There is a gap—and a significant opportunity—in our industry with respect to sustainability. Our focus on energy efficient buildings, while important, is not enough. Driving greater value and financial benefit requires a more collaborative, holistic approach that involves looking at social responsibility or sustainability (a subset of social responsibility) from a business ecosystem perspective. This means expanding your situational awareness beyond the traditional project, client-service provider relationship, and organizational boundaries.
Knowing your customer’s customer
Knowing Your Customers' Customer
What does knowing your customer’s customer have to do with sustainability, the real estate sector, and the built environment? Everything. We cannot operate in a vacuum when managing Corporate Real Estate (CRE) and global services, and engaging service providers. As in any ecosystem, events and actions within a business have collateral impact. For example, human resources policies affect the ability to implement a mobile workplace solution; a mobile workplace solution affects, among other things, service models, cultural norms, business continuity, environmental footprint, and organizational effectiveness. These collateral impacts are increasingly significant as we become part of evermore complex virtual and physical networks in a world where companies are competing everywhere against everyone, for everything, all the time.
Knowing an enterprise’s stakeholders and its engagement model allows CRE groups and service providers to deliver greater value propositions. This approach supports the development of scalable, adaptive platforms for growth instead of singular, inflexible solutions. Figure 1 identifies the eight major groups of internal and external stakeholders. Understanding their roles, motivations, and the interrelationships is critical to crafting solutions that maximize your organization’s contribution to an enterprise’s social responsibility strategy while maximizing financial benefits. What if an enterprise doesn’t have a strategy or engagement model? Then this is an optimal opportunity for CRE groups and service providers to develop roles as strategic leaders and trusted advisors.
Green ≠ Sustainability
We hear a lot about “green,” but what exactly is it? This is a tough question given that there are several interpretations. Some would say LEED certification is the qualifier. Others might argue that it takes carbon neutrality to be green. There are also those that would make the argument that it requires an entire enterprise and its product line to be environmentally neutral before it is truly green. All may agree to a certain extent that it is a clever marketing term that increases reputational risk through “greenwashing” claims.
A better-understood, more stable term is sustainability. The Brundtland Commission—formally the World Commission on Environment and Development, created by the United Nations to address global environmental problems—defined the concept in 1987. “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs,” the group stated.
Since then, several key events have eased the adaptation of this statement into measurable practices. The first of these can be credited to the Global Reporting Initiative (GRI), the Amsterdam- based, not-for-profit organization dedicated to providing global standards in sustainability reporting. In 2000, it released a corporate social responsibility (CSR) reporting template which splits sustainability into 11 categories. Reducing these categories to systems simplifies the process of creating direct links between the CSR environmental section and enterprise key performance indicators. Future blogs will look at the stakeholders and systems in more detail. Email me if you can't wait.
Continuity
Carbon Dioxide (CO2) is the common denominator for measuring performance, tracking, and reporting greenhouse gases (or carbon footprints) produced by these systems/categories. This key metric is also the foundation of the Greenhouse Gas Protocol (GHGP),a tool developed by the World Resources Institute and the World Business Council for Sustainable Development. The Protocol, released in 2001, provides guidelines for measuring and reporting these greenhouse gases. It is also the basis for many programs, including The Climate Registry, and is recognized by many environmental and investment groups as the standard for greenhouse gas reporting.
Another key development is the increasing recognition of other methods for calculating carbon footprints, including Life Cycle Analysis (LCA) and Input-Output. Both methods examine the environmental impacts of a product or service over the entire course of its “life,” including design, extraction, manufacturing, packaging, distribution, use, and end-of-life. They are beginning to affect the real estate sector as environmental groups expand their focus to the strategic planning and development processes, and not simply the built environments.
The Times They Are-A-Changin’
For better or for worse the highly fragmented nature of the real estate industry has delayed this enterprise as ecosystem approach, but no more. We will need to expand beyond our focus on energy efficient buildings and embrace a more collaborative, holistic approach.
The idea that a “green” building equals sustainability is parochial and does not position an enterprise to effectively engage its stakeholders. Life Cycle Analysis, Input-Output methodologies, measuring carbon footprints, and business ecosystems are rendering current certification tools to a “feel good” status.
Stakeholders are focusing on CSR or its subcomponents, using key performance indicators either not addressed or inadequately addressed in current and upcoming versions of available building certification tools.
A basic understanding of an enterprise’s existing and future reporting needs will allow entities involved in the built environment and real estate sector to build the foundations for a role as trusted advisor. A good starting point is to get familiar with the GRI’s CSR reporting template, the Greenhouse Gas Protocol, Environmental Management System standards such as ISO14000, and EPA Environmental Performance Track, and LCA standards for assessing products and services like PAS 2050.
Looking Forward
Based on my experience working with corporations, and environmental and CSR groups, engagement in carbon trading, and research of public sector activities at the local, state, and federal levels, I am optimistic about future developments. In the very near future more companies will be treating CO2 as an asset, and will expand their business cases to include the financial impact of a project’s carbon footprint. Projects will, if properly documented, generate revenue streams through the creation of carbon credits. Service providers will voluntarily include their organization’s carbon footprint or CSR report, and their proposals will include an expected carbon footprint of the solution they plan to promote. Alternatively, enterprises will be setting LCA-based project carbon footprint requirements.