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.

Materiality is prized across Social Value stakeholders, yet nowhere in the market does there exist an agreed upon method of testing this materiality. There are many working groups, I sit on one myself, that are trying to plug this gap but the truth is that it’s a tough nut to crack. Built environment industry leaders, Social Value experts, and all those in between are struggling to pull together a standard interpretation of Social Value, let alone a standard approach.

Partnerships Exist

Collaborations, such as that between VINCI Facilities and Social Value UK, are becoming more commonplace. These should be commended as the industry realises its need to contribute to the development of Social Value and the improvements they can offer the communities in which they work. However, such projects still occur at a relatively high level, requiring time and experience to gain maturity and so are the beginning of a long and complicated process.

Data Exists In Silos

Although some databases of knowledge exist (e.g. Social Value UK, Social Value Portal and Social Enterprise) there is still a fundamental lack of understanding around these datasets. Those directly involved in collecting the data may have some local and specific knowledge, but this is rarely shared outside of the project, let alone into the wider industry. Information silos are a well-known problem in all industries, and it is common knowledge that sharing learning is, more often than not, to the benefit of all. In the case of Social Value this is particularly true, because the enormous range of potential actions to improve Social Value on any given contract leaves more opportunity than usual to build strategies and activities that may already have been implemented elsewhere.

Variation And Innovation

That being said, there is also a significant amount of specificity required. Each contract is different, as is each location, and so every chance to implement Social Value will be different also. This should in no way preclude contractors. Variability on this scale is an opportunity for market leadership and innovation. When each situation is unique there are infinite ways to give back to the communities you work in, through employment, skills, business support, education, and countless other crucial ways. Ensuring engagement occurs effectively is even more crucial so that the activities undertaken are appropriate to the need of the community.

Be In It For The Long-Run

None of this negates the good work being done in the industry. I could showcase many great examples of Social Value implementation that I have seen myself, but they almost always happen in isolation. Constructing meaningful Social Value requires long term and cyclical thinking with frequent review and editing – as contracts and communities both grow and change, requiring different types of Social Value and different stages in their growth.

However, despite the vast amounts of opportunity there is little Social Value coherence in the market. What contracts need is practice – practice listening to stakeholders, practice identifying and understanding their options, practice implementing and evaluating these options, and practice sharing knowledge, experience and best practice.

Football’s World Cup is about to start again, hosted this time by twelve stadiums in Russia. Like any mega-event, there will be environmental impacts from transport, accommodation, broadcasting, and custom-built infrastructure to cope with extreme but short-term demands.

Football’s World Cup is about to start again, hosted this time by twelve stadiums in Russia. Like any mega-event, there will be environmental impacts from transport, accommodation, broadcasting, and custom-built infrastructure to cope with extreme but short-term demands.

For people who work towards sustainability goals, it’s an important concern. So, let’s celebrate the mega-events that prove their legacies hold more opportunities than threats.

Olympic Games, London 2012

London literally set the standard for sustainable events: it was the catalyst for ISO 20121:2012, the standard for event sustainability management systems. The organising committee, the Olympic Delivery Authority, and some event sites were certified to the new standard, which helped to ensure greener choices were made in, for example, transport, construction techniques, and choices of materials. The social legacy is mixed, but at least facilities like the aquatics centre are still being used.

FIFA World Cup, Brazil 2014

Brazil’s Local Organising Committee required all the tournament’s direct greenhouse gas emissions to be offset through the Clean Development Mechanism, funding emission reduction projects. That was around 545,000 tons of carbon equivalent, or 220,000 Brazilians’ emissions for a year. They also promoted social development with locally-sourced equipment, as well as the Football for Hope festival aiming to improve the lives and prospects of young people around the world.

Eurovision Song Contest, Vienna 2015

Other Eurovision hosts, like Malmo and Copenhagen, have tried to use the event to drive sustainable development, but Vienna decided to use existing infrastructure, bringing together transport planning, utilities management, and behavioural leadership to control and minimise environmental impacts. Its ridiculously comprehensive sustainability report documents some impressive achievements, like reusing or recycling almost all stage material, running on 100% renewable electricity, and the average visitor at the event venues producing just 74g of non-recyclable waste.

