Implementing meaningful sustainability

Implementing meaningful responsible business attributes within the built environment requires engagement of all levels of the chain – the developer, constructor and operators of facilities. Increasing complexities of roles and knowledge involved means this is no longer possible through a single body or simplified framework across the property lifecycle.

Acclaro Advisory and the SFMI (Sustainable Facilities Management Index) are delighted to be a major contributor to a collaborative approach in partnership with RICS. The aim is to create the new model necessary to transfer knowledge of sustainability through the property lifecycle. Sunil Shah, MD of Acclaro Advisory will be chairing a series of discussions across the globe, with the SFMI team developing and building upon the necessary discussions to develop a single approach for the industry.

Why?

For a long time, collaboration has been key for organisations to deliver sustainability; it has been the subject of many reviews within the property sector from the Latham Review in 1994 through to the present discussions from the Hackett Review. We have experienced a rise in dialogue develop between a client and their major suppliers, together with a governance system between the two stakeholders. Much of this is measured in more complex projects to improve performance and outcomes – great news for the parties involved!

Professional bodies, on the other hand, are showing a different approach to advancing the sustainability agenda. An increasing number of groups are jostling for position and funding. They are focussing on what separates or differentiates themselves from their peers. However this doesn’t promote a sector or an industry in a cohesive way, nor does it show leadership internally or externally. Discussions are blighted by arguments over semantics (the most recent is that experienced on the definition of Social Value), and with so many opinions there is little room to tackle key areas that would give consistency and a common approach for the good of the sector.

What we need is a more joined up structure

RICS have been taking a lead on one area related to Responsible Business. As the appointed Chair of the Forum, I (and our partners at RICS) see the importance of collaboration across the delivery lifecycle for two main reasons. First, is to ensure that as a collective we are working together and that multiple points will drive changes in behaviour and the need to comply. Secondly, simply, is that no organisation knows everything and that to build a practical response spreading over the lifecycle of a property requires a number of actors knitting their specialisms together.

The journey that we have been on in the sustainability sphere has promoted environmental specialisms including energy, waste and water, largely because they were easy to measure and understand. Social aspects have been considered by organisations for a long time, slowly becoming more widespread. For example, it formed a fundamental part of the London Olympics legacy programme.

In fact, volunteering and philanthropy have been easy wins for businesses to prove corporate responsibility with minimal strategic considerations. However, we haven’t had a structured approach. Since 2010, there has been a step change in the role of society within the sustainability framework.

Regulation in supply chain management (through Modern Slavery and Social Value ), the conceptualisation of wellbeing (through mental health awareness and workplace productivity), and increased competition for talent have driven employee development up the agenda.

Looking into the future, we can see the increasing trajectory of societal and community needs as part of the built environment dovetailed into environmental requirements. Assessments of place and occupier services will be based upon the provision of these services and engagement with the community to drive improved satisfaction, a safer environment and a location where people want to work.

Technology will play a significant role in this. The deployment of technology is driving the collection and use of data, but we have yet to answer the question of who owns this data. We are entering into space where knowledge is being captured that can denote the behavioural characteristics of individuals to help provide a tailored working environment. Should individuals be made aware of the data held and how it is used? Protocols are necessary –technology and data are a vital part of our necessary progress. – but a negative perception can damage the brand of an organisation quickly.

The Solution – The Responsible Business Forum

So, RICS has been working with Acclaro Advisory, UKGBC, Arup, Business Services Association and others to capture insight and identify solutions required for a responsible business to operate property assets. This work aims to influence the corporate culture, operational level and interaction with the supply chain to ensure the long-term sustainability of the built environment. See here our opening discussion in the UK, and the finding that we took home from a business leaders roundtable event.

Utilising partners, frameworks, tools and events from across the world, we will look to capture the knowledge, benefits, challenges and risks that will affect the management of property and integrate responsible business practices that will improve society and the environment that we live in.

RICS is calling on strategic thinkers and decision makers across the supply chain who have a desire to embed responsible corporate values in their business, to join the conversation. Together we can deal with challenges and look to shape clear solutions and drive responsible business leadership.

Visit the RICS website and download the RICS Responsible Business Leaders Forum summary report to gain further insight
To get involved in these discussions and for further information on what RICS is doing in this area, contact us or get in touch with Ana Bajri, Property Standards Project Manager, RICS 

Article Image : RICS

 

It is a year since the collapse of Carillion and we have accepted that the facilities management side of their business was not the result of the failure. Important lessons have been learnt from the downfall and progress made by both the Government and the industry towards rectifying problems. This article looks at a number of these areas from the perspective of supplier activities and gives an insight into how the Sustainable Facilities Management Index (SFMI)  can help you to manage these activities.

SUPPLY CHAIN RISKS

One area of real change has been the management of suppliers. In the past, suppliers were used as an extension of the balance sheet to delay or avoid payments should cash flow get into difficulty. As a result, many suppliers have gone into administration, and many more livelihoods have been impacted. Suppliers have recognised the high risks of relying on a single client and vice versa.

The Government is asking suppliers to draw up ‘living wills’ to protect against supply chain risk. The Sustainable Facilities Management Index (SFMI) looks to incorporate these changes into the relevant sections of the assessment to understand how they are being delivered with an ongoing low margin model. The SFMI continues to drive best practice across all aspects of sustainability to the industry and sees these issues as a method to improve the reputation of outsourcing tarnished by bad practices.

SOCIAL IMPROVEMENTS

Greater responsibility is being mandated to clients through regulation such as Modern Slavery Act and the Social Value Act. This is driving a different conversation for both clients and suppliers.  In particular, the role of social value has significantly increased as we look for different metrics to the simple financial ones to base decisions on.

