You’ve probably come across terms like Green Star, WELL, NABERS, ESG and Net Zero when discussing commercial property, but what do they actually mean for your business?
For commercial tenants, sustainability is not just a building feature. It can influence your property shortlist, fitout decisions, lease obligations, reporting requirements, outgoings and long-term workplace value.
Here’s a breakdown of the key sustainability terms every commercial tenant should know and how they add value.
Green Star is Australia's leading sustainability rating system for buildings, fitouts, and communities. Administered by the Green Building Council of Australia (GBCA), it evaluates a a project’s sustainability performance across categories such as:
Projects are rated on a scale of 1 to 6 stars, with 4 stars (45-59 points) signifying ‘Industry Best Practice’, 5 stars (60-74 points) denoting ‘Australian Excellence’, and 6 stars (75+ points) representing ‘World Leadership’ in sustainability.
Unlike some rating systems, Green Star certification does not expire. Developed in Australia, it has become the de facto rating system of choice nationwide and is recognised globally for its rigorous standards.
For tenants, the key question is what has actually been certified: the building, the building’s operation, or the tenancy fitout. A Green Star-rated building does not automatically mean your own office fitout has been certified.
This matters if your organisation has ESG requirements, sustainability targets or reporting obligations that require a specific certification outcome. Before relying on a Green Star claim, ask which rating tool was used, what scope was certified and when the rating was achieved.
Tenant takeaway: Green Star can help tenants assess environmental sustainability, but the rating needs to be understood in context. Do not assume a building-level rating covers your tenancy fitout.
NABERS (National Australian Built Environment Rating System) is a national sustainability rating system. Unlike design-led rating systems, NABERS focuses on actual building performance areas such as energy use, water consumption, indoor environment quality (IEQ), and waste management. The NSW Government administers this system and uses a 1 to 6-star rating scale, with 5 or 6 stars indicating strong performance in sustainability metrics.
For tenants, NABERS is useful because it shows how a building or tenancy performs in use, not just how it was designed. A stronger NABERS Energy rating may support energy efficiency, lower operating costs, and internal sustainability objectives.
NABERS has been in use for over 25 years in Australia and has gained international recognition, with the program now being used in countries like the UK and New Zealand.
For office buildings, a NABERS rating is required by The Commercial Building Disclosure Program when leasing or selling any space larger than 1,000 sqm. The rating must be renewed annually to remain valid. The NABERS Energy Tenancy Rating (which evaluates the energy efficiency of office interiors) remains voluntary but can provide valuable insights for businesses seeking to improve sustainability within their leased spaces.
Tenants should also understand whether they are looking at a base building rating, whole building rating or tenancy rating. Each measures a different scope, so the distinction matters when comparing buildings or assessing lease obligations.
Green lease clauses may require tenants to avoid negatively affecting a building’s rating, but standard office tenants are unlikely to materially affect the base building rating unless they have unusual operational needs, such as significant after-hours air conditioning or large technology loads.
Tenant takeaway: NABERS can help tenants compare operational performance, but ask what is being rated and whether your use of the space could create additional costs or obligations.
Administered by the International WELL Building Institute, WELL is the world's first health-centric building rating system. WELL v2 is structured around 10 concepts that focus on health and wellbeing intents within the built environment:
Buildings earn certification at the following performance levels:
WELL is recognised globally as the premium certification for health-focused organisations, with nearly 500 million sqm of space certified across more than 130 countries. Its standards are upheld through on-site testing and laboratory validation, ensuring that every health-related initiative is scientifically supported.
As the certification of choice for health-conscious organisations, WELL has been adapted to local contexts worldwide, making it the leading standard for those prioritising occupant well-being. The certification must be renewed every three years to keep the health and wellness features of a building current and effective.
For tenants, WELL is relevant because it connects sustainability with workplace experience. While Green Star is more focused on environmental performance, WELL focuses on the conditions that affect the people using the space.
This can be particularly useful when comparing offices for staff experience, return-to-office strategies, amenity, and workplace quality.
Tenant takeaway: WELL is worth considering when the goal is not only a more sustainable office, but a healthier, more comfortable, and more attractive workplace.
This is a globally recognised green building rating system developed by the U.S. Green Building Council. USGBC describes LEED as a globally recognised framework for healthy, efficient and cost-effective green buildings.
For Australian tenants, Green Star is often the more common local framework, but international organisations may have global requirements linked to LEED.
If LEED is requested by a parent company or global sustainability team, tenants should clarify whether a local rating, such as Green Star, can satisfy the same internal requirement.
Tenant takeaway: Global sustainability requirements should be clarified early, before buildings are shortlisted.
Net Zero and Zero Carbon are closely related terms, and they are often used in similar ways. The important distinction is the scope of the claim.
