ESG Objectives: From Cost Factor to Investment Issue

40% of worldwide carbon emissions can be attributed to the built environment – making for a larger carbon footprint than that of the transport sector or industrial activity. Such numbers underline the urgent need for more sustainable buildings. New legislation adds another dimension and transforms ESG (Environmental, Social and Governance) from cost factor into an investment issue, with a leading role to play for facility management.

Whether legislation is the right trigger for driving sustainable business or not, the law does make for an interesting business case. Until recently, many organizations were hesitant to commit, as sustainability was mainly seen as a cost factor. But once you get going with ESG, it becomes clear that it really is an investment issue.

5 reasons to set corporate ESG goals

There are five good reasons for adopting ESG principles:

• We must all contribute to a sustainable future.
• Reduced energy consumption translates into lower costs.
• Avoid fines: with the EU Taxonomy and CSRD guidelines, organizations that fail to meet the set targets risk penalties.
• Affordable funding: banks will give priority to green organizations and apply more favorable interest rates. Investors are looking for green, future-proof and profitable investments right now, and access to funding will depend on how sustainable your business is. This means that an ESG label will give you a competitive advantage.
• The battle for talent: Gen Z, future generations, and even prior generations, value working for an organization that is sustainable and socially responsible.

It's up to facility and real estate managers to translate the corporate ESG goals into practice. This requires in-depth knowledge of the properties and usage of buildings. Organizations need consumption and emission data per portfolio, building, space or even asset. These metrics can then be used to pinpoint the most urgent impact areas, after which targets can be set and monitored.

4 improvement projects

There are four ways to create more sustainable buildings:

• Reduce the number and surface area of your buildings. Especially since Covid 19 and related developments, many areas have become heavily underused, with only a 10% usage for outliers. This means you are not only unnecessarily adding to CO2 emissions, but you are also paying for lighting, heating, and cleaning of areas you don’t need. Software can give you a detailed insight into how your buildings are being used.
• Electrify your assets to replace fossil fuel.
• Generate your own energy. For example, by installing solar panels or sourcing green electricity.
• Digitize and automate, thereby enabling efficient facility services.