“A lack of transparency results in distrust and a deep sense of insecurity.”
So said the Dalai Lama at any rate. Here at the Sustainable Facilities Management Index (SFMI) when we are trying understand an FM firms operations we look to their publicly available information and ‘trust’ it informs us of facts and figures that help us make decisions – whether that be for tender contracts, collaborations, or investments.
We know that clients want to know that their suppliers are delivering what they promised. But how can people check exactly what is being achieved before they enter into a contract? There are several possible sources of information, including:
- Financial reports and governance details
- Corporate websites and reporting
- Submissions to third party organisations such as CDP and DJSI
Acclaro Advisory’s annual Sustainable FM Index is the only index focused specifically on facilities management and each year reviews publically available sources of information for leading UK FM providers. The data gathered acts as a resource on how transparent these service providers really are, also advising on how they can improve in the future.
We have found that more often than not FM providers actually sell themselves short in the public sphere. Our index utilises something called the Average Initial Assessment Score which measures the difference between what a company says they are doing with regards to sustainability and what they are actually achieving. In 2015 companies were found to be roughly 10 per cent better than they thought they were, or at least than they said they were (46.2 per cent compared to 56 per cent).
One of the biggest things we picked up on was the noticeable gap between publically listed and privately owned companies when it came to transparency. The SFMI assessed organisations against criteria that are interpreted as ‘management’ including:
- Risk Management
- Board Commitment
- Management Systems
Also we assessed them on criteria that are interpreted as ‘implementation’ such as energy and circular economy. When we had all the information and results we found that privately owned, out-sourced FM providers had an initial assessment score average of 26 per cent for the management of sustainability, and 27.5 per cent when it came to implementation. In contrast publically listed FM providers had a score of 51.3 per cent and 46.8 per cent respectively.
The SFMI theorises that this may be down to whether organisations are obligated to report publically on what they are doing. The implications of this are that all potential clients and investors are reviewing the information and seeing that your average out-sourced provider of FM services have a 50 per cent deficit in ensuring sustainability is managed well, whether the companies themselves are well-equipped or not. Even the highest management score was only just breaching 70 per cent sustainable.
This is important to note because the outsourcing facilities management sector isn’t articulating what it is doing. The service providers as a whole are failing to explain to clients exactly how and where it is adding value to their sustainable initiatives.
Where the Index does come into its own is through the direct review of organisations performance through face to face assessment, limiting the potential for miscommunicating responses.
So, bearing all of this in mind, how can the firms improve in the future? At present very few are seeking third party verification of the data they are reporting. An even smaller number are demonstrating how they are backing sustainability in financial terms. Whether this is through the money they spend on training, incentives coming from the board or something else, it needs to be articulated.
Demonstrating both financial and non financial reporting timeframes is important, as is ensuring your organisation has the confidence to use and report on non-financial indicators. When the SFMI measured the companies ability to do this on a scale of zero to five the average score was 1.6.
Clearly expressing exactly how you deliver best practice as standard procedure is a key step in moving away from tokenistic sustainability and ensuring that your corporate values are not compromised by client priorities. In future articles the SFMI will explore the sustainability ceiling and explain exactly how and why business models need to be adapted.
At this moment in time the facilities management sector doesn’t have a clear voice when it comes to reporting these sorts of issues. It needs to learn how to trumpet its achievements. It needs to learn to explain exactly how it is adding value to clients and the buildings in which it operates.
Where and when timely performance is reported there is often a limited amount of authentication taking place. This leads to “green-washing” and expressions of service-as-standard whereas in reality companies are performing in contract-specific vacuums.
The SFMI has an annual vision and it is to empower both clients and service providers by highlighting best practice and increasing an awareness of what excellence in the sector looks like. There is much that is excellent in the industry which should be shouted about. There are also areas which can be improved, but they won’t be if the industry doesn’t discuss the issues.
Once we start doing this it will be much easier to build trust into contracts. This is absolutely essential in the early days of any new relationship.