Moving to Sodexo…

March 7, 2012

Dear Friends/CRE3 Forum Readers:

I’m writing to inform you that I’ve resigned my position as Executive Vice President with the Sustainability Roundtable, Inc. (SR Inc.) to assume a role as Director of Business Development with Sodexo, Inc. effective March 9th.

As author of SR Inc.’s Blog and the CRE3 Forum for the past two years, I have thoroughly enjoyed publishing posts on a wide range of issues which impact the real estate industry. Through your interest in the trends I’ve highlighted, we’ve far exceeded 10,000 page views with an average readership of 35+ a day.

The move was a difficult decision to make given my firm belief in SR Inc.’s mission and role to move the real estate industry closer to greater sustainability. However, the choice to join Sodexo is a tremendous career opportunity for me and my family. Sodexo is a world leader in “Quality of Daily Life Solutions” as an outsourced facilities-management services provider and foodservice operator with over 120,000 associates in North America, serving 10 million customers. They provide a wide range of services at 6,000+ locations which consist of corporate, health care, long-term-care and retirement centers, schools, college campuses, government entities, and remote sites.

The North American operations, along with its Paris-based parent, have been recognized as:

  • One of “The World’s Most Admired Companies” by FORTUNE
  • One of World’s Top 50 Green Outsourcing Suppliers
  • Ranked number three in the world among outsourcing services companies
  • One of “World’s Most Ethical Companies”

 

I look forward to undertake this fantastic role and will publish my new contact details soon. And, welcome the chance to continue passing along thought leadership of management best practices which impact the real estate industry.

All the best,

Larry Simpson

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The Road Ahead in 2012 for the Real Estate Industry in the Drive to Greater Sustainability

December 18, 2011

This past year has been marked by corporate and commercial real estate leaders who have increasingly embrace the principles of sustainability to reduce operating expenses, enhance enterprise value and align real estate/facility portfolios with their organization’s goals of financial performance and environmental excellence.

In 2011, the challenge for executives did not come from their inability to succeed and lead but, from limited capital expenditure resources in the face of the risk and uncertainty of an expanding yet fragile world economy.

2012 will bring its own set of risk and uncertainty but, real estate professionals seem more motivated to develop and implement portfolio-wide sustainability strategies with the confidence that an organized commitment to corporate sustainability better aligns them with top management, investors, customers, talent and regulators. And, that sustainability is a better way to organize and motivate geographically dispersed, functionally divided staff.

In the coming year, leading real estate executives must recognize that individual sustainability initiatives, no matter how successful, are unlikely to be acknowledged at a Board or investor level. Conversely, real estate leaders that aggregate multiple successful sustainability initiatives with immediate payback paired with initiatives that have a longer-term internal rates of return can organize and animate the drive to higher performance throughout a large real estate portfolio that will justify Board, investor and top customer recognition and support.

The key to sustainable real estate strategy success in 2012 will rely on:

  • Leading companies who recognize sustainability as a megatrend that presents strategic imperatives for senior executives, where real estate plays a prominent and sometimes guiding role in enterprise wide sustainability.
  • A more comprehensive, internally branded “sustainability strategy” can be better resourced by the C-suite and the Board, rewarded by investors, supported by employees and lead to higher scores on the rapidly emerging number of indexes that measure sustainability.
  • Energy efficiency and cost savings will remain the core of real estate sustainability strategy, but a growing number of corporate users will see the value of enhanced employee health, well-being, and productivity within workplace environments.
  • Leading real estate executives will establish a compelling long-term vision of sustainable real estate with a strong business case and create effective policies and management structures to institutionalize sustainability.
  • Real estate executives will be identified as “Committed”, “Advanced” or “Leaders” depending on the maturity of their strategy. It will be critical to evaluate and identify improvements through the use of assessment tools such as the two-tiered qualitative “Sustainability Performance Assessment” (SPA), developed by the Sustainability Roundtable, Inc. (SR, Inc.)
  • The SPA reveals that leading companies will invest broadly in portfolio sustainability strategies but most companies still do not adequately invest in the areas of governance or results.

Will you be among the committed, advanced real estate leaders to achieve sustainability success in the coming year and ‘move the needle on the dial’?

Dare to be a pioneer and become the catalyst for change that will drive your company to greater sustainability in 2012.

If you would like to learn more about SR Inc.’s “Strategic Performance Assessment” or how its subscription-based research and management best practice advisory services can help you drive your organization closer to sustainability, visit us at www.sustainround.com or contact SR Inc.’s Larry Simpson, Executive Vice President – Advisory Services at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Advisory Services, Sustainability Roundtable, Inc. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/aboutst/blog/)


SR Inc. to Convene Corporate/Commercial Real Estate Executives and Drive an Industry Closer to Greater Sustainability

November 12, 2011

The Sustainability Roundtable, Inc. (SR Inc.), the for-profit, shared cost research and consulting firm will bring together corporate/commercial real estate executives and sustainability professionals who represent over 60 member-client organizations at SR Inc.’s Third Annual Summit entitled, “The Change Driving Sustainability” on November 30th and December 1st at the St. Regis Hotel in Washington D.C.

