors recognise

13:19

that the measurement of the 'S'

13:22

in this ESG is really difficult, but

13:25

we always think it's worth starting

13:29

to try to measure the 'S'

13:31

and then hopefully over time, you know, as Sarah

13:34

and her work with the Little BIG Foundation continues,

13:36

we've got a much broader sample

13:39

set and much broader quantifiable and

13:42

also, you know, qualitative stories that we

13:44

can recount as well.

13:45

And I wonder how this fits into

13:48

the broader ESG picture for

13:50

EG funds. Ian, can you speak about that?

13:53

With pleasure. Just to add to what Linh

13:55

was saying a moment ago, the idea

13:57

that when we're providing environmental

13:59

metrics to investors, that's often quite

14:01

easy to benchmark. We have

14:03

a relatively good understanding and

14:06

established understanding as

14:08

to what a low-carbon building looks like. There

14:10

are various trajectories and pathways

14:12

along the pathway to zero carbon . With

14:15

the social metrics, it's a lot harder, as Linh

14:17

said. So what we find we try to do

14:19

is use a combination of both what

14:22

quantitative metrics we can and

14:24

then pair them with qualitative metrics, which

14:26

might be a case study or even

14:28

something anecdotal. The example that

14:30

Sarah gave before about a games

14:32

night evolving into a movie night is

14:35

really beautiful. And those are the sorts of stories that

14:37

we'd love to tell investors, even if they

14:40

are difficult to quantify a more tangible

14:42

impact. But if we can then pair them with,

14:44

you know, the amount of people who attended, growth,

14:47

interactions, connections, to

14:49

us, that's the best way. And then

14:52

how that fits into each is broader approach.

14:54

So I mentioned that idea of wanting

14:56

to be a light on the hill and leave a legacy that

14:59

affects the whole community. That's

15:01

broadly more true for how we operate even

15:03

beyond Little BIG Foundation. What really

15:05

drives us is wanting to have impact

15:08

at scale. So it's all

15:10

well and good for us to be doing these things

15:12

as EG, but ideally we'd

15:15

love to move markets, we'd love to see other

15:17

developers, other property companies adopt

15:19

these sorts of, I suppose, approaches

15:22

to the way that they're doing this and really

15:24

seeking to address these big systemic

15:26

issues like loneliness and rather

15:28

than just, you know, having a coffee giveaway

15:30

in the lobby of an office building, have a coffee

15:33

giveaway that's accompanied by a conversation

15:35

and by an interaction and by a really

15:37

earnest and authentic attempts

15:40

to connect with people. And that's really what Sarah

15:42

and her team are doing so well and so beautifully

15:44

at the Flour Mill. And then what we

15:46

at EG are trying to bring to our whole

15:48

portfolio of assets, not just these residentials

15:51

buildings. And then what we'd love to say is

15:54

that impact of scale pay . So not just

15:56

EG doing this, but indeed everybody doing

15:58

this, and we can have more closely connected,

16:01

friendly, warmer communities.

16:03

Talking about the Flour Mill,

16:05

the success at the Flour Mill, I hear

16:07

that Little BIG Foundation

16:09

could be expanding and moving possibly

16:12

into resi or industrial and

16:14

just trying to share the love when it comes to

16:17

the foundation's work. This true?

16:20

Yes, that's right. We're excited. We're taking on

16:22

six new office buildings this year.

16:24

So we've got our primary site at

16:26

the Flour Mill in Summer Hill , and we're taking, you

16:28

know, working with communities in office as well

16:31

now. So I guess more

16:33

broadly, real estate sector might have called this

16:35

tenant engagement or maybe it falls into

16:38

the marketing budget or something of that capacity.

16:40

And it really is that example Ian mentioned

16:42

of, you know, the coffee giveaways in the lobby.

16:45

We really think that's something that can be done better.

16:48

You know, we're kind of investing in this area

16:51

anyway. We're surveying the community, we're

16:53

talking to our tenants, but are we really

16:55

thinking, are we genuinely caring about them

16:57

and their wellbeing and you know, how connected

17:00

they are with one another in the

17:02

community? And we also think those measures

17:04

are , are things that can only benefit the

17:07

landlord as well. If people are more connected to that

17:09

sense of place and, and you know, feel like they

17:11

have friendships and genuine connection within the building,

17:13

they're more likely to show up to the office every

17:16

day , which is better for your tenants and

17:18

better for the buildings occupancy and a

17:21

whole number of other factors as well. So

17:23

, yeah, we're doing that through a

17:25

very similar approach. So we've taken with

17:27

residential, we're looking at like the

17:29

local partnerships we can form in the

17:32

community around that asset. We're

17:34

carrying out a research piece, we're doing that tenant

17:36

engagement survey, but with a focus on

17:39

social connection. We can also

17:41

gather the general feedback about the lift upgrades

17:43

and end of trip as well for you in the process to

17:45

kind of kill two birds with one stone. But we

17:48

really focus on how people are feeling and

17:50

what sense of connection they have, which

17:53

is really already proving to be quite interesting.

17:55

You know, 60% of office workers

17:58

are lonely on a regular basis, which is significantly

18:01

above general national averages

18:04

and particularly interesting because people

18:06

who are full-time employed and in that

18:08

kind of middle of life cohort are

18:10

generally the most protected against loneliness.

18:13

You know, we see higher rates of loneliness

18:15

among young people and those who are retired.

