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ESG & SUSTAINABILITY

The ONE BIG THING CEOs and Boards can do now to demonstrate action and progress

staff_0005s_0000_W---Larry-Yogel
Larry Yogel | CEO
October 27, 2021

In every Board meeting, analyst call, shareholder meeting, etc. ESG policy (Environmental, Social and Governance) is a major topic. Not only are all direct stakeholders concerned – customers, employees, suppliers – but now corporate governance and regulatory authorities are demanding measurable action. Starting in 2023, the European Union plans to issue fines for failure to show progress to “net zero”.  In the United States, federal and state governments as well as the large shareholder proxy firms are developing more rigorous ESG standards, inspections, and penalties.

There is one immediate, measurable action every Board can take to demonstrate both commitment and progress against ESG goals: reduce carbon footprint and improve environmental safety of existing company real estate – offices, factories, medical care, and retail/distribution sites.

Consider these facts:

  • Estimates are that 30% of global carbon emissions are produced by commercial real estate
  • On average, companies have about 200 sq. ft. of real estate per employee (office, factory, retail; owned or leased) – and some companies are north of 400 sq. ft. per employee
  • For every 5000 employees that is 1 million sq. ft. costing over $20 million in annual expense
  • Lastly, at least 40% of that real estate sits unused for at least 12 hours per day

It’s a huge, low hanging opportunity to make ESG progress

The solution – capture, analyze, act on existing data

Sure, you can ask employees to just turn off the lights.  But ESG policy goes well beyond the electricity bill – it requires programs that encompass water, gas, air quality, building security, mobile asset tracking, etc. Does this require major capital investments to upgrade and retrofit buildings? ABSOLUTELY NOT!

The “hidden asset” across all your commercial real estate properties is DATA. Every building a company owns, or leases has HVAC, lighting, lifts, security, and increasingly bio-safety monitoring equipment.  Over the past 10-15 years, all this installed equipment has become “data enabled” by vendors to monitor equipment performance and drive maintenance. In a typical office building, there are 1000s of environmental equipment data points produce every 5 minutes.  In a hospital, for example, there could be over 100,000 data points being produced every 5 minutes.

The secret is to capture, analyze, and act on this data to reduce carbon footprint – building by building across your entire real estate portfolio. Today’s combination of IoT (Internet of Things) chips and data analytics technology (cloud processing, Ai, machine learning) makes this a lot easier and actionable than ever before. Now, with very little capital investment and in a matter of months, leadership teams can get:

 

  • Real-time energy and environmental monitoring of any building, anywhere, any time
  • On-going analytics to capture, analyze and respond to alarms and unusual performance spikes
  • Optimize building performance remotely and with local employees
  • Demonstrate to customers, employees, and regulatory authorities measurable ESG progress across an entire global real estate portfolio
 

This ESG technology is not pie-in-the-sky; it’s here today.

3 Questions Boards should be asked of their Leadership Teams

I suggest CEOs and the Boards start by asking these simple questions:

  • What is the tangible, measurable ESG improvement programs we have in place?
  • Do we systematically manage our global real estate energy consumption and environmental safety?
  • Can we show stakeholders – customers, investors, and regulatory agencies – that we are making measurable ESG performance improvements?

Entire companies and industries are rallying around ESG goals; it is time that we applied the latest technology to create not just a sense of urgency but also a cost efficient, measurable approach to environmental management.

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