Net Zero generally refers to the goal of reducing greenhouse gas emissions as far as possible, then balancing any remaining emissions through removals or offsets. In commercial real estate, this may relate to a building, tenancy, fitout, organisation or another defined emissions boundary.
Zero Carbon is often used in property to describe a building, fitout or asset with no net carbon emissions within a defined scope. Depending on the claim, this may relate to operational energy, embodied carbon, renewable energy use, offsets, or a combination of these.
Carbon emissions, in a building context, usually fall into two key categories:
In Australia, the recognised government-backed certification is generally referred to as Carbon Neutral certification by Climate Active.
An important question for tenants is what the claim covers. Does it relate to the base building, the whole building, the tenancy, operational emissions, embodied carbon, offsets, or a specific certification pathway?
This matters because a building can make a strong sustainability claim, but that claim may not automatically cover your tenancy, your fitout or your organisation’s reporting boundary.
Tenant takeaway: Before relying on any Net Zero or Zero Carbon claim, ask what has been measured, what has been reduced, what has been offset and whether the claim supports your own sustainability requirements.
Embodied carbon is becoming increasingly relevant to fitout decisions, fitted space, reuse of existing infrastructure and make-good obligations as this emission is connected to furniture, workstations, flooring, partitions, joinery, glass, ceilings, building services, installation, removal and disposal. As a result, if a tenant can reuse an existing fitout, retain existing infrastructure or negotiate landlord-delivered works, this may help reduce unnecessary waste and support sustainability commitments.
Tenant takeaway: Do not assess fitted space only on how it looks. If it suits your business, an existing fitout may reduce capex, shorten the relocation programme and reduce the carbon impact of building from scratch.
ESG refers to a set of externally regulated criteria that companies use to measure and report their environmental and social impact and their internal governance practices. What sets ESG apart is that it's quantitatively measured and directly tied to a company's financial performance and overall business valuation.
A key feature of ESG is that it is linked to measurable, company-wide goals, with progress reported in audited financial reports. Because of this integration with a company's financial structure, ESG performance is closely scrutinised and tracked against annual targets. It is not just about doing good; it's about ensuring that sustainability and social responsibility are embedded in the company's core operations and have a measurable impact.
Focus areas:
Australia’s mandatory sustainability reporting requirements are being phased in across three reporting groups. Australian Securities & Investments Commission (ASIC) states Group 1 applies from financial years beginning on or after 1 January 2025, Group 2 from 1 July 2026 and Group 3 from 1 July 2027.
Therefore, before any major leasing event, tenants should separate “must-have” ESG requirements from “nice-to-have” sustainability preferences. This helps with external reporting and avoids shortlisting buildings that can't meet internal reporting, procurement, or board-level requirements.
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CSR is a broader concept that includes a company's efforts to contribute to societal goals, often by supporting sustainability or charitable initiatives. Unlike ESG, CSR initiatives are typically qualitative and self-regulated, meaning they are not tied to a company's financial performance or annual targets. Instead, CSR focuses on social and ethical responsibilities and is often implemented through a company's culture, values, and brand management.
While CSR may not directly affect a company's business valuation, it contributes to the broader benefit of society, enhancing a company's reputation and building goodwill. These initiatives are more about fostering positive relationships with communities and stakeholders rather than achieving specific financial outcomes.
Tenant takeaway: If sustainability is part of your CSR strategy, the focus may be on practical improvements: choosing a more efficient building, reducing waste, reusing fitout where suitable or improving the employee experience. If it is part of your ESG policy, it should be built into the property brief from the start.
Sustainability in commercial real estate refers to practices directly linked to a project or building’s certification targets. It takes into account both qualitative and quantitative factors, blending self-regulation with external verification to ensure measurable impacts. While often related to financial performance and business valuation, sustainability also promotes long-term resilience in business operations.
A key part of sustainability is balancing immediate needs with future growth. As the UN World Commission on Environment and Development famously defined it: “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Tenant takeaway: The most achievable wins for tenants often come from practical lease and fitout decisions: choosing the right building, understanding which ratings matter, reusing existing fitout where suitable, managing after-hours costs, clarifying make-good obligations and asking for evidence behind sustainability claims
Understanding sustainability terms is useful. Knowing how it affects your lease is where the real value starts.
Tenant CS helps tenants look beyond the credentials. We compare buildings, fitout options, lease terms, and sustainability ratings to find the right commercial outcome for you.
We acknowledge the Traditional Custodians of the lands on which we work. Our offices are located on the land of the Gadigal peoples of the Eora Nation and the Wurundjeri peoples of the Kulin Nation. We acknowledge their continued connection and contribution to land, water and community, and pay our respects to Elders past and present.
We’re proud to be an inclusive workplace, where diversity in all its forms are valued and every member of our team is encouraged to bring their whole self to work.
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