Clients need to understand which social and environmental improvements are necessary and which suppliers can be engaged to help deliver them. This will require a mapping exercise to understand the local community needs. These needs can be aligned with the values of the organisation to develop a longer-term programme.

RESPONSIBLE BUSINESS APPROACH

Developing a deeper relationship with suppliers is necessary to enable two-way dialogue, transfer of knowledge and the understanding of what true value and innovation can be achieved. The SFMI has supported several supplier workshop programmes to help critical suppliers understand the main environmental and social impacts and to foster a dialogue to deliver shared services.

These themes play a fundamental role in a responsible business approach. The SFMI is driving this approach in FM – there is a long way to go, but there are some real cases of best practice out there to learn from. You can read the latest reports and Research from the SFMI here.

If you are an FM service provider, being part of the SFMI in 2019 will give your company the pathway it needs to be managing and implementing key issues that a responsible business needs to address.

Clients that procure FM services can also benefit from the SFMI. Look out for our tools that you can use to quickly assess if your FM is providing real long-term value by managing environmental and social issues responsibly for you.

Your Sustainability Shopping List

We are almost at the end January and there is already a growing list of activities and aspirations for the proactive Sustainability Manager in 2019. It’s now time to focus on the priorities of a Sustainability Manager.

If you are looking for inspiration, and want to freshen up the tired strategy from previous years, read on. Before reading Acclaro’s top 5 sustainability priorities, we should remind you that underpinning all of these areas is the need for good quality data to be captured and interpreted. Without which little can be achieved.

1. Developing a Social Value Approach

Globalisation offers many positives, but the drive for cheaper goods and services has affected not only, supply chains but also the communities that companies work within.

Social Value is currently measured on the value and impact of the corporate, rather than the benefit derived by the community. Some are scrambling to measure a monetary value. Assessing the benefits that supply chains can bring, or engaging with communities we operate within, is surely the first logical step.

We suggest, take a step back. The first stage is to understand what already takes place across the business coupled with assessing the needs of the community in which you operate, (or serve if you are a public-sector body). Capturing this information will help to develop a cohesive programme of engagement. This can be structurally managed across internal, supply chain and community programmes. There are many benefits to gain from a social value programme. This includes an increasing number of tenders requiring some form of disclosure of the value you create, so now is the time assess what your organisation can bring to society.

2. More accurate GHG Supply Chain Emissions

The reporting of greenhouse gases provides an ever-greater understanding of how our organisations impact climate change. However, when it comes to affecting change, it can be difficult to understand which areas of a business to target that will yield the most effective results. Carbon emissions from the supply chain is being increasingly scrutinised. Therefore, understanding these burdens and your ability to target them effectively is critical.

Using economic models based on annually updated economic data can map supply chains and associated emissions. The data from industrial Supply and Use tables is combined with emissions factors to create a model that maps national emissions linked with the spend of an organisation. This maps the entire organisations economy using matrix algebra to link environmental and economic data. Save yourself time and move away from the bottom up approach that sees us plot only a small proportion of supply chain emissions very inaccurately. There are other ways of doing it, and you can have a greater impact on climate targets by using correct data to being with.

3. Energy Audits and Reporting

Carbon emissions and energy consumption remain some of the biggest risks and contributors to climate change. The move towards nearly zero carbon buildings is accelerating with standards being developed as part of the wedges associated with science based targets.

The first stage should always be to minimise emissions and the energy being consumed through an effective understanding of how and why energy is used the way it is. Regulations are asking for public disclosure allowing for greater scrutiny and the need for verified and accurate information to be disclosed.

Significant quantities of information exist, but translating this into usable data and tangible outcomes from dynamic systems is the challenge – but can yield significant savings in excess of 15% energy reduction.

4. Environmental Risk Management

Whilst often initiated and implemented as part of management systems, the recent driver for climate and biodiversity related risk evaluation has come from the investor community. The premise is simple and equates to understanding the environment’s impact on you. These disclosures are targeted at mainstream investors and are intended to help them assess whether climate risk is appropriately priced in to their valuation of your company, enabling investors to make more informed decisions

Techniques and approaches for the scenario testing are still in development, but this year will see an increase in the understanding of the risks and early stages of validating the implications. Early movers will benefit from the opportunities available.

5. Building a Responsible Business Culture

Finally, this is the piece that joins the dots together. Business culture is changing and the expectations of new employees and our major consumers are dictating different terms – we now have a language of Purpose.

Responding to the societal pressures, the increased level of data, reporting pressures and investor requirements will necessitate a different response from organisations. And that culture needs to extend beyond the four walls of the sustainability team, into business and towards supplier management and sales programmes.

This is a long journey, that connects together forward risks, social benefits and environmental impacts, a develops a long-term strategy. Ultimately it will mainstream your role, but a concept we need to grapple with is, will it make it redundant? In time, perhaps some day-to-day operational parts. But there will always a need for strategic thinking and forward planning.

Acclaro Advisory wishes you a belated Happy New Year, and we hope to see you at many an event to discuss the direction you are taking for a sustainable future.

Good luck with putting  your priorities as a Sustainability Manager into action.

Joining the Sustainable Facilities Management Index (SFMI) a year ago has given me some unique insight which I hadn’t appreciated before. The Facilities Management (FM) holds great potential to influence the sustainability agenda. There are shining examples of sustainable FM and the SFMI celebrates these in our awards. However, there is a lot of work to be done for many others. Investors, clients, and internal business leaders can all drive the sustainability agenda in FM outsourcing, and now is the time to start.

