FM TODAY: A STORY OF REALITIES AND VISION - Pt. 2

Sustainability Is Moving Along the Maturity Curve

Sustainability is maturing beyond the “new build” emphasis that characterized it not so long ago.  Today, the emphasis is on developing corporate sustainability policies and protocols to improve behavior and outcomes while working to strengthen new build rating systems and credentials.

The growing interest and effort behind developing net zero buildings is placing a premium on the integration of design and operation, and recognizes that a building’s affect on the environment continues over its entire life span, the sum of the whole being several factors greater than first environmental cost.  Key strategies in this maturation include green leasing, supply chain accountability, making data transparent and possibly a bit of social engineering.

The Global Reporting Initiative (GRI) continues to evolve but is only one example of maturing sustainability regimens.  In August of this year the UK Green Building Council published the results of its latest review with members as it gears up for a GRI update in 2011.  The Leadership in Energy and Environmental Design (LEED) program continues to refine its credentials and provide market-niche specific certifications.  In whole, these and similar transitions in other protocols indicate a continuing trend toward knowledge specialization with the goal of driving sustainability consciousness deeper into the built environment psyche.

An interesting evolution to watch is the increasing use and effect of visible building performance data.  Important to operators because visibility makes operating efficiency transparent, and therefore important to them personally as well as organizationally, it also has the potential to broaden its reach.  Buildings with good sustainability resumes command higher rents.  As technology makes information more visible, however, it will not only be owners and operators who see it.  Occupants will be able to compare energy performance of other occupants in the building.  This visibility has some peer pressure potential and most certainly will encourage lessees to include occupant energy profiles on their lease shopping list.

Global Reporting Initiative (GRI) Overview

GRI is an organic response to the sustainability dialogue in that it began as an informal network, is allied with other international programs, and is a continually evolving framework. Over time it has matured until it is now the pre-eminent guideline for reporting sustainability performance across a wide array of dimensions. It seeks to standardize reporting to enable accurate assessment of any participating organization. That said, it does not mandate performance, only a standard way of reporting. It recognizes that sustainability leadership must come from the top and that different types of organizations have different needs, interests, priorities and constraints.

This Reporting Guidelines Reference Sheet provides an excellent overview of profile and performance information which organizations submit, and can be used as a support tool to guide engagement discussion. If you do elect to report your sustainability performance using GRI guidelines you have the option to provide a copy of the report to GRI, register the report with GRI thereby allowing data to be included in the global database, and to ask GRI to check the self-rating score you have applied.

Allowing data to be shared via the global database increases the knowledge base of all practitioners and informs the continued development of sustainability.

In addition to overall reporting standards, GRI is on course to develop industry specific supplements. This will allow meaningful analysis and definition of best practices within an industry segment and offer particular value to those participants. Industry segment supplements are currently available for the Electric Utilities, Financial Services, Food Processing, Mining & Metals, and NGO segments. Supplements are currently under development for the Airport Operator, Construction and Real Estate, Event Organizer, Media, and Oil & Gas segments. Other segments are currently in the pilot stage.

In many ways GRI mimics the model used by the Open Standards Consortium for Real Estate (OSCRE), drawing from operators around the globe to share openly. In OSCRE’s case the effort is to standardize information sharing and process flow within the real estate sector. In GRI’s case the goal is to provide a standardized rigor to reporting and ranking sustainability performance, thereby increasing the quality of information available and elevating performance. In both cases the model is voluntary, participatory and beneficial on a wide basis.

What Does Sustainability Really Mean?

Sustainability is moving along the maturity curve, becoming a mainstream and sometimes core issue for FM’s The problem with “sustainability,” however, is understanding what it really means and where it applies. Too many times the definition provided is limited, possibly in unintentional ways. For example, those who think in terms of development understand sustainability as an element of design and construction processes but seldom envision it past initial occupancy when the project team is largely gone. Operators think in terms of maintaining and optimizing the physical attributes and systems of a facility over its entire life cycle. Service providers and vendors consider the quality of products and services and their carbon footprint, as an example.

All these sustainability perspectives can be confusing and one needs to find a unifying element. And there is one, Facility Management.

FM has always been about people, place and process. These are our core concerns, virtually everything FM is about is encompassed in them. One can effectively argue that sustainability also falls neatly into these classic elements of FM.

People: Providing the people of the organization with good Indoor Environmental Quality (IEQ) is just the beginning. Amenities that support staff and the community also fall into this category.

