Race to Reduce is Team Effort

February, 2012

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Some Frontrunners Emerge in Four-Year Pursuit

By Barbara Carss

Leadership, a guiding program with measurable objectives and the opportunity for some friendly competition are building blocks of Toronto’s Race to Reduce – an initiative that already encompasses 120 buildings and 52.5-million square feet of office space in an effort to cut energy consumption by at least 10% over four years. 

And it’s not solely building owners/managers who have signed on to the challenge that the broad based alliance, CivicAction/Greening Greater Toronto, launched in May 2011. Perhaps more importantly from an energy management perspective, tenants play a partnership role. 

This kind of collaboration is also central to the 20 x ’15 campaign – a national voluntary effort to reduce energy consumption in commercial office buildings to no more than 20 equivalent kilowatt-hours per square foot per year by 2015 – and similar approaches that stress the importance of operational vigilance and behavioural change in finding and sustaining savings.

“It’s not just: spend a bunch of money [on technology] and hope for lower consumption,” Jason Underwood, President and Chief Executive Officer of Whiterock REIT, observed during a recent panel discussion on landlord/tenant joint efforts, one of the slate of seminars at the annual PM Expo. “It’s the landlords who control the macro items such as building systems and HVAC equipment and then you’ve got the tenants who control the micro draws on energy such as computers, copiers and other office equipment.”

Beyond encouraging tenants to choose energy-efficient equipment in their own spaces and/or invest in more capital intensive projects like lighting retrofits, there are also opportunities to save energy through operational measures such as ensuring that lights are off and cooling levels are reduced in the periods when tenants’ premises are largely unoccupied. Such seemingly straightforward adjustments are premised on a more complicated culture shift, however.

SURMOUNTING A TRADITION OF POLARIZATION

Traditional negotiating stances reinforce the view that tenants are entitled to and, indeed, should consume whatever the lease promises, while traditional net lease structures have made landlords reluctant to implement energy efficiency improvements that ultimately deliver flow-through cost savings for tenants and little direct benefit for the investors themselves. Both sides are now beginning to recognize that different attitudes and practices could result in greater business and societal returns, but it’s still a new and unfolding relationship.

“It depends on finding the right people who are accountable in each organization. There has to be leadership within the landlord’s company, and tenants have to commit,” maintained Jean McLeod, Chief Administrative Officer with Stikeman Elliott LLP, who brought the tenants’ perspective to the discussion.

In the bigger picture, most landlords acknowledge the potential economic benefits of improved energy efficiency, both to reduce operating costs and enhance competitive factors that attract and retain tenants. The growing take-up of corporate social responsibility and sustainability goals is another bridge-building commonality that many of the landlords and tenants participating in the Race to Reduce share. 

“It is embedded into our firm values,” McLeod reported. “For us, corporate social responsibility is critical in terms of recruitment and retention of our people.”

Yet, although values shape the philosophy of the workplace, core business demands typically exert more immediate pressure on the workforce. “Who wants to stay after school and do the energy initiative?” Underwood quipped.

"You can have high level goals, but at the end of the day, the execution comes down to what a whole bunch of people do on an hourly basis throughout the year,” concurred Brad Henderson, Senior Managing Director of CBRE Limited. “You need to translate goals into action steps, recognize good behaviour and change bad behaviour.”

Race to Reduce provides an implementation path for those endeavours – first off, perhaps, by appealing to the competitive spirit that successful business operators across all sectors invariably possess. This is reinforced with a universally applied measuring stick, the Real Property Association of Canada’s (REALpac) energy normalization methodology, which allows participants to readily conceptualize and compare their performance. 

Equally important, the sponsoring organization, CivicAction – which this year marks 10 years of community and economic development efforts among a coalition of leading business, labour, non-profit, academic and government players – brought initial credibility to the challenge, as some of Toronto’s most prominent commercial landlords and their blue chip corporate tenants were the first to sign on. Many of these participants had already been raising awareness and conferring on energy saving opportunities through CivicAction’s earlier established Commercial Building Energy Initiative.

SHARING RESOURCES, BUILDING MOMENTUM

From there, a successful collaboration draws on the resources that each entity brings. Landlords have the expertise in building operations, the infrastructure to monitor consumption and the professional personnel to provide energy management guidance. Tenants have the greater access and influence to mobilize their own staff, as well as facilities managers who are more attuned to the in-house energy load and opportunities to curtail it.

Notably, Stikeman Elliott’s 2008 business case for energy efficiency improvements relied on the data that its landlord, GWL Realty Advisors, provided. Quick paybacks (in keeping with the forecasts) on lighting redesign, retrofit and sensor installation were augmented further when the firm sold 630 surplus fixtures back to its landlord.

The resulting 15% reduction in energy consumption by 2010 has also helped the law firm, which has offices in five Canadian and three international cities, move closer to its corporate social sustainability targets. “60% of our carbon footprint is energy,” McLeod noted. 

“Most of it [argument for retrofits] comes down to dollars and cents, but some of it is also helping tenants understand what they can do,” she added. “We have really relied on and partnered with our landlord.”

This can also occur in the reverse. Large sophisticated tenants, like banks, that have a presence in almost every community can be the instigator of change and/or a resource for smaller landlords in markets that have made less progress in embracing sustainability.

“As a service provider, one of the things we take very seriously is sharing best practices,” Henderson said. “Bringing together the landlord’s operational people with the tenant’s operational people, that, in itself, is sort of an old fashioned social network.” 

Underwood pointed to other spinoff improvements. “To reduce energy means you have to be ‘hands-on.’ It makes you a better operator. It makes you a better service provider,” he said. “It all sort of spirals up.”

In the still early days of the Race to Reduce, participants are leveraging their accomplishments thus far to keep building operators and occupants motivated and focused on the target. Meanwhile, organizers are recognizing achievement – recently announcing winners of the first annual Race to Reduce Awards – and actively recruiting more aspirants.

Panelists expect to see a still larger field in 2012. “It’s added some friendly competition to what was already happening,” Henderson said. “It’s the equivalent of throwing an eco-log on an efficient fireplace.”