Show me the money... from sustainability
At my keynote at edie Live, I spoke about a vision of a sustainable built environment, how far away from it we currently are and what the industry is doing to move towards it. It's evident that, despite some positive progress, we need to fast-track the level of change and one way of achieving that is by making the business case for sustainability abundantly clear.
The problems are plain to see. Think climate change, resource depletion, biodiversity loss, health crises and social inequality. The solutions are often less clear, but many exist, and the business world, including property and construction, is attempting to tackle these issues. This has led to an increasingly broad range of activities undertaken in the name of sustainability or responsibility. The language has moved from reductions and ‘doing less bad’, to doing more good and having a net positive impact. At the same time, businesses from all sectors are identifying their purpose and attempting to use it to steer their operations.
To bolster the business case, every week there seems to be another piece of research or an investor announcement stating that undertaking sustainable business activities brings financial rewards. Recent research into B-Corps concluded that they are growing 28 times faster than the national average. An ING report in February found that US firms are using sustainability strategies to boost revenues, cut operating costs, and achieve better borrowing rates. In April, Deutsche Bank proclaimed that investing in eco-friendly and diverse companies brings higher returns, and Legal and General Investment Management told companies that they will divest if they don’t hit climate targets.
However, there is still a feeling in many organisations that the link between sustainable activities and creation of value at the individual business level is unclear. At a UKGBC event earlier this year, 77% of the 150 people who signed up to attend said they received pressure from investors, clients, or employees to prove the business value derived from sustainability activities.
It’s no secret that the costs of sustainability to a business, such as the salaries of many of you reading this, are direct and measurable. However, the effects of the activities are often distributed across differing parts of the business and so the value produced is indirect and often intangible, and consequently difficult to measure.
One way of identifying and measuring the value is to link the sustainable business activities to existing value drivers for that business, such as talent retention, reputation, customer satisfaction, and innovation. At UKGBC, we’ve worked with our members to identify common value drivers and their links to sustainable business activities, and pull together initial tables of indicators, metrics and methodologies, alongside case studies.
Collecting the data for the metrics requires a range of data sources and stakeholders from within and outside of the business. For example, HR, business development, facilities, research, marketing and finance teams, together with customers and investors. On its own this is a great way to start collaborating on sustainability across business divisions and identifying where the value is manifested.
Through the process it became clear that although many businesses want to demonstrate the value generated by their sustainable activities, few have managed to implement a robust way to do so. The UKGBC report helps sustainability professionals and senior management identify metrics useful to their business, enabling them to demonstrate the value of their sustainability activities and thereby attracting greater investment in them. I hope that by facilitating the ongoing sharing of such metrics amongst the industry we can accelerate the integration of sustainability across all businesses and business functions and can reach the rate of change required to create a sustainable built environment.
UKGBC’s Capturing the Value of Sustainability report is available here
Alastair Mant is head of industry engagement at UKGBCUK Green Building Council