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Leveraging the Sustainability Advantage Develop a Flexible Strategy with Clear Directions
November, 2007
By William (Bill) Roth
The rapid ascent of sustainability to the forefront of everyday life for real estate professionals has been unprecedented. It is almost inconceivable that anyone would build a new office building or high-rise residential building without at least designing to the principles of sustainability. Sustainable principles are also rapidly being implemented in the industrial, retail and even single-family residential sectors.
For real estate organizations, much of the benefit from sustainability strategies will come from within the buildings. However, to truly maximize the potential of sustainability initiatives, companies have to look beyond the four walls of their assets.
Real estate organizations that are early adopters of sustainability should have a competitive advantage in the marketplace today. One has to look no further than the reaction of the Toronto Central Business District to the development of at least three LEED (Leadership in Energy and Environmental Design) registered buildings. Landlords of the older stock in the downtown core are preparing for how they will compete with the newer, greener space that will be coming on stream in 2009.
UNDERSTAND MOTIVES, ENGAGE STAKEHOLDERS
Before a company dives into the details of developing a sustainability strategy, there first has to be an open and honest dialogue about why such an initiative is being considered. By clearly defining the "why" behind the strategy, the boundaries of the program start to take form. Without a clear understanding of the desired end result, it becomes very difficult to develop the specific details of the strategy.
For example, if an organization decides that the main objective for greening its operations is to improve staff retention and ease of recruitment, the framework for its sustainability strategy will be vastly different than one that is focused only on those things that have a specific financial payback in a set period of time. The most effective sustainability strategies, and all business strategies for that matter, take into account all stakeholders within an organization.
The interesting thing about the ideology of green is that it means different things to different people. A good sustainability strategy can engage the hearts and minds of most stakeholders.
When compared to "saving the world", the pursuit of increased profits seems to be a selfish and dishonourable goal. However, in a business environment, especially one as competitive and monitored as today, any sustainability strategy must have an overall net positive impact to the profitability and financial health of an organization. To achieve the maximum overall benefit from sustainability (financial, environmental, and social), the best and the brightest organizations invest partial savings from specific initiatives to fund others that have less financial and more holistic payback.
As more and more information is thrust upon us everyday, it is becoming increasingly difficult to understand what sustainability is. This confusion can often cloud the process and sidetrack corporate thinking and strategy.
The most logical first step is to clearly define what sustainability means and why it is important to a company's future success. In the absence of a clear understanding of what will and what won't be included in a strategy, it is all too easy for initiatives to become mere "feel good" statements that never truly drive change through an organization.
Are we retrofitting our existing buildings to be greener? Where are we buying our power? How green are our procurement policies? What types of cars make up our corporate fleet? How does our corporate culture align with the principles of sustainability? To which green standard are we developing our new buildings? What is our carbon footprint? For a sustainability strategy to truly take hold, questions like these and others have to be asked at all levels of an organization.
One of the best ways to capture a company's sustainability strategy is to develop a vision statement for the initiative. To truly demonstrate the importance of sustainability, some organizations have even revised their existing corporate vision statements to include the sustainability vision. Putting sustainability on an equal playing field with the organization's other strategies is an important step in highlighting the true conviction of the program.
STATED COMMITMENT, ACHIEVABLE OUTCOMES
There are a few common areas where real estate organizations begin to get sidetracked or to lose momentum with regards to sustainability strategies. A company's existing culture and ability to change needs to be considered during the definition and goal-setting for a sustainability strategy.
The breadth and depth of how far a company is going to take its green strategy should be achievable, specific and realistic. Too often, lofty statements are made that make good headlines, but are impossible to achieve. If the people who are going to be responsible for executing the vision do not truly believe they can succeed, buy-in will be limited and results will most likely fall short of plan.
As the green wave has washed over the real estate world, there have been many broad, general statements made by organizations. One of the most common has been: "All our existing buildings will meet a certain green standard."
This type of announcement sounds like a great rallying cry for a real estate organization. However, greening any building requires a very asset-specific approach. There may be certain assets within a portfolio that simply cannot achieve a defined standard based on design, construction, age, functional programming etc.
In the absence of unlimited money it may not be possible to achieve the desired benchmarks. At that point a company either has to go back on its policy or sell the asset and reallocate the capital somewhere else.
PAY ATTENTION TO DETAILS
Carbon footprinting and carbon neutrality are two of the latest hot topics in the green movement. Organizations pursuing a measurable footprint or carbon neutral status should find a good partner to help define what will be calculated and how required components will be measured.
If offsets are going to be part of a carbon neutral initiative, it is important to research and understand how the offsets are actually generated. There is no standardized mechanism for defining and awarding carbon offsets, thus there is a wide spectrum of validity of credits on the market today. Becoming a carbon neutral organization can be a very effective way to define and communicate the organization's sustainability commitment and strategy, but the organization must be able to explain and outline exactly how offsets are achieved to avoid accusations of green washing.
The details of the execution will drive the strategy down to the grass roots of an organization. The success of the strategy starts and ends with how clearly and realistically the playing field (the why) and the goal posts (the what) are defined.
Sustainability is all about continuous improvement for the betterment of an organization, society and the natural environment. As with any strategy, it must constantly be updated and evolve. As organizational behavior becomes more green-focused, strategists can start to expand the "why" and the "what" of their strategy and broaden the ability to drive change within a company, the industry and the world at large.
Bill Roth, P.Geo. is the Director, Real Estate, Central Canada, for Jacques Whitford Limited. He is responsible for the overall client strategy for the real estate sector team and has been working with numerous large real estate firms to develop and implement their sustainable strategies. For more information, see the web site at www.jacqueswhitford.com.
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