When super returns meet environmental returns

August 2017

Simon Casson Photography

If you had to think about which companies might be making substantial inroads into environmental sustainability, an airport mightn’t immediately spring to mind.

Adelaide Airport Limited, in which UniSuper owns a 49% share, is doing just that. In 2016 it became the first Australian airport recognised by the global Airport Carbon Accreditation program, cementing its place as an aviation leader in sustainability.

In 2016, AAL finished installing a multi-million dollar solar photovoltaic system, at the time making it the largest airport solar rooftop system in Australia.

Just over a year later, the installation is already achieving its desired effect—cutting the airport’s carbon footprint. It’s expected to eliminate about 915 tonnes of C02e annually and generate around 8.5% of the company’s total electricity use.

The system is also paying financial dividends, generating a return on investment of 13.1%, with a ‘payback’ period of eight years. It’s a sound result, and an especially important metric for commercial renewable projects.

AAL Managing Director Mark Young says the significant capital investment in the solar rooftop system was justified on the basis of the many benefits to the overall business.

“The financial benefits include reducing utility costs and mitigating the risk of rises in electricity costs—a material issue for South Australian business in the immediate future.

“Other benefits include achieving our 2019 carbon reduction target, increasing energy self-sufficiency, meeting investor environmental, social and corporate governance (ESG) risk expectations, as well as enhancing Adelaide Airport’s brand,” he says. The rooftop system will also assist the South Australian Government’s Renewable Energy Target—to produce 50% of the state’s power by renewables by 2025.

Captains of industry

Since the installation, AAL has been approached by numerous companies seeking to learn about the business case development, including tendering processes and technology trends.

“We’ve been keen to share our insights with others to support the expansion of commercial-scale solar in South Australia and nationally—whether it’s driven by a commitment to reduce carbon emissions, drive down operational cost, or both,” Young says.

The solar installation was also useful for the company’s future planning due to the evolving nature of such projects. “While we eventually settled on a different system design to the one we originally proposed, the process required we swiftly improve our understanding of solar technology.

“It gave us the knowledge to have more productive negotiations throughout the tender phase and ultimately deliver Board approval,” he says.

New departures

AAL is in the process of conducting high-level feasibility assessments on a number of other potential projects, including ground-mounted solar at Parafield Airport, other rooftop systems, and waste-to-energy technology for accepting terminal and operations waste at Adelaide Airport.

“We were also recently awarded $1 million from the South Australian Government’s Future Mobility Lab Fund for the introduction of electric autonomous buses at Adelaide Airport.

“A detailed feasibility assessment is underway and, if the outcomes are supported, it will provide a shuttle service between the terminal and long-term car park, replacing the current diesel-powered bus fleet,” Young says.

Carbon reductions in full flight

Young says such projects help to deliver on the company’s goals to reduce per-passenger electricity consumption by 10% and related greenhouse gas emissions by 2019.

“With the operation of the solar PV array since March 2016, we are well on the way to achieving this goal—and in fact, the array will enable us to achieve our carbon goal in the space of a single year,” he says.

Over the past five years, the company has reduced per passenger electricity consumption in the terminal by 10% and overall per passenger greenhouse gas emissions by 17%.

In achieving year-on-year emission reductions, AAL has focussed primarily on electricity efficiency projects and renewable energy.

In other areas, the company has significantly renewed its vehicle fleet towards more fuel-efficient models, including replacing three petrol cars with the fully electric plug-in Nissan Leaf. It has also run successful forums which have led to initiatives to influence its stakeholders in reducing their carbon footprint, such as aviation taxiing and flight efficiencies that reduce fuel burn and proposals for future introduction of biofuels, among other programs.

Happy travellers

And it’s also worth remembering the tangible benefits for travellers.

“The project doesn’t just have the potential to offer a low carbon transport solution,” Young says. “[We also believe] it provides superior customer service and showcases an emerging technology.”

​UniSuper’s engagement

As a major direct investor in Adelaide Airport and other major commercial property assets (including Sydney, Auckland and Brisbane airports), UniSuper has influence over—and high visibility of—the companies we invest in. We also directly engage with companies on climate and other environmental risks, ensuring these risks are being managed appropriately.

In this way, we look forward to maintaining our mutually-beneficial ongoing relationships with our major investments.

Learn more about our approach to responsible investing.

This isn’t intended to be an endorsement of any securities named above for inclusion in personal portfolios. The above material reflects UniSuper’s view at a particular point in time having regard to factors specific to UniSuper and its overall investment objectives and strategies.