Most food or drink was served in reusable containers, and visitors were encouraged to put their recyclable waste into the right bins. Image: Reuters/L. Foeger

Strategies for sustainability

To achieve sustainability targets, every mega-event needs to carefully tailor its approach to make sure it is right for its time and place, but here are some guidelines:

  • Implement an event sustainability management system that complies with ISO 20121. A structured and effective approach brings credibility with regulators, business partners, and the industry (the same way that compliance with standards like ISO 14001 does).
  • Use event sites with certified high energy or environmental performance. Venues with low energy use and low water consumption reduce costs and emissions.
  • Engage the local community: Co-operating with different community groups as well as planners, developers, and service providers will make sure the organisers have support where they need it. This is highlighted by the example of what happens when the local community is not involved: city bids for Olympic games being rejected by the public, as has happened in Innsbruck, Hamburg, and Budapest.Sustainable Mega Events

Both client and provider must invest in a long-term relationship to truly harness the potential of timely and specialist support.

While environmental requirements on companies – due diligence, transparency and performance progress – have increased over the last decade, environmental team sizes have rarely recovered from the contraction experienced during the recession. Beyond the sheer weight of the environmental workload, CR managers are increasingly finding that the diversity of skills needed to satisfy the requirements is rare to find contained solely within one team. Outsourcing some or all of the environmental functions is becoming more popular. But to be truly effective, long-term relationships are needed.

The sole “environment manager” within large corporates in the late 1990s – often tasked with an array of activities including health and safety, supply chain management, environmental management, social impact management, communications (if the company engaged in this), quality and community giving – began to be replaced in the early 2000s by a larger team, with more specialised roles.

Even so, the increasing external reporting requirements on large corporates – including the various rankings and the need to produce a complete CR report each year – effectively shut down progress on performance for around three months each year unless data collection and copywriting was outsourced, as well as verification. CDP, DJSI, FTSE4Good and GRI amongst others led to a fundamental shift by connecting the investment and fund bodies with environmental performance data. As reporting requirements became stringent – and a clearer picture of ‘best practice’ more prescribed – some companies struggled to keep up with the new imperatives, now with the additional impetus of potential investor sanctions. Additionally, stand-alone research pieces were commonly commissioned from consultancies, often focussed on a defined issue affecting strategy and frequently inspired by the latest ranking requirements.

Compliance and due diligence obligations also increased over this period, led initially by regulatory pressures and financial penalties, particularly in the US. Overall, outsourced support in this period tended to be piecemeal, with providers called on occasionally on a task-by-task-basis and changed frequently, without investment in a long-term relationship or a deep understanding of the company culture.

As reporting requirements became stringent – and a clearer picture of ‘best practice’ more prescribed – some companies struggled to keep up with the new imperatives,

The economic turmoil of the past decade saw environmental teams cut and a retrenchment in Government policy globally on green issues – but emerging from this came incentives for companies to promote their environmental and social credentials directly – particularly to a new generation more interested in social value, hungry for transparency and well acquainted with the new tools with which that need could be satisfied.

What does this mean for today and the future? Certainly, we can expect that the need for transparency will continue to play a stronger role in environmental progress than compliance alone. For a generation well-schooled in sustainability matters and sceptical of regulatory effectiveness, environmental performance inherently includes aspects of social value, well-being, and value chain impacts.

The skill sets required to deliver this change are becoming more complex requiring a mixture of change management, data analysis, strategic insight, in-depth and targeted two way communications, and operational management. The reporting calendar is still a huge influence, meaning different skills sets continue to be emphasised at different times of the year.

Outsourced environmental teams can provide the right kind of technical support for the time of the year, and give a pool of specialist skills to be dipped in to when necessary. To truly harness the power of an outsourced team – to truly have a ‘team’ – the provider needs to be able to invest in a long-term relationship with the client and become well-versed in the company culture, with their own internal network. Only then can they work semiautonomously, and ensure their work becomes business-as-usual within the client company rather than the dreaded report-gathering-dust-on-a-shelf.

Conclusion

Outsourcing isn’t for everyone and shouldn’t be seen as a panacea to achieve higher rankings scores and deliver better results – the outsourced parties still need to work within the bounds of the strategic direction that can ultimately only be set by the company. If a company is willing to invest in a long-term relationship and truly immerses the provider within the day-today running, an outsourced team can become an invaluable pool of insight and workforce in the face of shifting priorities and constrained resources.