Corporate Sustainability reporting in outsourced services

In my previous life in sustainability reporting, I admit, I had over-looked the FM sector (as many do). I found that the classic outsourcing corporation did not account for impact within the contracts they deliver. The focus would be on the scope 1 and 2 measurement approach. This boundary-wall approach meant that the measured impacts are minimal and based mainly on office locations. Alongside this, when a major business with outsourcing services responds to a corporate reporting initiative, they would neglect the FM side of this integrated business. Because it would be compared to the heavy industry component (for example) the construction arm. Therefore, the FM business will often fall through the cracks of corporate non-financial reporting, and non-financial risk identification. This historic approach means that many FM businesses have fallen behind other industries in their ability manage sustainability. Times are now changing, and demand for corporate responsibility is rising, so areas for influence are increasing.

So there’s a gap?

There is indeed a gap! An FM manages facilities on behalf of their clients. but are not taking responsibility for reporting on non-financial risk. On the flip-side the client may not be incorporating the FM provider into their sustainability strategy and processes. Meaning a gap in the ability to achieve sustainability targets and running buildings / operations in line with those targets. The gap impacts energy targets at a country and global level, and does not address climate change and energy security. Many do not incorporate the social challenges in the corporation either. For example, employee health and well-being may not be linked through the Facilities management team. Also, there are unrealised savings to be made in energy efficiency and other resource efficiency. The Facilities manager is a problem solver and a pragmatic one at that. They are perfectly positioned to fill these gaps, if they are unleashed and have the resource!

What’s been causing the gap? – A concern for investors and clients

I came into this sector during what can only seem like a dark age in FM. On a media headline level, it seems that in the last few years all hell is breaking loose in the outsourcing sector.  Major outsourcing business have seen share drops (Interserve among a few) and profit warnings, and we have witnessed the collapse of Carillon which brought major clean-up costs to the public purse – one third of its revenue (£1.7bn) came from public FM contracts. Also to private suppliers who will never get paid (there were thousands of them). On top of this, there have also been scandals from the running of the UK’s HM prison’s through G4S, and another major security-based outsourcer has seen regular negative coverage. “So there is a lot of bad press in FM. – What’s your link”, I hear you ask?

I am not naive to think that poor environmental / social management is the cause of these issues. Ultimately, it boils down to the economics of outsourcing. The public and private sector clients decide to outsource services because they want to save money and concentrate on their own business. By outsourcing to a specialist provider, they aim to make efficiency savings under those who do this for a living, and who can incorporate economies of scale.

However, the overwhelming drive to make short-term savings causes a multitude of risk:

  • instability,
  • excessive transfer of risk,
  • low unsustainable profit margins, and
  • a cost focused model that includes many contractual performance stipulations that are weighted in the clients favour which aim to refund money.

It’s a multi-pronged attack on the concept of a sustainable business model. Multiple players are driving this scenario:

1. the customer who wants the cheapest outsourcer at whatever cost. (The UK Government found itself guilty of this after the Carillon inquiry; and

2. The outsourcer whose business model is to undercut the opposition with the aim of rapid market expansion. (We’ve seen how the Carillon model ends up for stakeholders).

So what’s the correlation between profit warnings, the SFMI and E,S,G management?

The “race to the bottom line” is a cause of major systemic issues. Economic sustainability is realistically the bedrock that can drive environmental and social sustainability. What we are seeing at the SFMI is; once those companies fall into this “race to the bottom line” culture, they will start to peel back on their ability to manage sustainability:

  • Reduced corporate Governance,
  • Lack of internal environmental and social impact management, and
  • lack of implementing social value and environmental services into client contracts.

What is left is a stripped back and potentially loss making service with higher risk. By not integrating sustainability into an FM model, it removes them from being part of the solution towards major issues such as climate change. This means a higher risk for investors and all other stakeholders being part of the unsustainable business model. I wouldn’t want to be the supplier of unsustainable business, would you?

Therefore, at the SFMI, we believe that ESG performance of the outsourcer can act as a proxy warning for poor business management.

This year we have seen a number of FM’s fall back in their sustainable FM performance. This simple chart shows 7 large FM providers have dropped from a silver performance level to a bronze (according to the SFMI annual assessment. We are seeing the beginning of a two tiered FM system. Sustainable value added companies (Platinum, gold and silver), and bare basics (Bronze and assessed).

The change of sustainability performance bands for large FM providers

How can the SFMI be used to flag this?

Showing the historic ESG performance based on public data for Carillion against the SFMI criteria

For 6 years the SFMI has been auditing and guiding FM providers so they improve their in-house corporate responsibility agendas, AND (very importantly) to implement sustainability management into their clients contracts. We score companies across a range of 23 topics of sustainability stretching from environmental, social and governance issues against a range of evidence presented. No evidence = no score. Our approach separates the marketing talk from the action.

Therefore, if we start to see FM providers drop in their sustainability performance from year to year, this should raise red flags for those clients and investors who are stakeholders of the company. A provider’s ESG performance can correlate towards the business model  taken by an FM provider. By using an audit based approach rather than a self-reporting approach, we can separate the marketeers from the doers.

Who can get involved, and how?

The SFMI is an assessment for FM providers, however, there are plenty of stakeholders that gain from selecting a sustainable FM business as part of the SFMI.

Clients – Clients who haven’t made the link between their FM and their sustainability goals are missing a trick. Also, if you are selecting your FM contract on cost alone, then you are part of the problem. Using the SFMI is your way of integrating your sustainability goals with your facilities operations, and gaining more value in the long term. Get in touch to speak with us further.

