Sustainable Governance, Reporting and Accounting

Green Star NAB 700 Bourke Street Docklands. Photo courtesy NDY

Governance

From organisational leaders, to individuals and dedicated teams, a move towards governance structures that embed sustainability into the firm is proliferating across Australian businesses. Across the range of best practice initiatives, there is consensus that to achieve a more sustainable workplace, integration of the sustainability agenda at all levels of a firm is required.

Sustainability @ SKM

The drive for a sustainability agenda can emerge from anywhere across an organisation; from the grassroots to the C-Suite.  Where this drive comes from will largely shape the direction and focus of the sustainability agenda and will affect the implementation strategy.

When sustainability emerges from the grassroots, the agenda will often be driven by groups who want to take collective action for change and will frequently focus on operational issues such as energy consumption and waste management.

Where the agenda develops from the C-Suite, it is often very strategic in nature and connected to the growth aspirations of the firm.

At Sinclair Knight Merz (SKM), the sustainability agenda was driven by both the grassroots and the C-Suite, resulting in a strategic company approach with broad engagement.

SKM’s grassroots journey began early in the new millennium with the passion of a group of graduates who were concerned that the company did not use recycled paper or manage waste and energy appropriately.  With full management support, these graduates created significant change and awareness across the company’s operations.

In 2008 the strategy shifted gear with the introduction of the new role of Chief Sustainability Officer (CSO), and the appointment of Dr Nick Fleming to this role.  The CSO has since led a whole-of-firm approach to sustainability by:

  • Encouraging the development of comprehensive sustainability skills and awareness across SKM using the award winning ‘rEvolutions’ program.
  • Embedding sustainability and innovation into the way SKM delivers projects—from design through to construction.
  • Advising and guiding SKM’s leadership team on how to incorporate sustainability into the company’s decision-making processes.
  • Driving SKM’s efforts to reduce its operational footprint, including the challenge of reducing emissions by 30 per cent over three years.
  • Representing SKM on sustainability matters of relevance to clients and staff and also in government and industry forums.

Our intent is to transform SKM into an organisation that is exciting and innovative to work with because we create and deliver projects that define what it means to be sustainable. We won’t talk about sustainability as a challenge or initiative—it will just be what we do.

–          SKM CSO, Dr Nick Fleming

Provided by SKM Group Manager – Environment and Community, Wendy Smith

External Governance

The benefits associated with sustainability can be achieved by extending internal policy to external parties.

A good example of this is the concept of a green lease, which sets out environmental and social objectives as part of the relationship between a building owner and tenant. Office buildings are designed to provide a productive and effective place for people to work in comfort. According to the report Green Lease Guide for commercial office tenants1 developed by a consortium of government departments, industry and academia, the benefits of developing a green lease include: enhanced reputation, attraction and retainment of talented employees, enhanced employee wellbeing and productivity, a reduction in liability, and an increase in profitability.

the-fifth-estateThe Fifth Estate guide to best practice and green leasing: A guide for tenants and landlords
This document is an evolving publication – with the first chapter released in July 2013.

The concept of green lease and other similar initiatives, furthers an organisation’s sustainability agenda as internal efforts are recognised, publicised and potentially mirrored by individuals and groups outside of the organisation.

Australian Institute of Architects: Holistic sustainability

The development of 41 Exhibition Street as the Australian Institute of Architects’ (AIA) Melbourne home was designed to make a fundamental statement about both the Institute and Australian architecture more broadly. The AIA undertook such a drastic undertaking for it to be known as an exemplary project for form, function and sustainability.

41 Exhibition Street needed a complete refurbishment, rebuild, or sale and relocation to achieve an appropriate standard to meet the AIA’s organisational objectives. The Institute investigated all of these options and decided that the current site provided an excellent prime city location which is popular and convenient for both staff and members. The AIA National Council decided that a new building incorporating design excellence and leading sustainable design would be the best option for the Institute over the long term, providing an opportunity to showcase world-class best practice.

As a nod to the collective pursuit for sustainable outcomes for the site, the building strata rules for the development incorporate a Sustainability Charter which outlines a commitment to put into action the total carbon management plans to target achieving carbon neutral office accommodation for all strata owners and their tenants. The modelling projects that over a 30-year life cycle the building will achieve through design a 42 per cent carbon reduction compared with a standard ‘business as usual’ new office building with annual offsets being used to achieve carbon neutrality.

The savings will be achieved through energy efficiency, waste management, transport strategies and use of sustainable materials and analysis also shows that there is a pay-back period from the energy efficient design with energy savings approximating the cost of offsetting all residual carbon footprint.

The Australian Institute of Architects CEO, David Parken said, “I am very proud that the Institute is committed to a project which is both an exemplar in design and market leading in terms of its commitment to carbon neutrality.”

By identifying inefficiencies and being innovative in their approach, the Institute is setting a benchmark that in time will become the norm in the commercial property sector.

As a site, 41 Exhibition Street will lead the market by showing how a very small CBD site can be transformed to deliver a high quality, highly sustainable, innovative commercial building targeting carbon neutrality.

Operationally, the Sustainability Charter commits both the Institute and all owners and tenants to the goal of carbon neutrality.

Provided by the Australian Institute of Architects (AIA)


1 2007, Green Lease Guide for commercial office tenants, Office of Environment & Heritage, last accessed 11 July 2013 http://www.environment.nsw.gov.au/sustainbus/greenlease.htm

Reporting

The way you report will vary enormously. It may depend on the size and resources of your firm, or may result from your organisational vision and be part of your business as usual behaviour regardless of size. Reporting may include client communications at a basic level or may extend to detailed reporting and accounting initiatives.

