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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.

Leading companies are now targeting their supply chain carbon emissions. Change within operational control is considered basic, but ambition requires looking beyond these boundaries. Consumption-based accounting, an economic model to calculate supply chain carbon emissions, is one way to do this.

Every industry has some form of a supply chain, but these can vary in size and complexity. For example, the supply chain of the manufacturing industry is usually simple. Here ‘simple’ refers to how many ‘tiers’ and ‘pathways’ make up a supply chain. Whereas service industries are far more ‘complicated’ in terms of the number and variety of these ‘pathways’.

A ‘tier’ is a layer of a supplier. For example, Company A purchases catering through Company B, creating one supply chain ‘tier’. Company B buys ingredients for catering from Company C, creating another supply chain tier. However, Company B also buys drinks for from Company D. This does not add another tier, but another ‘pathway’ to the 2nd tier. The possible connections are endless and complex. This makes them very difficult to understand.

The different types of supply chain can host different opportunities if they are understood and managed well.

Supply chain tiers by Elementum

 

EXTRACTION

The environmental impact of extraction industries is clearer than any other industrial category. Despite fairly simple supply chain structures, there are limits to how well we can understand their GHG burdens. This is especially true when you consider the impacts of land use change, an area recently raised for development of a standard by GHG Protocol.

Consumption-based carbon accounting surpasses these limits. Understanding 100% of the carbon footprint gives companies a better chance to make real change.

MANUFACTURING

Construction, fashion and food products industries have had historic supply chain controversies (horsemeat in ready meals, labour violations in construction sites, and animal fur on ‘faux fur’ clothing). Their supply chains also share similar GHG emissions patterns. This provides an opportunity to improve the public view of these industries, and a transparent view of the supply chain will play a key role in this.

Supply chains in manufacturing are critically important. Consumption-based carbon accounting gives insight into the industries companies rely on and the associated carbon emissions. Diversity and improved sustainability in supply chains can protect companies from supply chain risks.

DISTRIBUTION

The complexities of Distribution industries are added to by the greatly increased demand for transport compared to other industries. Burning fossil fuels in lorries, ships and planes is one of the most significant GHG emissions sources at every scale. Distribution sectors will have significant transport burdens across supply chain tiers. New connections between tiers will have heavier burdens too.

With such important environmental impacts, consumption-based carbon accounting can bring a clearer focus to carbon emissions reduction efforts in Distribution industries.

SERVICES

Some of the most complex supply chains are within service industries. Examples of these industries include financial, legal and educational services. It is impossible under current methods, within a reasonable time and cost constraints, to measure the entire supply chain carbon emissions of such companies. However, the supply chain can hold 95% of the burden of service companies. The easiest way to map supply chains is through financial spend.

Using consumption-based carbon accounting, the GHG emissions of all supply chain paths can be included in one model. This also increases transparency in the supply chain, environmentally and financially.

WHAT THIS MEANS

Though discussed individually, the critical complexity is that all industries are linked through supply chains. For example, the Distribution industries that supply the Manufacturers, or the Service industries that support Extraction. Understanding these relationships and how they relate to supply chain carbon emissions helps target reduction actions.

More detailed understanding of these relationships through the consumption-based accounting model can accurately identify hot spots of spend and carbon to help you effectively target your emission-reducing initiatives

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.