Investors – Seeking to understand the risk in your portfolio is fundamental. The SFMI has been developing a historic database of scoring information that can aid investors in risk management. We do not count carbon, or quantities of water used – We score processes, initiatives and outcomes and how they are implemented in a company and its contracts. This is a unique approach.

FM business leaders – Differentiate your business from the race to the bottom culture. Show your stakeholders you offer value added sustainable FM, with an SFMI audit. By opening your company to a transparent audit against our tried and tested criteria of sustainability, you will gain the path forward. Be a pack leader, not a pack chaser.

A responsible business approach will give long term value to all stakeholders involved.

Contact us today to discuss how we can help you support@SFMI.UK

On the 8th November, the Sustainable Facilities Management Index released its annual insight into the state of sustainable facilities management in the UK. After a summer of assessing 26 major UK FM’s against a tried and tested sustainability criteria, we can offer a look at the 2018 leaders, and our look at the market.

If you missed the event, sign up for our webinar on the 12th December. The webinar highlights key parts of the report, and gives three top rated businesses the chance to tell us how they have developed a sustainable facilities management approach, and the challenges faced to get there.

State of the Market round-up

Two tiered FM – separating those who add value

The SFMI predicts that the FM market is developing into a two-tiered hierarchy.

  1. A top tier of businesses able to evidence successful implementation of environmental, social and governance added value into their corporate management and contractual approach.  The companies achieving the top tier scores are overall winners; Engie, along with fellow leaders Vinci Facilities and Skanska. Then Bouygues, BAM FM, Sodexo and Galliford Try all performing well and looking to gain ground on the leaders.
  2. A second (larger) tier lacking in disclosure and evidence showing how they manage sustainability. They show varying signs of being part of the ‘race to the bottom line’ approach. Many business that offer FM are part of a diversified wider company. The SFMI always focuses on the FM division of the business rather than this wider corporate group. Therefore, an FM business cannot rest on the laurels of corporate wider programme to see them to higher scores.

The SFMI approach shows a need for higher transparency in the FM sector. It also benefits the client interest who are seeking added sustainability value. The SFMI cuts through smooth marketing talk and requires evidence to back-up claims around social value and environmental management.

Sign up for our webinar for insight into what a top tier company does, and how they do it.

Red Flags

Page nine in the report draws comparisons and the concerns about the sector in relation to Carillion’s score from 2013 and the risk of a two tiered market. While the Carillion collapse was not isolated to sustainability and was a complex issue, we can draw signals from the Carillion approach to sustainability over the years which acts as a proxy for the long-term strategy of a business.  The SFMI will delve further into this on our webinar on the 12th, and now we have 6 years of data, we will look to see how data can portray red flags in the future.

Partnerships announced

The SFMI announced two strategic partnerships at its launch event. Working with RICS, the SFMI will play a key role in the establishment of a global approach to responsible business management in FM and the supply chain. This role comes in the form of a series of global forums called the RICS Responsible Business Leaders Forum. The forums will be Chaired by Acclaro Advisory MD, Sunil Shah, and the SFMI is tasked with analysing and compiling the findings from the series of events into a report for RICS. This will be used to build the case for a global approach to Responsible business management in the built environment.

Our second partnerships works on a practical level for the companies taking part in the SFMI. Working with Ditto Sustainability  will help to deliver improvements through three means:

1. Utilise Ditto’s experience with technology, software and data handling to improve the annual assessment approach that we take.

2. Potentially integrate an improved bench-marking approach through technology

3. Provide access to interactive e-learning tools so business can cultivate and integrate sustainability across all levels.

Also, to look out for

Assessed companies will soon receive their scorecards, and partners will be setting up their feedback presentations for the upcoming months – these presentations are a chance for the board room to gain exposure into the feedback that was gained from the audits, and the potential for improvement in key areas of sustainability.

Consultation – The SFMI seeks to improve its approach and is conducting consultations with interested stakeholders. Our discussion will give insight and input into improvements to our offering. Get in touch to setup a call.

2019 partnership offers and pricing will be available soon – contact us for further information.

Plastic waste pollution: bad resource efficiency

The WWF published its latest Living Planet Report last Tuesday. It’s not just a thorough analysis of global data on biodiversity; it’s also a landmark in how leaders connect abstract, data-heavy sustainability concepts with the drivers that really motivate people. An important theme is that human wellbeing, economic performance, and social development all depend on “the web of life that sustains us all”. It says responding to this is our generation’s greatest challenge and opportunity. But there’s one big problem: the way we use resources is wrong. So how do we improve resource efficiency?

Consumer demand is an increasing burden on natural resources and habitats – and global population will approach 10 billion by 2050. International development and increased spending is bringing large cars, plentiful diets, and an abundance of waste.

Rising consumption globally is more than the planet can bear, and is straining material and natural resources. That threatens our food, biodiversity, materials, energy, soil, water, and atmosphere. There is a growing scarcity of key materials, such as copper and lead. It’s pushing procurement prices up and limiting their availability in many nations.

Overall, humanity’s Ecological Footprint has almost doubled since 1969, largely attributable to a carbon footprint which has quadrupled since the 1950s. Not everybody has an equal footprint and there are enormous differences between countries, particularly those at different economic and developmental levels. Humanity’s Footprint is around 20.1 billion global hectares (gha), or 2.8 gha per person. However, the Earth’s biocapacity is only 12.2 billion gha, or 1.7 gha per person. That’s an ecological overshoot: people use the equivalent of 1.7 planets to support their activities.

What does overshoot mean?