Banarra: Sustainability reporting: the good, the bad and the ugly

There aren’t many small businesses that produce a sustainability report. They demand a significant commitment of time and labour, are challenging to write and when done really well, and bare the soul of an organisation to a broad audience. Considering these factors, is there really a business case in doing this?

Absolutely, but it is important to recognise that it is very different between firms. For Banarra—a small but rapidly growing sustainability consultancy in Sydney—there are many reasons to report.

Banarra is a values-driven firm who believe that if stakeholders really understand the business and the challenges faced, their relationships will be better off. Transparency and accountability in reporting earns trust. Clients see this as a firm being able and willing to practice what they preach. There’s a lot to gain, but a lot of input is required.

Banarra often tell its clients that the real value of sustainability reporting is not in the report itself, but in the act of reporting. Amongst many things, the reporting process allows firms to identify gaps, introduce more rigorous processes around collecting and analysing business performance data, and improve data systems.

Using the Global Reporting Initiative (GRI) to frame the report, Banarra runs a materiality process to understand those issues that should be the focus of the report (the report then only accounts on those issues—a shorter, better, more valuable document is the result). Importantly, bad outcomes are reported—there is no attempt to explain those away, but rather an outline of what the firm plans to do about them is provided.

Every business cringes about its shortcomings, but when a firm is honest, it usually receives a better response from its stakeholders. In its reports Banarra has publicly stated, “We stuffed up”, but not one client, supplier or employee has been lost because of it. In fact the result was quite the opposite. Where there were mistakes, Banarra tried to identify a goal for the coming year to improve their approach, and then put that commitment in the public domain through the report. Nothing like a bit of extra pressure to move things along!

The firm also tries to be innovative in its reporting, but that is harder to do than to say. ‘Innovation for innovation sake’ is not what is desired.

One such innovative change was to ask a representative group of its stakeholders to review the draft report and then honestly say what they thought of it. The panel included a: supplier, client, employee, and independent facilitator. They provide a detailed, written opinion which was published unaltered in the final report along with their recommendations for future improvement. It added that extra bit of accountability, transparency and honesty that enhanced what is reported.

Each year Banarra asks itself, “Will we do it all again?” For years running the answer has been yes—they get enough out of it to justify what they put into it and in 2014, Banarra produced one of the world’s first G4 Sustainability Reports by a small business.

The firm also challenges its clients to think about what value they get out of reporting. Many do it as a habit, some from peer-pressure, and some because the company is committed to it. Businesses need to be honest and reflective in identifying the business case because it is resource intensive and can be expensive; and confronting.

Don’t report for reporting sake. Do it to add value to your business. This value add can take many forms – better data, better target setting, better values sharing, enhanced trust, better quality recruitment, and better self-awareness. It may not be for every business but, for Banarra, ‘so far, so good’.

Provided by Banarra Principal, Paul Davies

Accounting

To exhibit the benefits of technological changes to offices and infrastructures and to legitimise the lessons learned through processes of internal awareness raising, many of today’s innovative firms are developing live, interactive, real-time resource monitoring systems to monitor the progress of change and allow them to develop internal reports on carbon emissions, waste generation, water/paper consumption and air travel.

Arup: Office Realtime

Developing and setting sustainability targets is a complex task, made more complex by the fact that behaviour change is often a necessary precursor to achieving these targets. It is important therefore that targets are effectively communicated to all members of staff.

At Arup, Office Realtime was developed to support this communication process.

Office Realtime is a data visualisation tool that uses active facts and figures to guide sustainability-related behaviour change. It was developed with the premise that rather than communicating consumption in arrears from purchasing or billing information, behaviours were more likely to be improved where people knew they could affect change.

Essentially the tool became the vehicle to communicate sustainability targets to the office in Arup – making the invisible visible.

Developed by Arup’s Sustainability and Digital Innovation teams to support Arup Australasia’s Environmental Management System and Corporate Sustainability Policy, the tool brings about sustainability awareness and behaviour change by presenting live data on any number of sustainability indicators.

Whether the desired sustainability measure is office copying and printing, computer use, energy, daily flights or cycling numbers, Office Realtime is able to display information in simple, engaging form to support an organisation’s environmental and sustainability objectives.

The implementation of Office Realtime has shown measurable positive impacts on office resource use and associated sustainable behaviours in areas such as travel-related carbon, cumulative paper use and energy consumption. Office Realtime was made possible through Arup’s culture of investment in innovation whereby the firm invests a share of its profits in research and development.

However, in considering the business case for the tool or the Return on Investment (ROI), the firm considered the tool’s potential for enhanced staff engagement, cost savings associated with sustainable behaviour, and the high level of interest from clients and visitors.

The business benefit increased exponentially when visitors suggested that there was potential for Office Realtime to be marketed as a product available for purchase to a wider audience. The resulting commercialisation of Office Realtime is an example, which whilst not likely in all projects and rather ‘ideal world’, truly demonstrates the added potential benefits of sustainability investment.

Aside from the income stream Office Realtime may generate, the real-time accounting of indictors has kept sustainability at the forefront of people’s minds and motivated them to continue making environmentally responsible decisions. If improvements in sustainability are not measured and reported there is no benchmark, no engagement and no incentive.

Understanding the most effective way to influence and maintain sustainable behaviours in the workplace remains a constant challenge for business. Arup Office Realtime offers a unique opportunity to bring about genuine awareness and behaviour change in this space.

Provided by Arup Digital Innovation Leader, Andrew Maher