Six steps to sustainable commercial buildings for owners

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Summary

Six steps to sustainability is a 'how to' guide for owning, developing, designing, constructing, occupying and managing sustainable commercial buildings. For each industry group, it is a compilation of input and ideas from Australian industry leaders as to what, in their experience, are the most important issues and how they can be addressed. For owners, the six steps to sustainability article provides the key steps for integrating sustainability into their commercial buildings portfolio.

The six steps for owners are:

Step 1 - Active leadership

Active leadership is important for increasing the understanding and cultural adoption of sustainability principles, as well as for promoting related initiatives and managing related change (Lantos, 2001; Andersson & Bateman, 2000; Starik & Rands, 1995). It follows that achieving sustainable commercial buildings depends on strong leadership, starting with the CEO. The CEO is the primary link between corporate board members and various levels of an organisation. With the CEO on board, it is possible to get the commitment of senior management, to gain access to financial and human resources, and to ensure that sustainability initiatives are recognised as relevant to business, organisational, and personal objectives and values (aspirational, strategic and operational).

The organisational structure and management of companies can vary greatly; however, in every case, getting the major decision makers on board is key to the organisation realising their vision for a sustainable commercial building.

Step 2 - Define the business case - place a value on sustainability

The objective of the business case is to define the contribution that ownership of a sustainable commercial building can add to stakeholder value. This reframes the financial process by including appraisal of the following questions:

• How can sustainability add to our profit?
• How can sustainability reduce our risk?
• How can sustainability impact on the continuity of our business?
• How does sustainability fit with our beliefs and values?

The groundwork for the business case is typically done by working groups, whose aims should be to quantify:

• the effects of owning a sustainable commercial building on current business plans, systems and processes
• the required asset management strategy and process developments, including for building acquisitions/disposals, compliance, and 'future-proofing' of assets
• the change management strategies required to culturally, structurally, and systematically embed sustainability within the organisation, so that sustainable buildings within the portfolio perform to the expected levels.

The outcome of the working groups will inform the business case development and may highlight a need to reframe your organisation's financial processes to:

• embed TBL accounting and reporting
• establish the budgets required to undertake sustainability
• establish life cycle costing, payback evaluation, and trade-off criteria to evaluate the future value of sustainability inclusions.

The business case will vary considerably across the commercial building sector, as a number of the different business case factors will provide different value to different industry groups. From an owner's perspective, the business case will also vary depending of the type of building owner (e.g. an owner-occupier may value improved occupant productivity, while an investment funder will be driven by the ability to attract and retain tenants).

Step 3 - Embed sustainability in your organisation's decision making

In addition to the big strategic decisions, achieving and owning – and maintaining the performance of – a sustainable commercial building demands many small decisions made at all levels within your organisation. Ideally, sustainability will become a consideration in all strategic and operational decisions.

One way to encourage this is to establish a series of working groups charged with embedding sustainability into your organisation's culture, structure, processes and behaviours. This requires an interdisciplinary approach, led by the CEO or a change leader. The working groups may be asked to look at key operational and strategic issues such as people and performance, environment, community relations, markets (customers, suppliers and JV partners), finance, and governance. Employing tools, such as an environmental management system, can help to embed sustainability within the day-to-day activities of your organisation.

Working from the organisation's mission, vision and values, the working groups may suggest changes to organisational structures, relationships and processes. Importantly, they will discuss pressing issues with stakeholders, select performance indicators and benchmarks, decide on critical strategic actions, and set targets for the next planning period. They will also work to engage employees and other stakeholders to encourage the desired changes to decision-making behaviours.

A range of new policies and existing policy revisions may be necessary, such as:

• environmental policy
• sustainability objectives and targets (portfolio and organisational)
• reporting objectives (for internal review only or publicly available).

However, policy changes are just one instrument of leading change in organisations. People in your organisation need to be empowered to implement sustainability, and a total commitment at all levels of your business is needed to convince your clients and employees that you are genuine. Organisations have to live what they are selling. Once employees are committed to sustainability, momentum will build, new ideas will be encouraged, and innovation will result.

