Dramatic drop in business confidence around sustainability as retail gets a boost

A sharp fall in business confidence around effective sustainability strategies is reported by the British Institute for Facilities Management (BIFM).

Its just-published report reveals a worrying trend with only 40% respondents advising that their company is ‘very good’ or ‘excellent’ at implementing sustainability, down from 60% last year.

At the same time, the benefits of sustainability are highlighted in new research by the British Council of Shopping Centres (BCSC) and global real estate adviser CBRE, indicating that investment in energy efficiency improvements could boost retail property values by up to 5 per cent.

The ninth annual BIFM Sustainability Survey identifies that 80% of respondents point to physical issues with 71% highlighting financial constraints and 69% a lack of organisational engagement.

The BIFM is concerned that the survey exposes the need for swift, effective action and that the report signals a ‘sustainability crunch’. Facilities managers should focus their efforts on three main areas: leadership, making the business case for sustainability and collaboration.

Leadership

On leadership, the BIFM report advises that despite the relative high importance given to sustainability by all respondents, 41% of organisations still do not have their sustainability policy owned at a director level, and 15% of all respondents did not know who owned their organisation’s sustainability at a strategic level.

It says: “The gap between the stated importance of sustainability and how it is measured and managed in practice may point to the recent decline in effectiveness as this lack of ownership and inconsistency in governance aligns with the observed fall off in the effectiveness of sustainability management.”

We would strongly support this view, and we have seen that organisations without clear board-level focus and direction on sustainability strategy struggle with effective implementation.

Business case

At the same time, it is a core part of our work to help organisations make the business case for sustainability, and particularly the focuses on energy saving, carbon emissions reduction and water management.

The report says: “Whatever the primary driver in each organisation, further commitment to the sustainability programme is only likely to happen if the leader of change in business practices, or investment needs, creates a solid business case.”

Detailed measurement and reports are central to every business case we develop for our customers so it is disturbing that more than a third of BIFM survey respondents say they have no formal system to collect and check the information gathered on sustainability.

The need for experience and knowledge is flagged as a reason for the uneven and hesitant views. The survey indicates that there are high levels of confidence among respondents in sustainability knowledge at all levels within organisations but the depth of this knowledge is not consistent and could impact on the FM profession’s ability to meet the sustainability ambitions of the business.

Collaboration

The survey reveals clear differences in collaboration priorities for sustainability depending on the role. Respondents at CEO/MD levels are looking externally for greater input, while senior managers and non-managers see the need for collaboration as an internal matter.

Again, our experience is that working with an external partner, advising and guiding at every level, is the most effective means of ensuring successful implementation of sustainability strategy.

BIFM chief executive Gareth Tancred advises:

“Despite increased pressure on businesses to be more sustainable, we are seeing a decline in their ability to do so. In nine years of conducting this survey, 2015 has seen the biggest year-on-year decrease recorded. Historically, sustainability has been dominated by a tick-box mentality by business which is undermining the long-term value of sustainability investment.

“While it is encouraging to see so many organisations regarding sustainability as an important part of their corporate agenda, they must adopt more formal processes to monitor and measure progress, and avoid a short-termist view of sustainable business practice.”

Retail sustainability

Meanwhile, the upbeat report from the British Council of Shopping Centres (BCSC) emphasises the commercial importance of effective sustainability strategy, particularly in energy.

The BCSC’s “Sustainable Shopping Centres: Energy, performance and value” reinforces the view that better understanding and policy around energy consumption should improve property commercial performance.

The study identifies that older shopping centres would gain most from the sustainability focus on cutting energy use while even those built in the past five years would also see higher returns for owners.

The report advises that the biggest savings come “from replacing the lighting, escalators, lifts and heating, ventilating systems, and air conditioning (HVAC) units, in that order”.

Rapid ROI

In our experience, the rapid returns on investment (ROI) in LED lighting, HVAC controls and smart heat pumps, underpinned by accurate measurement make the most effective case for action. The report argues that shopping centre owners need to embed analysis of energy performance within the property investment philosophy and due diligence process.

As the report says: “The combined impact means that by investing in replacement equipment the savings generated from operating and maintenance costs outweighs the total replacement cost. Lower operating costs reduce the service charge and this ultimately means that occupiers are willing to pay higher rents which will provide gains to the landlord driving an increase in value.

Rebecca Pearce, head of sustainability for Europe, the Middle East and Africa at CBRE said:

“Shopping centres are one of the biggest single contributors to CO2 emissions in the UK commercial property sector. To finally have evidence to prove that energy efficiency is not just a costly exercise without financial benefits is massive for our industry.

“This needs to serve as a wake-up call to developers, investors, owners and all associated stakeholders that energy efficiency and sustainability isn’t a fad. It’s here to stay, adds real value when implemented properly, and is business critical to the lifecycle of shopping centres. Essentially, if no action is taken owners should expect value erosion or price chipping by future prospective acquirers.”

 

We can only wholeheartedly support this view, based on the excellent and rapid payback we have delivered for a wide range of energy-intensive businesses and organisations.