29 July 2022
Each component of ESG is equally important, but more often than not ‘environmental’ appears to be the one attracting the most attention.
Following the ESG ‘rule of three’ for achieving outcomes
The fact that Environmental, Social, and Governance (ESG) across the commercial and public sectors is becoming increasingly important needs no further labouring. Each component of ESG is equally important, but more often than not ‘environmental’ appears to be the one attracting the most attention.
Indeed, there is little doubt that many organisations, not least those in our own sector of the built environment and estate management, who are taking their commitments to the environment seriously and are keen to be proactive. However, as Gordon Whyte, our head of ESG and managing director of Nurture Gritting, explores, there is still a degree of misunderstanding in certain areas of compliance, particularly in relation to meeting Scopes One, Two and Three of the Greenhouse Gas Protocol, the international body which supplies the world's most widely used greenhouse gas accounting standards.
What may have once been thought of as good corporate governance and environmental responsibility is now holding greater sway in boardrooms and in the minds of prospective partners or customers. ESG is never far from the minds of employers, employees, and organisations worldwide, especially when the requirements around carbon emissions are factored in. These, as defined by the Greenhouse Gas Protocol (GHP), are broken down into Scope One, Two, and Three emissions. Of the three, Scope Three emissions are perhaps the least understood.
Scope Three emissions are ‘indirect emissions’, in other words, those produced by suppliers rather than an organisation itself. Indeed, these invariably account for much of the total level of emissions, in many cases by as much as 90%. However, at the time of writing, disclosing this information is voluntary - for Scope One and Scope Two, it’s mandatory. Consequently, businesses may not necessarily have the full picture they need to maintain progress.
For our own sector, this is an area where facilities managers need to draw as much detailed information as they can from their suppliers in terms of the environmental impact of received products and services, and in turn what this means for their own environmental footprint. A deeper understanding of FMs’ wider supply chain presents opportunities to use Scope Three emission data as a means of addressing potential shortfalls before they become apparent and indeed, more costly to rectify.
As an example, how is waste disposed of? Could less be sent to landfill in favour of recycling perhaps? What about business travel and employees’ commuting patterns? For businesses that manufacture products, other questions arise from warehousing and transportation. Granted, not all businesses will be affected by every single aspect of Scope Three emission sources, but the fact remains that the full extent of responsibilities should be shouldered by an increasing number of stakeholders.
For the built environment specifically, activities such as grounds maintenance and winter gritting present certain Scope Three challenges, not too dissimilar to those mentioned above. Other factors to be included within the conversation comprise emissions from equipment and how plants are tended. It is within this area that a decarbonisation ‘roadmap’ with a Scope Three viewpoint can be constructed.
As we at The Nurture Landscapes Group have witnessed across our own client sites, the input available from contractors pertaining to Scope Three emissions facilitates discussion and latterly, action, as to how both sides can combine forces to deliver tangible ESG outcomes.
In driving ESG agenda forwards, companies should not be held back through fear of being accused of ‘greenwashing’, particularly where they can prove demonstrable and credible success in furthering their environmental improvements in day-to-day operations. Whilst greenwashing undoubtedly still exists amongst a more cynical community of businesses who pay lip service to reforming their operations environmentally, we should not be backwards in coming forwards in terms of our own green credentials and aspirations.
We need everyone – suppliers, competition, and customers alike - to promote the cause of environmental protection and sustainability. In the same vein, we need to promote a culture of combined learning and business improvement in these areas. Individual organisations may have differing thoughts or approaches when it comes to managing emissions, yet all should be united in the common goal because, ultimately, we all stand to benefit.
It was interesting to see at this year’s Facilities Show a number of organisations clearly engaged and signed up to the ESG agenda, which is great, but there was scope for a great deal more. Industry events and gatherings of all kinds are surely perfect platforms for promoting shared thinking and best practice and putting our industry at the fore of a sustainable revolution that truly embeds a culture of carbon reduction across the full span of our sector’s operations. This is especially the case as we are all being encouraged to think about our environmental impact in all aspects of our lives, corporately and as private individuals. Possibly something to remember at next year’s exhibition.
Howsoever a facility or corporation seeks to engage with and market its ESG operations, it is important that Scope Three of GHP is not overlooked. To that end, we need to be bold about promoting our ESG objectives and aspirations, and to do that we need to bring our suppliers with us on the same journey. Alongside our clients, our suppliers are every part as important in the ESG ‘rule of three’ and the foundation upon which all groups can contribute.
So what are the next steps? That is the million-dollar question which can only be answered by those who possess an intimate understanding of their daily operations. Reviewing the so-called ‘green’ credentials of individual suppliers and aligning these with an organisation’s key values is one step, as is maintaining collaboration at all corporate levels in reporting.
This article is the first in a three-part series on i-FM and can also be viewed here.