Finding sustainable purpose: How we found new life after public funding through profit for purpose
Britain's Energy Coast's chief executive Michael Pemberton discusses the company's transformation from a publicly-funded entity to a firm with a profit for purpose property business model that champions sustainability in the built environment.
Like so many companies with social purpose, Britain’s Energy Coast (BEC) used to be funded by the public purse.
Britain’s Energy Coast, as it is formed today, grew out of a series of regeneration and economic development companies designed to boost the economies of Allerdale and Copeland in Cumbria. The company had property assets, but much of its focus was on the delivery of socio-economic programmes designed to diversify the Cumbrian economy – ideally with the low carbon economy in mind.
But, the funding always came with a time limit and in April 2016, funding ceased.
I was faced with a choice: to fold the company, with its assets to be dispersed, or form a new business model that capitalised on the physical property assets (without funding, the only revenue route).
Together with my senior team, we chose the latter, developing a profit for purpose property business model that enabled physical regeneration in the area, and that could enable surplus profit generation to fund projects that will bring local benefit in the low carbon space.
As a property company with low carbon activities acting as a golden thread, the field of sustainable building is of great interest. We seek the highest standards in sustainability for the properties we bring forward and manage. Through this, we can see huge opportunity for growth of a local supply chain – with excellence cultivated in our county exported far from our borders. This has been front of mind last week, as it was World Green Building Week. The week gave me great reason to pause.
This time last year we were in the formative stages of establishing our new model and we didn’t know if we’d make it through another year. We did and we are stronger for it. Last week marked the first of what I hope will be many, many, World Green Building Week’s that see our participation as an organisation. Our team have used the opportunity to expand their knowledge and share their views under the #OurHeroIsZero banner, that looks to celebrate zero carbon building.
As I reflect on how lucky I feel that we are here and engaging in this fantastic industry, I’m inspired to share the three key things that I believe have made BEC’s new approach enduring – in the hope that other Edie readers facing similar public-private funding model changes can learn from our experience.
Within your sphere of influence
There are lots of great business ideas out there – especially in the green sector. But, what is critical if you are looking at commercial model changes is to choose something that sits entirely within your sphere of influence as an organisation and delivery ability as a team.
Long before our commercially sustainable days, BECs’ funding was earmarked to deliver a Blueprint – a plan mandated by government that would transform Cumbria into a low carbon capital. However, while the plans were laudable, the company’s remit, make up and governance structure did not allow for effective delivery.
Now our activity – encapsulated in a ten year commercially routed plan – is completely within BEC’s control to deliver.
This step is critical for any business undertaking the public – private funding switch and I can’t overstate how much consideration it needs.
Close to your heart and pertinent to your operating space
Just in the same way there are many business models to choose from – there are so many causes, aims and directions with which to align yourself.
Choose careful. Consult with your team, board and owners where appropriately.
It’s a hard slog with long days ahead to make a success of the move from public funding outfit to successful commercial entity and the key drivers need to be things that set your soul alight.
For us, sustainability building is a natural fit because we have existing property asset base that we could start to make a difference in immediately. It also offers a clear market differentiator to the new builds we look to drive forward – including a £300m development that will regenerate our local town of Whitehaven. What’s more – that old ethos of ‘economic diversification’ still hangs in the air with us. This arena of operation gives us the chance to build a stronger job base for local people that any of our previous activities.
Has revenue and growth opportunity
There are lot of great ways to shape a business, and lots of great causes – but it’s no good trying to build a sustainable business models around one of them if it’s a declining industry, or has limited growth potential.
This is one of the biggest pitfalls for companies that take the move from public funding to private operation. Often the work we do as publicly funded outfits DOESN’T by nature make commercial sense – if it did, someone would be doing it already. What you have to do is attach to an industry area that will brings you growth.
The property industry and the sustainable construction industry in particular are booming. Through this we can both play our part in the fight against climate change while driving a healthy income to support projects that really should be done – but won’t get done without deep pockets. This is the encapsulation of our Profit for Purpose business model.
It will be a long time before we know if our choices have been the right ones – but a sound commercial footing is now ours and our ethos and purpose are stronger than ever.
The world needs more commercial outfits with a heart, and as long as we stay savvy, those of us moving from the publicly funded space could have a huge role to play. So, if you are in the same shoes we were in 18 months ago, I wish you both luck and longevity.
Michael Pemberton is chief executive at Britain’s Energy Coast