Anthony Bamford follows on from his recent ‘Bricks and Clicks’ article, with his suggested approach for environmental corporate social responsibility. WhichPLM. Anthony MBA MRICS is a UK based senior leader specialising in strategic management and transformation and change with a professional background in real estate. He has worldwide contacts in the corporate, commercial and public sectors.
I was recently invited to discuss corporate social responsibility (CSR) and associated issues and joined an esteemed panel, virtually by computer, comprising: a former government minister; a banker specialising in TMT; an established SME managing director, and a serial entrepreneur. With such a diverse range of backgrounds and viewpoints it was an extremely illuminating and interesting session for all concerned. It is absolutely right that CSR and ESG (environment, social and governance) issues have taken centre stage. These are perhaps magnified by the coronavirus pandemic as mother nature’s way of prodding us more firmly out of our lethargic approach to climate change. My pessimistic tone was prompted by looking at a book published in 1990, over thirty years ago. Initially I thought it would tell me little and then, looking at the final section on the future, it galvanized my concern. Even then (Organisational Capability; Ulrich and Lake) the ozone layer, climate change facilitated super storms, the loss of habitats and large swathes of rain forest were of concern. If anything, our answer to these issues has been to continue to make matters worse in the intervening decades.
Around forty billion tonnes of carbon dioxide are estimated to be produced through human activity every year. Industrial processes such as cement (10% and 30 billion tonnes of material per year produced and increasing) and steel manufacture are joined by the internet (14%) as contributors (BBC World Service “Climate Question” Series). In Europe and the United States it is estimated that commercial and domestic property (lighting, heating and cooling) cause a further 35%. Other scarce resources such as water are used intensively in fast fashion (400 gallon for a t shirt), the western diet (660 gallon for a beef burger), and other uses (3190 gallon for a smartphone, 62,000 gallon for a ton of steel).
In the UK a Climate Change Act has given a statutory underpinning to the aim of reducing CO2 and greenhouse emissions. Energy Performance Certificates (EPCs) are an energy usage assessment mechanism for both domestic and commercial premises and a key step towards improving energy usage in the built estate. The government recently consulted on a prospective major upgrading of energy efficiency under this system. The framework consists of gradings going from A, at the most efficient or least energy usage, running up to G. Public buildings are also required to show a Display Energy Certificate (DEC) prominently in buildings. Hitherto letting and selling properties that are most inefficient has not been possible. Retrofitting and energy efficiency improvement in both domestic and commercial premises has been promoted. This year the UK in leading the COP 26 talks and G7 so has a significant role at this crucial juncture, with the return of the United States to the Paris climate accords.
The UK financial plan, or budget, was announced in early March and has been supplemented by financial strategic plans towards the end of the month including important green initiatives. These complement other wider changes including wind power, solar power and electric vehicles. The potential for clean hydrogen as a fuel in the coming decade for commercial vehicles and heavy energy use applications, such as the production of steel, are also becoming clearer. In addition to government action, corporate and investor action is developing. Major investors such as Black Rock (US$ 6.7 trillion assets under management), the Norwegian Sovereign Fund (US$ 1 trillion) and others are strongly pushing the environmental agenda. The momentum has therefore changed and a wide range of investment vehicles, including for retail investors, are available with enhanced environmental aims. There is evidence of superior performance for green investments over the short, medium and longer terms.
A typical corporation will therefore have to address this issue along a number of lines. Public sector bodies, such as local authorities in the UK, are also creating climate strategies and linking them closely with their strategies on real estate and assets. A business should look at its space – property, travel, supply chains, waste and discharge – amongst other key lines of action. ISO 14001 can be extremely helpful in the last area. Furthermore, it is important to avoid displacement, rather than reduction of negative climate consequences. Unfortunately, the coronavirus pandemic has also caused many negative consequences, apart from temporarily reducing CO2 emissions. These have already bounced back to normal. Yet private car usage is likely to increase, large numbers of plastic masks are causing pollution worldwide and other secondary consequences are being identified.
Through Corporate Real Estate Asset Management (CREAM) physical environment is being addressed across the globe. In the UK BREEAM is the principal standard; in the US and Canada LEED; in Japan CASBEE; Australasia, Green Star (Australia and New Zealand) and Estidama in the UAE. These focus on new buildings, with other initiatives such as SKA from the RICS being applied to retrofits and other conversions and changes of existing properties. The RICS published an initial guidance note on sustainability back in 2009. A subsequent lifecycle and sustainability whole land and building lifecycle management approach was set out. (Haynes et al. Corporate Real Estate Asset Management). Allied to these initiatives larger organisations are using asset management and FM software and BIM (building information modelling) to seek further effectiveness, efficiency and economy in this area.
In a corporate context it is possible to drive sustainability from the top of the organisation or from the bottom, the so-called bureaucratic or dispersed leadership approaches. Given the pressures of the coronavirus and working from home / alternative base working there is a strong argument that the dispersed approach has the greatest opportunity to flourish in the immediate future. Car and vehicle makers have used both approaches effectively, such as Ford and Polestar which, as a new brand has pursued environmental concerns as a central corporate objective. These companies are forging forward from established and new positions. These developments are less noticed by mainstream media, yet are crucial.
In order to effectively address the global existential issues effective sustainability requires, will require all the sectors represented by the panel I referred to in the introduction to this article. Central government, local government; finance and banking; large and small companies, and entrepreneurial interests; all have equally important roles in these issues that affect us all.