Too often, in the world of ESG, we focus on a specific issue or trend without considering the strategic impact of sustainability across our entire organization. Yet, the key to an impactful ESG strategy is just that, a holistic approach and the consistency that accompanies long-term thinking in all business decisions.
Think your organization is taking a holistic approach? Step into the client’s shoes for a moment and look at your own organization and ask the same questions you are asking of your assets.
What is your organization’s corporate carbon impact - the impact of your business offices and operations? Have you measured it?
What does your supply chain look like? Have you questioned it?
How do you promote diversity, inclusion, and equity amongst your employees? Are you tracking promotions and compensation by employee group?
Does your organization have internal policies and procedures that ensure corporate decisions align with purpose-led performance?
Are you evaluating the risks and opportunities that climate change may present to your own organization?
Especially in real estate, we often see organizations set up robust sustainability programs that are completely focused on their properties only, but that has little to no impact on how the organization focuses on its corporate operations. This can lead to a do as I say, but not as I do circumstance that holds the potential to undermine the entire strategy.
The test I like to use is to look back at your sustainability goals and look at whom the audience for each is. I once had an experience in which I spoke with suppliers of a product in a competitive procurement exercise. Vendor after vendor came in and told us what they could do for us, yet not a single vendor told us what they do themselves. At one point, I asked, “what is your impact?” my question was met by silence, and eventually, the reply, “what do you mean?” The organization had never stopped to consider what their corporate impact was; instead, they focused entirely on what they did for others.
To effectively impact climate change, we must shift our focus from a linear focus to a more circular focus. The traditional “take, make, and dispose” production model leads to waste compared to a more circular approach that considers the entire life cycle. Yet, while “circularity” needs to be considered, it must be considered in a holistic manner. It is not enough to do a life-cycle analysis on the product without considering the organization producing the product.
You might think about this from a leadership position. Certainly, by embracing ESG, your organization has taken the position that understanding the impact of its operations is important. Quite possibly, your organization is reporting through a framework such as GRESB or developing assets with third-party certifications such as LEED. So what message are you sending when your corporate office hosts guests with one-time-use plastic water bottles? What does it say if your office has no recycling or evidence of a recycling program? What is the potential reputational risk? We live in a world where cameras are on every phone, and social media can quickly spread evidence that your organization’s internal values don’t match their external messaging.
You do not have to look far to see examples of organizations that have been harmed by making environmental claims but not operating in an environmentally friendly way. One example from the fossil fuel industry is BP’s “Beyond Petroleum” campaign, which boasted $1.5 billion a year in alternative energy investments, while 93% of the companies investments remained in oil.
It is too common for organizations to promote the sustainability of their properties without looking at the sustainability of their own organizational operations. When a sustainability goal is made, it should rest on these three pillars:
Intention
Commitment
Execution
All three must be present in any sustainability initiative and in equal parts. Wanting to do the right thing is not sufficient; it must be accompanied by commitment and actually doing the right thing. When placed under the holistic lens, this also means all three must be reflected throughout the organization, both in words and deeds. Failure to walk the talk demonstrates a lack of commitment.
So, where do you start? I would suggest the first step is taking a step backward and assessing what messages you are sending now. As mentioned earlier, evaluate this from all angles, including what message someone external of your organization would get if they visited your office. This may include things like the strategies around waste reduction and reduced impact through reuse, reduction, and recycling. If you are setting a goal to reduce your impact on landfills - are you sending out paper bills? What does your business card say about your organization - is it printed on responsibly sourced card stock? Is there evidence of recycling in the office? Are you handing out disposable kitchenware or reusing it?
Note: Understandably, the current pandemic may change your approach in some of these areas - but be sure to include signage explaining why you have temporarily moved to one-time use items. Equally important is also to make an effort to plan for how to deal with those one-time use items if this is the decision made.
Governance can also help by enacting policies that make acting with a long-term view standard operating procedure. Taking the time to build out ESG policies can help guide your organization towards more consistent results. For more on governance, see this article.
As organizations, we have to start thinking more holistically. While Stephen Covey said, “Begin with the end in mind,” it is equally important that you consider the consequences of the end that you have in mind. Transparency into your operations is increasing in importance. Not only are investors asking, so are regulators as well as customers.
What will you answer next time you are sitting with a client and telling them about your ESG program, and they ask - what are you doing inside your own organization?
You can help reduce the impact of the built environment by sharing this blog with your peers. Together we can impact the 39% of greenhouse gasses attributed to the built environment. It starts with awareness, and we succeed with teamwork.
Stay well!
Chris Laughman is the ThirtyNine Blog author, a blog dedicated to reducing the impact of the built environment. When not blogging, Chris is helping the real estate industry reduce energy and water impact as the Vice President of Sustainability for Conservice, the Utility Experts. Whether Multifamily, Single Family, Student Housing, Commercial, or Military, we simplify utility billing and expense management by doing it for you. Our insight into your utility consumption provides an opportunity to identify risks. Leveraging innovation and experience, we ignite solutions with real impacts and track performance to ensure the trendline stays laser-focused on the goal. To get there, we must build relationships within our organizations and outside of our organizations building the critical mass needed to truly make a difference. We have before us a tremendous opportunity. Standing shoulder to shoulder, we will get this done. Contact me at claughman@conservice.com for more information.
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