42 nd AUBEA Conference 2018: Educating Building Professionals for the Future in the Globalised World The importance of environmental sustainability to obtain finance for port developments in Australia and Indonesia Haya ALDaghlas 1 , Felix Hui 2 , Colin Duffield 3 12&3 School of Engineering, The University of Melbourne, Parkville 3010, Victoria, AUSTRALIA E-mails: haya.al@unimelb.edu.au; kin.hui@unimelb.edu.au; colinfd@unimelb.edu.au Abstract: Major ports in Australia and Indonesia that adjoin major cities seek private finance to support capital investments. Competition for both local and international investors is high, and while there is significant interest as financiers seek to diversify their portfolio, there are also concerns regarding the long-term sustainability of investments due to environmental legacies associated with many ports. Potential sources of pollution include water, air, and soil. In the meantime. Environmental expectations from investors, like the World Bank, generally have conditions imposed on loan agreements dictating their environmental sustainability expectations. This study examines the importance of environmental sustainability to obtain finance for port developments and deduces that required upskilling of port organisations if finance is to be secured for new developments. Having undertaken a critical review of the literature, the study reports the findings of a detailed questionnaire of government officials, financiers and operators associated with ports in Australia and Indonesia. Findings from this research propose that the port industry should invest more in educating port internal and external stakeholders on the importance of environmental sustainability to port development and daily operations. Not only to be able to attract more private finance to port development projects but also to ensure that the environmental regulations are being well understood and implemented. Keywords: Environmental Sustainability, Internal Finance, International Finance, Ports. 1 Introduction Seaports are considered potential sources of pollution that includes water, air, and soil. As a result, achieving environmental sustainability in port is of great concern not only for relevant authorities but also policy-makers, and the general public (Acciaro et al., 2014). With several stakeholders associated with the port industry, port authority and government are recommended to work together to design and select policies not only aiming at enhancing the environment but also at having a positive social impact (Jong- Kyun Woo et al., 2018). While the majority of the research literature focuses on interests of the main stakeholders of the port such as the port authorities, governments, policy maker, and the local community, there is not much said about private investors in ports. This is important as the latest trend in finance options involve transferring the port ownership from the government to the public sector (Chen et al., 2017) This research investigates the importance of environmental sustainability to obtain finance for port developments in Australia and Indonesia. This paper presents the findings of an online questionnaire of government officials, financiers and operators associated with ports in Australia and Indonesia, to indicate the 156. 157. 42 nd AUBEA Conference 2018: Educating Building Professionals for the Future in the Globalised World importance of environmental sustainability in port development projects. To investigate the importance of the role of environmental sustainability to obtain finance for port developments in Australia and Indonesia, an online survey was used to survey government officials, financiers and operators associated with ports in Australia and Indonesia. The survey results show most of the respondents considered environmental sustainability as important in attracting both international and local finance, as well as the overall importance of port performance sustainability. As the research is at the initial stages, the survey results combined with the existing literature can lead the way to the next step. An in-depth investigation on how the involvement of private investors reflect on the importance of environmental sustainability, what measures are in place to ensure the investor’s awareness and commitment to the environment, and how to ensure that the environmental practices are not only in place but also are being followed. 2 Literature Review 2.1 Commercial outcomes and Environmental awareness In a study conducted to examine the factors that drive company investments in green innovation by (Saunila et al., 2017) it was found that there is a positive correlation between the decision to invest in green innovation and the company values towards a wide range of sustainability dimensions. Nevertheless; it is not only the company values that impact investment decision but more importantly is the people who actually make the decisions and sign the paperwork. Finance executives who choose to take an outstanding role in sustainability triple bottom line, they need to include sustainability in their costing scheme, investment decisions, and in the reward and performance measures (CFO, 2008). Siegel (2009) argues that companies must practice green management only when it is in the interest of the company and its shareholders and not only from a moral, social perspective. In addition, Siegel states that companies should be sceptical about management decision allocating resources for environmental and social responsibility without a logical return on investment to ultimately maximise the company wealth. Consistent with the quantitative study conducted by (Besley and Ghatak, 2007) which shows that companies engaged with environmental groups will earn lower profits, but at the same time companies that gain reputation in support of good actions may earn higher profits. The debate whether investing in sustainability contradicts with firms goal of maximising profits seems to be settled in the new framework proposed by (Schoenmaker, 2017) for sustainable finance. Schoenmaker argues that the traditional model of maximising profit for shareholders has a short-term prospect. Whereas the new framework suggests looking at a stakeholder approach that aims to create stability in the Triple Bottom Line is more long-term focused. In Australia, the Responsible Investment Association Australasia (RIAA) is a peak industry body that represents investors in Australia and New Zealand who choose an ethically responsible approach in their investments, including sustainability-themed investing. In 2017 the RIAA announced that responsible Australian investments are outperforming mainstream investments due to the growing market towards responsible investment (RIAA, 2017).