How can humanity be using the capacity of 1.7 Earths, when there is only one? Just as you can withdraw more money from a bank account than the interest the account generates, it’s possible to harvest renewable resources faster than they regenerate. Agricultural operations destroy tropical forests faster than newly planted forests elsewhere can grow. The global fishing industry and uncontrolled pollution are damaging aquatic ecosystems without allowing enough time for their regeneration. This can only continue for a limited time, as the resources become depleted. Similarly, CO2 emissions exceed the rate at which ecosystems can absorb them, and cannot be fully sequestered on Earth. Ultimately the overuse of resources will lead to a shortage of materials. Unless we can improve resource efficiency, we’ll need to find alternatives or reduce consumption.

Resource Efficiency as a Solution

Businesses of all sizes should consider resource efficiency across their operations. Ultimately, the demand for goods drives the global market that we are all part of. So, businesses should consider not only the goods they consume, but also the products that they produce for consumption.

Mapping major resources can be tough, but it’s an empowering start. Once identified there can be a move towards one of three options:

  1. finding alternatives with a lower impact or ideally a renewable source;
  2. being efficient with the resource which will see marginal gains; or
  3. a total reduction in consumption.

Drivers pushing businesses to do this with carbon and energy already exist. Companies are switching to alternative providers, setting efficiency targets in line with their growth, or they are reducing outright. In many cases, all three can be approached simultaneously. That’s encouraging, but, as the WWF report highlights, there is still a fundamental issue with the way we use resources. Businesses need to consider more and more what they consume and how they can make changes.


Acclaro Avisory runs the Sustainable Facilities Management Index. It considers resource use among a set of ESG criteria to set a sustainability standard for outsourced facilities management.

On Thursday 8 November, the Sustainable Facilities Management Index will launch its 2018 results at the RICS building in Parliament Square. We’ll be hosting speakers from RICS – and we’ll provide a free breakfast. Join us for the free event.

In June this year, the SFMI began a collaboration with RICS to help begin a very exciting project that could be used to shape the global debate on how the built environment embeds responsible business practices.

As you can tell, this is no small feat, and the SFMI is excited to be a part of this potentially huge project from the get-go. It also touches on the hugely important topic of giving social value, which is heavily discussed across the FM sector and others.

What is this project? – The Responsible Business Leaders Forum

What is that then? – This forum brought together a group of business leaders to discuss issues that can shape global debate in the role of the property sector (inclusive of all areas of property such as FM) to manage responsible business issues. These issues are far reaching; from climate change, employee development, well-being, giving social value – the list goes on – whilst balancing these responsibilities with the need to turn profits and appease the shareholders. Add in the rapid advances in technology and the risks and opportunities associated with data, automation and AI and you have yourself a fascinating debate of how a responsible business conducts itself in the future.

When was it? – The forum took place in late July at the RICS head office, on Westminster Square.

What next? – We are releasing a document to the members of the forum, and the wider group of interested senior level industry personnel and aim to setup a second forum in the UK to continue the discussion with a wider group. RICS are also aiming to roll out the discussion globally to understand the challenges across different regions of the world, so that we can collect the results and assess learnings that can be had.

These learnings can then be discussed at the WBEF (World Built Environment Forum) in May next year, and by then we shall be closer to the understanding the business case for a global standard of responsible business in property could look like.

October 2016 marks the commencement of the 2nd year of progress towards delivering against the 2030 Agenda for Sustainable Development as outlined by the United Nations. The new 17 common goals are an integrated set of targets for a vision on a better world.

This is the third and final instalment of the ‘briefing’ articles where FMJ will hear from the SFMI (Sustainable FM Index) on how their empirical evidence collated over the past 4 years provides a vision of its own – how the Facilities Management sector in the UK are contributing towards these UN targets, or in some cases, are not contributing to it at all.


SDG 11 – Sustainable Cities & Communities

Making cities and human settlements inclusive, safe, resilient, and sustainable. FM urban maintenance contracts, and their position as a conduit for stakeholder engagement makes the assessed organisations of the SFMI ideal candidates to ensure progress against this SDG. The 2016 results have found a rather large drop in the sustainability of approaches to stakeholder engagement, and overall, the category of ‘social’ performance has made a marginal decline in average scoring.

However, VINCI Facilities’ (Winner of the 2015 SFMI) Commercial Director, Rory Murphy, states that “45-50 % of all carbon emissions are from buildings. As facilities managers and experts in the management and operation of the built environment, we’ve got a crucial role to play in proposing innovations that will reduce this carbon footprint and provide our clients with more sustainable and cost-effective solutions across the entirety of their portfolio. We have also a wider social responsibility to deliver value and benefits to the communities within which we operate. As with any truly sustainable FM business we envisage being here for the long-term, therefore the wider social, environmental and economic impacts are always to be considered and our management and usage of scare resources, be they environmental, material or human will be key to our sustainable future.”

STATUS UPDATE: Across the past 4 year, social performance has been highest amongst the ESG categories. In contrast, however, stakeholders are often identified but what they need, how they feel, and ways that they may become integrated into business decision making is under-developed. To develop and maintain sustainable cities and communities, closer relationships must be forged with site level and corporate level stakeholders.

SDG 12 – Responsible Consumption & Production

Endeavouring to ‘ensure sustainable consumption and production patterns’ will mostly impacts services for catering and waste management contracts, as well as the providers’ own in-house procurement patterns. This year, the SFMI has merged the 2015’s criterion of ‘Waste’ and ‘Materials’ into one focused on the ‘Circular Economy’ future. This encompasses sourcing of products, materials, and food for service provision, as well as testing the robustness of processes in place to treat materials and waste as a resource from a life-cycle perspective.

