Sustainability is gaining a resurgence as the economy stabilises and, as an industry, we are looking towards growth over the next few years. As a subject, it had certainly dropped off the agenda during the dark days over the past five years but twin drivers around resource efficiency and costs are leading towards a future of constraints that will affect all businesses and their supply chains.
2014 saw the publication of the 2nd Sustainable FM Index, which assessed the top FM organisations against a rigorous set of criteria to validate the services being delivered. There are a number of emerging trends that are being evidenced through the Sustainable FM Index which are described below. These trends have not been provided in any particular order, but some have a greater level of certainty due to regulatory drivers that are underpinning them.
Overall Sustainability Progress
Through the Index, the Index Assessment Model shows the sustainability performance for all the 27 participating organisations from the Sustainable FM Index. The 21 criteria within the Index have been split into a Management set and an Implementation set of criteria.
- Management: outlines what the strategy is going to be for the company in terms of sustainability.
- Implementation: deals with how the strategy will be delivered.
When activities are split into management and implementation, there are a few clear indications that can be seen. Implementation has risen among listed companies by 5% over the last year. This supports the finding that “Since 2007, there has been significant progress in the implementation of the sustainability policy within organisations”, due to legislation and increasing pressures on FM organisations to demonstrate their Corporate Responsibility.
Management scores have decreased over the past year, falling by an average of 4%, despite the emergence of new legislation to help engage senior management with sustainability issues. The 2014 BIFM Sustainability report states that the ability of facilities managers to drive organisational change is still constrained by poor communication and a lack of robust and granular data; “overcoming these weaknesses is critical to delivering a sustainable FM service provision”.
Management Versus Implementation
There are two key trends that can be observed from this assessment. The first relates to the position of private FM organisations being on the same trajectory, but much further behind those that are listed. There is a clear journey that FM businesses take as they mature in embedding sustainability within the organisation.
The second key trend is the short term nature of sustainability within FM, demonstrated by a closer alignment on a 1:1 basis between the implementation and management scores. This correlation infers that as strategies are developed, they are implemented relatively quickly. This also gives rise to a lack of longer terms thinking being planned and forward assessment of likely impacts – evidenced during the assessments. Private companies are following the same trajectory but are much earlier on in the journey.
The worrying part of this trend is that it fails to take into account some of the longer term trends being seen around resource constraints, skill shortages and wages to understand the risks to the business and to mitigate the issues.
Energy is now intrinsically linked with the management of buildings and seen as a pre-requisite for FMs to deliver as part of their service. Legislation such as the Carbon Reduction Commitment and voluntary indices such as GRESB are highlighting the increasing linkage between energy performance of buildings and their asset valuation. Indeed, the proposed minimum energy performance standards due in April 2018 will make poor performing buildings unlettable, which is having an impact on the sale price of current properties.
However, whilst the property sector is seeing the perceived link between energy performance measured through Energy Performance Certificates and BREEAM assessments, what is the role of FM as part of this. FM for the large part in commercial properties is still related to the management of the building – the provision of maintenance services based upon a suite of indicators related to work order completions and meeting compliance requirements. Energy management however is related to the procurement of energy, its metering to enable completion of the regulatory and corporate reports and also identify efficiencies. Often these two roles are separate entities and not linked together.
The linkage between the two roles – one of management and the other of implementation – to enable the changing of specifications is not incentivized sufficiently and becomes more acute where outsourced parties are being used purely because of the contractual issues related to delivering a service. There is already evidence of organisations taking business back in-house as a result of this challenge.
The increasing costs associated with the consumption of energy, together with viable means to reduce usage and reporting imperatives means a continued focus on this area. For FMs, this will require a different contractual approach to incentivise change in behaviours and management, which are recognised as the main streams for reduction. The trend is moving towards energy and maintenance being treated as an outcome based service as opposed to a set of measurable input criteria allowing for greater alignment with client requirements and scope to link knowledge between the maintenance, energy management and finance disciplines.
Wellbeing and its benefits have been a hot topic this year with the release of the Governments review: Does Worker Wellbeing Affect Workplace Performance and the World Green Building Council report on the subject. To perform at the top level organisations must take part in regular two way dialogue with staff, including POE studies to optimise working conditions, productivity and wellbeing. Evidence should be provided that practices have been used to achieve reduced sickness and turnover rates. FM has a role to play in providing the face and environment that their customers operate within – from the first person engaged within the business (reception or security) through to the ambience of the space. Better understanding of the wellbeing issue can help to deliver a better experience.
Whilst evidence that the design of an office has a material impact on the health, wellbeing and productivity of its occupants is well known, the information does not translate into the design and financing community. The need for a different discussion to present the evidence base is compelling and heightened by the lack of skills in certain parts of the industry.
There is a slow progression towards a better understanding of these benefits. M&S will be focusing upon this area to understand the linkage but also to measure the benefits that a healthier workplace has on the wellbeing of both staff working in the building and the customers. The real value is simply that the cost benefits associated with improved performance of those in the building will far outweigh the savings from direct environmental initiatives. Linking the two together delivers a clear imperative of the need to change and the value behind it – cost, environment and people.
Living Wage and Employment Issues
Across many urban areas, and particularly London, FM employs some of the lowest paid individuals in the property. Momentum is now gaining around FMs using the Living Wage for roles including cleaners, security and catering personnel. However, as Living Wage continues to outstrip inflation pressure will come to customers and FM providers to look at alternatives.
The cost of living has been raised many times and most recently Glasgow City Council has sought its FM providers to ensure the living wage is provided as part of the contract to deliver services for the Council. The UK Government has a similar intent as part of the FM Contracting Model tender that is underway.
Whilst not necessarily a trend, there is a forward crunch point that will appear whereby the increasing Living Wage for FM staff will significantly outweigh savings that may be generated leading to a moral question that will be asked of by those procuring the service.
Effective implementation will require a change in not only the contracts that are in place, but also the way that these activities are measured as part of service delivery. Increased focus should be placed upon the end provision and outcome base.
Sustainability has been re-booted from the doldrums seen over the past few years. An understanding of the value and benefits that can be gained from effective implementation within a business – not just efficiencies in energy and waste, but also improving productivity of staff and their wellbeing.
Organisations are starting on this journey to fully embed the concepts of sustainability within the business as an integral part of the operational activities. To do so will require some fundamental changes to the way we currently measure performance and enable contracts to be developed which in many cases hinder the ability for sustainability to take place.
For FM, this will become the difference between those organisations that can support their clients and those who cannot. Watch this space – the next few years are looking to be quite exciting!