2018 felt to us to mark the year that environmental sustainability went truly mainstream. We saw the positive impact that engaged and passionate people can have on the agenda of corporates on a wide range of issues. Plastic pollution, veganism, fast fashion, science-based targets all became headline news and we are continuing to see this growth with the likes of Veganuary uptake and M&S releasing a completely vegan line.
However, the release of the IPCC’s report and the outcomes of COP24 last month indicate that our efforts are not sufficient and we are heading towards climate disaster. –Current pledges to cut CO2 emissions are on track to push global warming to at least 3 degrees by 2100, a full 1.5C higher than the IPCC recommended 1.5C pathway. We can’t emphasise the scale of the implications enough and the impetus on us all to do more. So, what do we expect to see in 2019 to drive this change?
The Corporate Reporting Dialogue launched its two year ‘Better Alignment Project’ in December 2018.
Improved alignment across sustainability frameworks and integration into mainstream reporting
2019 will see the continued move towards a higher level of integration of key environmental, social and governance (ESG) factors into mainstream reporting and investment decision-making. The TCFD recommendations will continue to play a key part in advancing this agenda over 2019 and, as a growing number commit to implementing these, this will drive companies to consider not just the impact their business has on the climate, but also the impact that climate change will have on their business. The Corporate Reporting Dialogue launched its two year ‘Better Alignment Project’ in December 2018 which will see the main ESG standard setters and framework providers including CDP, GRI & IIRC come together to map their respective sustainability frameworks and standards, to determine how they can achieve greater alignment, as well as support integration of material non-financial information into mainstream reporting.
Widening the net of ESG issues and a push for increased transparency
It’s no secret that investors increasingly understand ESG risks and opportunities and are pushing for participation in benchmarking and rating mandates – and we expect this to truly become standard practice this year. But what are we seeing across some of these key frameworks? GRESB is increasingly placing an emphasis on ‘totality’ – an understanding of the full impact of an operation that is clear, transparent, impartially-audited and supported by robust data that extends to a broader range of ESG issues. As CDP has indicated there will be no significant changes to the questionnaire in 2019, we predict companies will use this time as an opportunity to consolidate their disclosures for Climate Change, Water and Forests and utilise CDP to respond to investor requests for information. With this in mind, we expect more emphasis to be placed on transparency – in particular, addressing Scope 3 emissions and setting Science Based Targets in order to demonstrate alignment with the Paris Agreement.
‘Smart’ buildings take on a new meaning
Smart buildings will take on a new meaning, as not only will they become more efficient, but more renewable and user-focused. Buildings will get much Smarter, enabling higher cost and carbon savings from optimisation as IoT sensors and gateways become more cost-effective and widely available. A combination of ESOS and 20%+ increases in energy costs will engage boards more on energy efficiency. The ESOS compliance deadline is 5th December 2019, which requires Board level sign-off. This coupled with an average of 20% or higher energy cost inflation will re-focus boards on energy efficiency opportunities that will now have better ROIs.
Following Brexit will mean companies look to ‘lock-in’ agreed electricity unit rates for 5-10 years.
PPAs will be embraced more as organisations look to lock in renewable energy contracts to save carbon and reduce price risk. 2019 will be the year that Renewable Power Purchase Agreements (PPAs) come into their own. Rising grid energy costs, reducing renewable PPA prices and volatile markets following Brexit will mean companies look to ‘lock-in’ agreed electricity unit rates for 5-10 years. This creates a double-whammy of reduced carbon and less risk. More organisations will be exploring and embracing electric car charging infrastructure and how this will affect their electricity usage.
While these changes will increase energy costs and carbon emissions, if done well there could be new revenue opportunities as well.
Wellbeing becomes mainstream and workplace enhancement becomes a key focus
By the end of 2019, how wellbeing is supported by buildings and site management will be better defined with more pragmatic solutions, which will ultimately lead to better buildings and more productive occupants. Adoption of less expensive and more programme specific standards. Having successfully been certified to the first RESET Air Shell and Core in Europe at the end of 2018, we are anticipating two more projects to be certified in the next month or so, with additional projects to come. At the same time, we see a growth in Fitwel Ambassadors and an increasing number of Fitwel pilot projects. There will be a growth in wellbeing projects which are less about certification but more to do with employee or tenant engagement and workplace improvement. Carbon Intelligence has conducted half a dozen of such pilot projects to date, and these are seeing a lot of interest because they can be directed towards the specific aims of the client and the building.
Honest and vulnerable communication builds trust
How can you harness the voice of your employees and customers in 2019 and what are the trends that you should be taking advantage of? Leverage social. It can be difficult to make the most of social media platforms, but they’re a vital tool. More corporates will be looking to user-generated content to give their engagement initiatives authenticity and to build momentum. There is plenty of research exploring the power of social norms to change behaviour, so make sure you’re working with influential colleagues to produce engaging content that sets expectations for behaviours you’re trying to encourage or deter.
The availability of data and the ease of storing and analysing large data sets continues to improve.
Progress over perfection. Over the last few years, we’ve seen a trend towards transparency and this will continue as corporates seek to build trust with their employees and consumers. We often talk about ‘progress, not perfection’ when it comes to engagement, and why it’s more important to make a start than wait for the perfect plan or ideal moment. You don’t need to pretend you have all the answers, by being honest and transparent you will discover solutions and achieve results quicker. Use technology to communicate impact. The availability of data and the ease of storing and analysing large data sets continues to improve. Make sure that you’re taking advantage of this to communicate results quickly and in a way that resonates with individuals. By making feedback personal and timely you will build confidence and inspire further action.
On the horizon
Circularity – the idea of a Circular Economy has been brewing for quite a few years now, but we expect for it to really gain traction over the next few years by being integrated into frameworks, and particularly thinking around circular buildings (e.g. Green Building Certificates). Zero Impact – companies heading towards a zero-carbon future will not be so few and far between anymore. In particular, we predict the UK-GBC’s Advancing Net Zero programme to lead to more Net Zero portfolios.
If you’d like to understand more about any of these topics or find out how Carbon Intelligence might be able to support you, please contact Franki at email@example.com, Fiona at firstname.lastname@example.org or Sam at email@example.com.