STATUS UPDATE: An early insight into the performance of ‘Circular Economy’ in the 2016 results shows that FM providers are restricted in their progress, as full strategic direction is not being established in-house and directive guidance remains elusive. The leaders of the 2016 SFMI, to be announced on the 10th November, are showing signs of progress in this field as historical sporadic procedures that dealt with singular waste streams are beginning to be brought together into a competent strategy. In dealing with ‘Waste’ and ‘Materials’ separately, most assessed organisations had already commenced their understanding of waste as a resource, however, the joined up and deliverable process is where the biggest area for improvement exists.

SDG 13 – Climate Action

The 2016 early insight that ‘Energy’ performance figures have marginally increased, enables this article to suggest that FM is committed to ‘taking urgent action to combat climate change and its impacts’. Although energy and associated emissions are a narrow yet clear contribution to climate change – it is a fundamental aspect of addressing the problem. Other aspects such as ‘Transport’ are not developing as quickly due to a focus within this criterion on trialling and innovation, rather than robustness of entire processes and reporting.

STATUS UPDATE: Reporting on and reducing carbon emissions is a matter of transparency in the FM sector – some providers have high ‘Disclosure’ scores, and make it very clear how data has been developed and verified, whereas others do not even report publicly on data and progress on these figures. Stock market listed assessed organisations commit to this, out of obligations, however, few ensure data is assured using third party auditing.

SDG 14 – Life Below Water

Conserve and sustainably use the oceans, seas, and marine resources for sustainable development. Perhaps the most tenuous link to the FM sector comes with the 14th SDG, as the realistic opportunities to offer assistance on its progress comes from the use of recyclable materials and strict COSHH guidelines and training to ensure he least harmful chemicals are not used in cleaning processes.

STATUS UPDATE: Most FM providers are confident in their delivery of recycling and waste management offerings, although an area for improvement exists within their relationships with suppliers who deal with the end of life processes. The SFMI also measure against ‘Employee Development’ wherein approaches to providing training to all levels of staff are assessed. ‘Water’ is an assessed criterion of the SFMI, which has historically performed very poorly, as providers and clients are focused on water innovation and aesthetically pleasing consumption reduction mechanisms – rather than the wider picture on water quality, accessibility, and monitoring.

SDG 15 – Life on Land

Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainable manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. Beyond procuring sustainable wood, the FM sector have capacity to impact this SDG through understanding the ecological value of the sites on which they operate. Furthermore, where site maintenance contracts are directly contracted activities, the procedures in place to deliver require well thought out processes to ensure sites’ optimisation.

STATUS UPDATE: The 4 year trend on ‘Ecology’ criterion scoring is poor as a sector. Indirect responsibilities are largely cited as the deciding factor over whether a provider ‘cares’ about a site’s wider ecological value. It is a fair assessment that FM providers can feel restricted by rigid contracts, however, there is a lot of knowledge as a sector that is underutilised and may, in contrast, be largely under-applied. The latter of these issues is a clear symptom of many stakeholder matrices that place ‘biodiversity’ as a low priority.

SDG 16 – Peace, Justice and Strong Institutions

Having clear structures in place that check and necessitate the accountability for sustainability in FM providers is key to help ‘promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels’. The SFMI scores assessed organisations against a ‘Board Commitment’ criterion, which last year saw a continued decline in its sustainability. However, Nicola Lovett, ENGIE’s CEO of Services Division explains that “we are committed to leaving a lasting positive legacy on the environment and communities we operate it in. This is why it is essential our leadership team set the example and have accountability for not only financial but also non-financial performance of our business. One key aspect of this is that our Board has in place objectives in relation to the delivery of Our Future Strategy that are linked to their financial remuneration.”

STATUS UPDATE: Assessed organisations are focusing on embedding a ‘culture’ and delegating accountability across the organisation, however, leadership is required for any cultural revolution – and in some organisations this will need to be a revolution in its purest sense. Some leading organisations use frameworks that tie Director bonuses to delivering on sustainability, however, these examples remains largely uncommon.

SDG 17 – Partnerships for the Goals

‘Collaborations’ is a new criterion in the 2016 SFMI, introduced from the growing recognition that operating in isolation will not create a sustainable future. Not only will it take a combined effort, with trust placed in competitors and JV partners, but the structures in place to deliver collaborative solutions need to be resilient to achieve FM provider and client end goals. The SFMI 23 ESG framework has assisted partners in created a structured approach to continual improvement – BAM FM Ltd’s Strategic Development Director Reid Cunningham states that “The process of undertaking the Index has stimulated internal collaboration that might not have happened otherwise. The results of the Index provide us with a plan for where we can improve our business in the areas of efficiency, innovation, safety, and customer focus.”

STATUS UPDATE: The early bird news on the ‘Collaborations’ criteria is showing a poor average performance. Informal collaborations with NGOs, charities, and suppliers are in place – but few are engaging with other industry competitors, fewer still with the formalisation of policies on collaborating. The latter being something that would instil investor confidence that the organisation was not engaging with high risk or unsustainable partners.

October 2016 marks the commencement of the 2nd year of progress towards delivering against the 2030 Agenda for Sustainable Development as outlined by the United Nations. The new 17 common goals are an integrated set of targets for a vision on a better world.

This is the second of three ‘briefing’ articles where FMJ will hear from the SFMI (Sustainable FM Index) on how their empirical evidence collated over the past 4 years provides a vision of its own – how the Facilities Management sector in the UK are contributing towards these UN targets, or in some cases, are not contributing to it at all.