Place: The site and building development process are obvious, as is the outfitting and maintaining of the facility over its life cycle. Workplace strategies, standards and policies can also enhance sustainability by lessening the amount of space needed and therefore minimizing the built environment’s impact.

Process: Every FM process from procurement of property and space, mail and food services, maintenance, work order management, conference support, office supplies, transportation and the host of others that FM’s lead have a direct bearing on not only the organization but also the environment. “Quality service” is no longer just about the business of the business, the business of sustainability is also a part of the quality dimension.

FM is where the intersection of the outside world and the inside world occurs. When we deliver quality processes that support the business of the organization we have an impact. When those same processes are optimized in how they affect the world around us then we have much greater impact.

Requiring Landlords to implement good sustainable practices in property management and renovations, requiring suppliers to be ISO 14001 certified, optimizing building operations to minimize energy consumption, implementing workplace strategies that allow work at a distance and reduce car trips are all sound practices. They support the business and lower the business’ impact on natural resources while enhancing the quality of life of employees and the community.

Sustainability. What does it mean? To a large degree it means “FM.”

A Green Lease Cautionary Tale

Imagine developing a new LEED certified building only to have the investment and competitive future of the property negated by one clause in a tenant’s lease. Think it can’t happen, or that it didn’t happen? Think again.

The anchor tenant in a new building caused a clause to be inserted in the lease which read:

“Landlord shall not be required to impose on Tenant or any other tenant of the Building, requirements for Tenant or other tenants to comply with any certification requirements under the USGBC’s Green Building Rating System or other green or sustainable design elements.”

Sustainable building, LEED certification and social responsibility all continue to be important elements in the commercial property maket sector. Achieving LEED certification and having a good sustainability program enhances market value and competitive positioning. More and more tenants have sustainability as a requirement because they recognize the long term financial and social benefits of doing so.

However, there is an expectation in the marketplace that buildings will improve their sustainability profile over time as new technologies and competitive requirements dictate. Doing so requires capital investment which must be borne in part by tenants, and there’s the rub. In the case referenced above the anchor tenant forced a clause into their lease prohibiting the building from requiring any tenants in the building from complying with any sustainable project requirements. Presumably this stance was taken to insulate the tenant from lease increases associated with capitalization of these projects. Once the clause is in place the building and its owner are effectively held hostage until the clause is renegotiated or the lease terms out. During the time the clause is in effect the building owner alone is responsible for capitalizing all sustainability improvements. Improvement which will benefit tenants as well.

A more rational approach would be to recognize that sustainability improvements over time will benefit both owner and tenants. Instead of negotiating a hostage clause like the one above the parties could have chosen to agree on a governance mechanism that would allow joint participation in decision making and an equitable cost / benefit sharing formula.

For more on this tale see http://www.galleyecocapital.com/2009/12/the-little-clause-that-killed-a-green-building-sale/

Lease Green, But Know What It Means

Green leasing is in vogue these days and I suppose that’s a good thing. As with any initiative, however, it is important that it be done right; and that can vary from tenant to tenant and landlord to landlord. Many companies are taking advantage of current economic conditions to leverage concessions from landlords, renegotiating leases to lower rates in exchange for extended terms. More and more frequently green leasing is included in these discussions. For some it may even be a prime goal.

It is important that landlord and tenant agree on what their particular form of green lease will include. For some it may be as basic as assuring that building service providers use green products or that a good recycling program is in place. Others may set standards for common spaces, ventilation, natural light or other elements. Some property owners are investing in green building projects as a way of differentiating themselves in a tough market.

Aside from requiring consensus on what green means in a particular case, a green lease also brings accountability for measuring and reporting performance against the green lease standards. The parties must agree here also. What will be measured? What is the standard? How will it be reported? How often will it be reported?

The lease should also be specific and fair in how projects will be capitalized and benefits allocated. For example, an owner will have a hard time justifying capital to retrofit building energy systems to increase efficiency if the resulting benefit goes primarily to tenants. In short, the lease should be crystal clear on the questions of who is responsible for paying for projects or initiatives, how benefits are shared, tracking mechanisms and how differences of opinion will be resolved.

Tenants who occupy a majority or very large portion of a building have more leverage with the landlord and can help move the green initiative along. If this is you, don’t forget to network with other tenants in the building. Including them in the process will be beneficial to them and you, demonstrate your recognition of their role in the building and help speed acceptance by other tenants and the landlord.