Facilities managers can play a key role in implementing their company’s environmental initiatives.
By Regina Ludes
As more companies implement environmental, social and governance (ESG) programs, facilities managers will be tasked with greater responsibility to meet the environmental goals and requirements set forth by their corporate executives. Managers who embrace this challenge can make a meaningful impact not only on the environment, but for their organizations.
“Implementing an ESG program can create a competitive advantage for your business,” said Tom Kay, Chief Revenue Officer with SMG Facilities and Co-Chair of ConnexFM’s ESG Committee. “Companies that perform well in ESG initiatives also tend to have stronger financial performance with better investment value and higher returns.”
Kay cited research published in the Harvard Business Review, which analyzed the results of 200 studies. 90% of the studies analyzed concluded that strong ESG standards lowered the cost of capital improvements, 88% showed better operational performance and 80% showed a positive correlation between stock performance and good sustainability practices.
While facilities managers might be in a position to make a difference within their organizations, some are reluctant to move forward because they doubt that such efforts can be successful. Yet others don’t know where or how to begin. For most ESG environmental endeavors, it’s easiest to start small.
For starters, from an “E” or environmental perspective, facilities managers can ensure that critical assets, such as HVAC, lighting, etc., are energy efficient and Energy Star-certified wherever possible, said Kay. They can also implement “smart” energy-efficient equipment and systems that drive down utility costs and extend the usage life of critical equipment. An energy management system (EMS), for example, can help facilities managers monitor, control and optimize the performance of HVAC across an entire distributed portfolio and thus increase operational efficiency and reduce carbon emissions.
Higher Performance Standards
“Roughly $200 billion a year is spent on operating buildings in the U.S., yet 20%–30% of that money is wasted,” said Maria T. Vargas, Director of the Better Buildings Initiative at the U.S. Department of Energy (DOE). “Companies either don’t prioritize energy issues or they lack corporate commitment for them. Some don’t know how to finance the programs, or whom to trust to run them, or they don’t want to be the first company in their location to do it. Small changes like improving lighting, HVAC systems, even office equipment, can improve a company’s energy efficiency,” Vargas said.
“Some organizations have set extremely ambitious goals for their ESG programs and are now challenged with delivering on those promises. Varying areas of focus, such as becoming carbon neutral by a certain date or entering a more efficient cycle of supply chain management, have proven difficult to implement,” said Jade Dauser, Real Estate and Technology Services Leader with Ernst & Young.
Furthermore, some facilities managers might have misconceptions about the process, such as buying a product or service will mean that the task is completed. But carbon tasks are increasingly being scrutinized with questions about whether they are truly valuable to ESG or if they are a stop-gap solution, Dauser added.
“What we’re seeing is the realization that they have to make more effort, invest more money
or change more of their internal processes than they expected,” Dauser said.
The first step in any ESG strategy is to develop a clear and provable state of operations from which to grow, Dauser said. “Many facilities managers might think they know where they stand with their sustainability efforts and carbon emissions reductions, but their data wasn’t collected properly or thoroughly, or the data can’t be easily compared. They have to become more aware of how their locations are operating and how these locations contribute to the company’s overall carbon footprint.”
Benchmarking can help managers determine how much energy their facilities are using, Vargas added. “Benchmarking allows you to compare your location’s data with other companies with similar building types or locations. The data can also be used to look at different properties within a company’s portfolio to prioritize where to invest in energy improvements.”
Data collection is also critical in communicating and validating progress of ESG priorities, not to mention efficiencies and savings gained, Kay added. “Each company will identify certain tenets or principles that are critical to their ESG strategy, and those metrics weighted based on the priorities within the grand scheme of ESG within their company.”
For now, there are no definitive rating agencies, defined reporting, standard, guidance or governing principles that facilities managers can refer to, Kay said. “Much of a company’s ESG data will come from ‘self-reporting’ with the lion’s share of data collection falling
on their service providers.”
Partnering with the U.S. Department of Energy
To learn more about how to increase energy savings, ConnexFM has partnered with the U.S. Department of Energy to educate members about ESG resources. Last fall, ConnexFM’s web series “The Daily Grind” featured an interview with Vargas, which members can access
on the association’s website. Additional resources and education will be offered at the ConnexFM2023 National Conference.
In addition, through DOE’s Better Buildings Challenge, facilities managers can learn from partner organizations about best practices and strategies to increase the energy efficiency within their own organizations. Similarly, the department’s Better Climate Challenge, which launched in early 2022, provides guidance and support to partner organizations that commit to a 50% reduction in carbon emissions (Scope 1 and 2).
“By being proactive and learning how to improve energy efficiency, you’ll see how you can achieve the savings. It’s less costly if you plan for improvements rather than it creeping
up on you,” Vargas said.