SDG 6 – Clean Water & Sanitation

‘Ensure availability and sustainable management of water and sanitation for all’ is the mandate of the 6th SDG. Many aspects of FM operations are reliant on access to clean water, and while chemicals use and innovations for consumption reduction are widely featured aspects of operations – the average FM provider in the 2016 benchmark has limited confidence on water data, influencing sub-contractor usage, and carbon foot-printing. When the 2017 regulations are introduced, and consumers are able to choose their suppliers, the SFMI predict an increase in the conversation around water, its costs, accessibility, quality assurance, and conservation activities.

STATUS UPDATE: The SFMI remarked last year that FM providers are not performing very well on the ‘water’ criteria’. Each criteria is scored 0 to 5 (0 being very poor), and the average score for 2016 assessed organisations continues to be very low, and falling at only 1.8 out of 5. David Johnston, Lead Developer of the SFMI states that “water is not a hot topic in FM board rooms or in FM contracts, despite the recent high profile fine of Thames Water and the area’s clear links to pollution prevention agendas – which has been the staple statement in many environmental policies, for many years.”

SDG 7 – Affordable & Clean Energy

In the face of contradictions from the UK Government decision to revitalise the fracking agenda, FM providers are progressing with motivated clients to ensure access to affordable, reliable, sustainable and modern energy. To do so, they are implementing renewable energy systems, developing ‘gain share’ mechanisms, and presenting proposals which offer ways to minimise energy costs and to reduce the reliance on grid energy which may not be from ‘clean’ sources.

Rachael Baldwin of Skanska Facilities Services states that “as our population grows and our natural resources deplete new ways of generating sustainable energy must be sourced. At Skanska our key Environmental target is to have Deep Green™ projects which essentially means that buildings self-generate the utilities they need to operate. In our Facilities Services OU within Skanska we aim to reduce both our and our customers’ consumption to a minimum and work with our customers to understand their renewable, clean energy options for the future and move our customers to a Deep Green™ position.

STATUS UPDATE: Energy has been high on the agenda for FM providers as clients become more familiar with the costs associated with its usage. An early view on the SFMI 2016 figures shows that your average FM provider continues to make positive progress on this criterion. The capacity of the sector in contributing towards this element of the SDGs is under-developed at present, which is something a number of the Index Partners put down to a continued mind-set of sustainability as an ‘add-on’.

SDG 8 – Decent Work & Economic Growth

The SFMI monitors assessed organisations on an ‘employment’ criterion which looks at how FM providers develop initiatives to reduce unemployment, engrain equality & diversity into recruitment processes, and adapt HR practices to address skills needs. The FM sector represents a diverse range of skills set from cleaning operatives and engineers, to managers and security professionals. It is difficult to predict the direction of employment trends in the current political climate, however, so long as customers of FM providers continue to see the value in out-sourcing solutions – the stability and growth of the market will continue. It is this aspect of value that has been questioned throughout 2016 with Local Councils such as Cumbria, Essex, Bournemouth, and Liverpool taking certain FM services back in-house.

STATUS UPDATE: The 4 year trend on ‘Employment’ criterion scoring is negative. This means that the sustainability of current average approaches to tackling skills shortages and ensuring equality and diversity in workforces are not going far enough. Local employment mechanisms are in place, but tend to be created out of the need for gains in business efficiency, rather than articulation of the value that is provided to local communities when unemployment decreases. It is this level of conversation that will represent progress in FM dialogue as FM providers build their confidence in non-financial reporting of sustainability and social value.

SDG 9 – Industry, Innovation, and Infrastructure

Innovation is a key driver for clients in FM contracts. The most engaged clients are those that are constantly seeking the most up to date, cost saving, and efficient ways of working that they see as delivering value. Although the shiny and new is attractive and is arguably the most obvious was the ‘show’ value – it can not always mean the most cost saving and ‘sustainable’ way to produce value for money from an FM contract. Compartmentalising progress into a tick box in the shape of a new tap is not sustainability. Sustainability in FM means establishing longevity, stability, and trust as a service delivery partner who cares about the site whether they keep the contract after re-tender, or not. Without a life-cycle mind-set, skills to maintain assets, and accountability – there is no value in installing brand new items of innovation. In the SFMI, we measure ‘Contracts’ criterion on how the company approaches flexibility in delivery, as well as innovation, use of behaviour change, and engagement with clients beyond the contractual obligations.

STATUS UPDATE: The average score, over the past 4 years, has been 2.5 out of 5. This suggests that either the average FM provider has no interest in optimising their partnership with clients, or their clients have taken a very strict procurement stance that isolates operations, and therefore limits opportunity. Either outcome is not a positive one for progressing objective & targets on sustainability.

SDG 10 – Reduced Inequalities

HR processes within FM organisations are best placed to progress this SDG, and the SFMI measure criteria including ‘Diversity’, ‘Employee Development’, ‘Employment’, and ‘Stakeholder Engagement’ to monitor assessed organisations on the sustainability of their approaches to each. The SDG 10 goals include promoting inclusiveness based on a range of protected characteristics, and many leading FM providers are already monitoring a sophisticated granularity of datasets on these. Fewer, however, are designing specific initiatives to address negative trends in the data. This SDG also seeks to address wages – an issue captured within the employee development criterion where we investigate whether the FM provider has committed to paying a fair wage or living wage. ABM have developed a system for one of their clients that assessed the current marketplace to enable them to track progress on whether operatives were being paid above average wages for the geography, or whether there were cases to be made to increase these wages in line with others in the region. Andy Donnell, MD at ABM UK states that “this approach expresses our commitment to continual improvement and dedication to our workforce through innovation and proactive research”.