Step 4 - Develop a vision, set targets and benchmark performance

Developing a vision statement for your building portfolio or individual building project will act as a guide for the design/refurbishment, construction and operation of your building. Targets need to be established to meet the performance objectives for the commercial building that were established by the working groups and guided by the business case. Targets may be based on branded benchmarks or rating tools (e.g. carbon neutral, ABGR, NABERS or Green Star ratings) or internal organisational goals, such as employee productivity and staff retention. The implications and cost-effectiveness of pursuing sustainability initiatives beyond the benchmarked relevant tools should also be explored to continually drive innovation and differentiation. Setting smaller short-term goals with the intention of working up to larger outcomes can be a useful starting point. Owners can also look to move beyond international best practice by implementing new technologies and strategies.

The design performance of a green building may not be met in practice for a number of reasons – a green building may still have 'grey' occupants due to lack of systems integration, poor building commissioning, and lack of training. Building management, tenancy fit-outs and occupant behaviours all impact on overall building performance. Therefore, once targets have been set, actual performance needs to be measured.

At a portfolio level, identifying the performance status of your current buildings is crucial. This will provide a benchmark to compare your stock with 'standard' and 'leading practice' within the industry and will set the platform from which to determine targets for improvement. Reviewing your building stock involves both identifying the performance status of individual buildings within the portfolio and establishing a benchmark of overall asset performance.

Step 5 - Engage tenants in the sustainability of your building

Increased demand for sustainable commercial buildings in Australia is being driven, in part at least, by growing awareness among tenants of environmental issues such as climate change, energy efficiency and water shortages. Tenants may also be seeking to fulfil their own corporate sustainability goals and to align with their business case for sustainability; for example, governments in Australia now frequently specify minimum performance ratings for the buildings they lease. As a result, owners are increasingly being asked to deliver sustainable outcomes (i.e. specific building ratings) for their tenants.

However, delivering a base building to a specific rating does not guarantee that the occupied building will perform to design expectations. A poorly designed and inefficient tenancy fit-out, or tenant behaviours that counter sustainability initiatives (e.g. not separating wastes or over-riding automated light switching), will impact on overall building performance. To overcome this potential problem, owners need to interact with their tenants to raise their understanding of tenancy fit-out design and office management practices that will aid in reducing negative impacts.

One way to promote positive fit-out design and tenant behaviours is the use of contractual agreements such as green leases and building performance guarantees. Through defining the roles and responsibilities of all the parties in achieving particular sustainability outcomes, these forms of contractual agreements help to engage all parties and to influence their behaviours.

Step 6 - Optimise your assets

Aim for peak building performance

A highly efficient building running below its capabilities will result in a lower return on investment and weaken the business case for future projects. Compared to traditional buildings, which are more an assembly of technologies, sustainable buildings are highly sophisticated technological systems that need to be continually and finely tuned to achieve and maintain their optimum performance. This will no doubt get easier as the technology develops, and as the industry gets better at delivering and understanding these new systems.

Monitor and report sustainability performance

To achieve sustainable objectives, good intentions need to be backed up by actual performance. Monitoring building performance and sustainability engagement over time allows the asset's performance to be measured against the projected value outlined in the business case. Sustainable building design asks people to innovate, and therefore benchmarking data is needed to measure the successes and failures. Data is also important to reflect and report on the key issue of optimised asset value for all stakeholders, who are likely to extend beyond shareholders to include occupiers, customers and the local community.

Share lessons learnt

Sustainable buildings are complex, and measuring and understanding their performance realities is important to maintaining optimum building performance and to improving industry knowledge. In this respect, it helps if performance data is disseminated to stakeholders in the project, including the occupiers, designers and building managers, and to the market more generally. For example, designers will benefit from feedback on building performance, as it will help them learn what worked as designed, what didn't, and why. You are welcome to use the Your Building website as a vehicle to promote your sustainable building initiatives and achievements.

References

Andersson, L.M. & Bateman, T.S. (2000), 'Individual environmental initiative: championing natural environmental issues in US business organizations', Academy of Management Journal, 43(4), 548-570.

Lantos, G.P. (2001), 'The boundaries of corporate social responsibility', Journal of Consumer Marketing, 18(7), 595-630.

Starik, M. & Rands, G.P. (1995), 'Weaving an integrated web: multilevel and multisystem perspectives of ecologically sustainable organizations', The Academy of Management Review, 20(4), 908-935.