18:18

So people coming into an office every

18:20

day where they don't feel a sense of connection or a building where

18:22

they don't feel a sense of connection is a really interesting

18:25

area and a really risky area as

18:27

well. So we're thinking about what kind of moments

18:29

we can embed in those days. It's not

18:31

necessarily a food festival or a

18:33

free coffee, but you know,

18:36

maybe using some of those traditional

18:38

ideas, tying them with some of these things

18:40

we've learned in the residential space and

18:43

kind of creating a program that does

18:45

more for tenants than some, you know, a

18:47

free yoga class that you can't quite make on your busy

18:49

schedule and your lunch break anyway.

18:51

Yes. And creating these types of great

18:54

social outcomes is just so

18:56

important. But Linh, in

18:58

our industry, there's also the need

19:00

to deliver financial outcomes for

19:03

investors. Is it possible

19:05

to invest in our communities and

19:07

still make a profit?

19:09

Done correctly Su-Fern, the answer is yes. So

19:12

as part of the Delta Fund, we

19:15

actually have a dual objective, and

19:17

that's both to deliver a financial outcome

19:19

alongside the ESG outcome.

19:22

And, you know , unlike many other funds in

19:24

the industry, our performance

19:26

is measured against both factors. Which

19:29

is why it's really important that we measure,

19:31

you know, the 18 objectives that we've set for

19:34

ourselves, including the social objectives

19:36

as well. So what we need to do is

19:39

think about, you know, what are the smart solutions

19:41

rather than the expensive solutions.

19:44

So like both Sarah and Ian

19:46

mentioned before, our programs don't

19:48

involve expensive giveaways or

19:51

extravagant events and, you

19:53

know, everything that we do is done

19:55

with the help of the foundation and it's

19:57

volunteers, the communities, the

20:00

tenants, because you know, at

20:02

the end of the day, establishing those communities,

20:05

it has to be grassroots and it

20:07

can't be curated, you know , by a

20:09

few people. So we really

20:11

want people to be involved, we want

20:13

people to share their experiences. All

20:16

we need to do is make it a little easier

20:18

for them to do so.

20:19

Thank you, Linh. Now Ian,

20:21

just to end off the podcast, what

20:24

are some of the big plans that EG has

20:27

for ESG? Do you have

20:30

quite an innovative strategy plan ?

20:32

Big question, but one that we're glad

20:34

you asked . So obviously a big focus on

20:36

all the work that Sarah is leading through a Little

20:38

BIG and wanting to create that connection

20:41

between our community members. One

20:43

of the other big pieces of work we're doing is on

20:45

climate change and working towards

20:48

reducing emissions to zero, not in

20:50

the, I hesitate to say traditional sense

20:52

because net zero targets have certainly been around

20:55

for less than a decade, but not

20:57

that way. We are aiming instead for what we're

20:59

calling a real zero carbon target,

21:02

and that's based on this desire

21:05

for greater data and technology to

21:07

underpin our carbon accounting and monitoring.

21:10

So traditionally when building owners have

21:12

measured the carbon footprint of their building, they've

21:14

taken the total energy used from electricity,

21:17

any natural gas burned on site , any diesel

21:19

used on site , and they've made one

21:22

annual calculation sort of multiplying that

21:24

by the emissions factors that the government gives.

21:27

The problem with that is that it assumes that every kilowatt-hour

21:29

of electricity has the same carbon content.

21:32

And the way that our grids currently are

21:34

with a lot of solar coming on board during the

21:36

day, wind being intermittent, coal

21:38

being intermittent as it comes on and offline, is

21:40

that every kilowatt-hour of electricity

21:43

doesn't have the same carbon content.

21:45

So a more sophisticated data

21:48

driven approach allows us to look at the carbon content

21:50

of electricity every 15 minutes

21:52

as opposed from once a year . That

21:55

gives us about 35,000 data points instead

21:57

of one. What that means is we can

21:59

start to look at when we are using

22:01

energy in addition to how much

22:03

energy we're using, which is to

22:05

say that if it's a sunny day, there's

22:07

a lot of sun in the sky, a lot of solar power

22:09

being generated. We want to be encouraging

22:12

our buildings to use more energy because

22:14

it's going to be cleaner. When that sun

22:17

sets sort of around 6:00 PM, we want to start

22:19

to be a little bit more stingy and really focus

22:21

on energy efficiency in these periods. So

22:23

it's a question of as to when

22:26

we're using energy as opposed to how much, and

22:28

then that unlocks new opportunities to reduce carbon,

22:31

doing things like demand management load shifting,

22:33

and 24/7 renewable energy procurement.

22:36

So we're not dependent on buying credits,

22:38

be they carbon offset, solar renewable energy

22:40

certificates. So it's a project I'm

22:42

really, really excited about. Almost as excited

22:45

as I'm about all Little BIG work that Sarah and co

22:47

. are doing. We've got a white paper out , we've

22:49

just released an ESG report that includes some baseline

22:51

reporting. So if you want to reach out

22:54

and my details, I don't think there are too many Ian Lieblichs on

22:56

the internet, so if you search that, that's

22:59

I before E, except after C of course, I'm

23:01

happy to dish out more information and of course

23:03

have that conversation because we're very excited about

23:06

that piece of work.

23:07

Thanks, Ian. That sounds amazing.

23:09

And we'll be sure to put links on

23:12

the podcast page as

23:14

well . Thank you so much for

23:16

your time.

23:18

Thanks Su-Fern. Thanks for having us.

23:21

I absolutely love what you've

23:23

done with Little Big House and the focus you have

23:26

on delivering great social outcomes

23:28

as part of your ESG strategy. Thanks

23:31

for tuning into this latest episode of Talking

23:33

Property with CBRE. If you'd like this

23:35

show and want to check out more, visit cbre

23:38

. com.au/talking-property or

23:42

subscribe through Spotify and Apple Podcasts.

23:45

Until next time.