STATUS UPDATE: The integration of equal opportunities and diversity policies into recruitment is present, however, external reporting and general transparency is unclear. Empowering people with an aim to reducing inequalities is predicated on the access to and communication of clear and trustworthy data and information. Therefore, without higher ‘Disclosure’ criteria scores (currently averaging at 3.1 for all assessed organisations over a period of 4 years), the inequities of society will not be removed with the FM sector’s assistance.

October 2016 marks the commencement of the 2nd year of progress towards delivering against the 2030 Agenda for Sustainable Development as outlined by the United Nations. The new 17 common goals are an integrated set of targets for a vision on a better world.

This is the 1st of 3 ‘briefing’ articles where FMJ will hear from the SFMI (Sustainable FM Index) on how their empirical evidence collated over the past 4 years provides a vision of its own – how the Facilities Management sector in the UK are contributing towards these UN targets, or in some cases, are not contributing to it at all.


SDG 1 – No poverty

This goal is highly relevant to the FM sector as ‘frontline’ staff such as cleaners, caterers, and security staff represent a group of employees who are paid the lowest wages of any firm. Walk into any commercial, educational, or healthcare building in the UK and the chances are you may not notice the value these employees bring – cleanliness, safety, and friendly customer service. The SFMI measures FM providers, who these people work for, against criterion such as ‘Sustainable Communities’ and others which encompass an understanding of the approaches taken to pay fair wages and oblige with new regulations such as the Modern Slavery Act.

STATUS UPDATE: Social sustainability has been creeping up the CR agendas in the past 4 years, however, slow progress is being made on committing to fair or full living wages as standard. So far, most assessed organisations have prepared Modern Slavery statements but proposed procedures on the statement’s implementation are less transparent.

SDG 2 – Zero Hunger

A part of the SFMI methodology for choosing ‘who to assess’ on an annual basis is drawn from the Government ‘Supplier Lot Matrix’ – a list of FM providers who have been chosen as that year’s chosen suppliers to the UK Government. There are 3 ‘lots’: Lot 1 ‘Total FM’, Lot 2 ‘Hard FM’, and Lot 3 ‘Soft FM’. Within ‘Lot 3’ is, amongst others, the provision of catering contracts to public bodies. As we all know, there has been an increased focus over the past decade on what we eat, its nutritional content, and the sheer amount of food waste that is produced every day. So how is your contract enabling the efficient use of resources and addressing the need to nutritional optimisation?

STATUS UPDATE: 2016 is the first year we are looking at ‘Circular Economy’ as a criterion and scores are, so far, looking bleak. Also, in 2015 we found that the average Lot 3 supplier was less ‘sustainable’ in comparison to procuring ‘Total FM’ provision. This indicates that choosing to compartmentalise FM into blocks of separate activities is restricting the long-term value a client would otherwise be receiving from out-sourcing catering service provision to a specialist provider of FM. Although ‘Zero Hunger’ may not be a topical issue in the UK, it is the role of large corporations to procure resources efficiently and limit waste.

SDG 3 – Good Health & Wellbeing

This goal places an onus on the FM sector to foster resilient business models that address employee health, safety, and well-being. This in turn will have an impact on productivity, turnover rates, and absenteeism – resulting in added value to clients. The SFMI measures ‘Employee Well-Being’ and look at how the sector’s major players are able to understand their turnover and sickness rates, and design initiatives and campaigns that address their particular areas for improvement.

STATUS UPDATE: Turnover and sickness rates are monitored well, but understanding on how these link to productivity is low, and they rarely inform the design of well-being initiatives. Instead, activities are usually more influenced by popular calendar trends and meta-trends such as ‘mental health’. Whilst these activities are valuable and necessary, there is a growing gap of understanding the ‘bottom-up’ issues.

SDG 4 – Quality Education

The FM sector can contribute to this goal through the provision of FM services to schools and universities, and at the same time address the technical skills shortage facing the sector. The SFMI measures providers on ‘Employee Development’ – giving each a rating from ‘0’ to ‘5’ (‘0’ being poor) based on what infrastructure is in place, how they utilise matrices, and encourage career progression.

STATUS UPDATE: Robust development networks are rare thing in the FM sector, and where established, there are issues with communicating opportunities adequately. Whilst the assessed organisations may be aware of the skills shortage – there is a lack of an integrated approach to tackle the issue long-term.

SDG 5 – Gender Equality

The SFMI assessment framework features criterion for ‘Diversity’, ‘Employment’, and ‘Sustainability Frameworks’ which provide a view on how well equality and diversity policies are engrained into HR activities. The 2016 process has also been asking questions about the preparations to report on the Gender Pay Gap.

STATUS UPDATE: Sector leaders have been committed to this prior to the mandating of its reporting in 2017. However, approaches to addressing equality & diversity at Board levels remain vague as providers of FM avoid being open about any positive discrimination agendas.

VINCI Facilities’ Senior Sustainability Advisor Charlotte Osterman, states that “To support the SDG for gender equality many actions could be taken; so we needed to prioritise and make it relevant and deliverable for our business. In our UK FM setting, we’ve undertaken actions to promote equal wage for same work, empowered minority groups in general across our business and enabled employees to apply for flexible working arrangements that can help parents combining careers with school pick-up times. We have also put a great emphasis on engraining a culture of Fairness, Inclusion and Respect right across our operations, which has contributed to us achieving Investor in People Silver status and obtaining Leader in Diversity accreditation.”