This invitation only two-day event will feature: sustainability excellence award winners; presentations and case studies of SR Inc.’s 2011 Research Program; panel discussions with Federal agency representatives; and, facilitated sessions to develop SR Inc.’s 2012 Research Program.

Management Best Practice Sessions will include:

Portfolio-wide Sustainability Strategies: What strategies do Real Estate Executives use to resource and create sustainable value. (Includes Innovative Finance for Energy Efficiency)

Benchmarking Sustainability: What sustainability KPIs should Leaders adopt and what are the relevant performance benchmarks.

Sustainable Leased Space: How Leaders move to more sustainable leased space? How Tenants and Landlords systematically implement green leases and what provisions in RFPs, LOIs and Leases are used.

Alternative Workplace Strategies: What AWS strategies are successfully adopted to increase productivity and how can landlord’s best respond.

Working with the Federal Government: What are the best sustainability resources available within the Federal Government and how can Real Estate Executives partner with them.

The collaboration of SR Inc.’s member-clients supported by SR Inc.’s analysts, researchers, consultants and advisors is rapidly driving the real estate industry toward greater sustainability with breakthrough management best practices about ‘what works’ to apply the principles of sustainable real estate strategies across a portfolio that reduce operating expenses/occupancy costs; enhance enterprise/asset value; and align with organizations’ commitment to the environment.

If you would like to learn more about SR Inc.’s Annual Summit III or how SR Inc.’s resources and implementation guidance could help you drive your organization closer to sustainability, contact SR Inc.’s Larry Simpson, Executive Vice President – Advisory Services at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Advisory Services, Sustainability Roundtable, Inc. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/aboutst/blog/)

 


“Green Leasing” Tools Evolve from Infancy to Maturity in the Move to Greater Sustainability

October 23, 2011

The movement to greater sustainability in leased space took an important step forward following a recent Sustainability Roundtable, Inc. (SR Inc.) Member-Client webinar. The event presented research, case studies and introduced a newly developed “green leasing” toolkit that will enable corporate occupiers and owners/investors to achieve sustainable excellence.

The increased adoption of “green leases” is playing a transformational role to streamline the greening process. One of the centerpieces of the SR Inc. webinar detailed a more sustainable leasing strategy with seven fundamental preferences in decision making:

  1. Develop a portfolio-wide optimization strategy
  2. Integrate alternative workplace strategies
  3. Seek space in transportation adjacent existing buildings
  4. Weigh renewal options
  5. Weigh long-term lease options
  6. Seek buildings with a third-party certified commitment to sustainability
  7. Collaborate with landlords and tenants to advance greater sustainability

The most important aspect of the webinar was the introduction of a “Green Leasing” toolkit. These tools were introduced in DRAFT form pending SR Inc. Member-Client input/comment and are designed to be used by corporate directors of real estate and portfolio managers in the final phase of sustainable corporate real estate selection – the green lease itself. The tools within the toolkit included:

Site Selection Tool – outlines the steps to select a landlord with a commitment to sustainability and a site that has already achieved LEED, ENERGY STAR certification or a willingness to achieve sustainability certification.

Request for Proposal Tool – identifies tenant requirements for sustainability practices and distinguishes which green terms may be structured into the lease documents.

Letter of Intent Tool – highlights a tenant’s key green or sustainable lease issues and includes which green terms may be structured into the final lease document.

In addition to the green leasing guidance toolkit, SR Inc.’s breakthrough tools offer sample lease language for: 

  • LEED or Other Green Building Certification
  • Base Rent, Operating, and Capital Expenses
  • Utility Consumption and Metering
  • Data Collection and Information Sharing
  • Waste Stream Management, Recycling and Janitorial Services
  • Indoor Environmental Quality
  • Parking and Alternative Transportation
  • Environmentally Preferable Purchasing Policy
  • Construction Obligations and Tenant Improvements
  • Special Remedies for Violation of Green Lease Provisions

Overall, the toolkit emphasizes that a successful green lease is the result of a comprehensive negotiation process, in which sustainability practices are deliberately embedded in each phase of the lease lifecycle. The lease should reflect and memorialize the sustainability goals and obligations of both landlord and tenant as negotiated through prior documents.

The tools were developed in conjunction with SR Inc.’s Full Report – “More Sustainable Leased Space,” the “Global Sustainable Facilities Guidebook” for corporate occupiers and the “Global Guidebook on Sustainable Properties” for owners/investors.

In addition to the presentation of the SR Inc.’s newly developed toolkit there was a highly interactive discussion with comments from corporate executives at Apollo Group, AutoDesk, CapitalOne, Cisco, Intuit, McKesson, Mitre and Symantec as well as owner/occupier, Brandywine Realty Trust.

The movement to greater sustainability is evolving from its infancy with the leadership of innovative corporate and commercial real estate executives. And, now with tools developed by SR Inc. sustainability in leased space is becoming more cost effective and much easier to achieve.

If you would like to download the program presentation and an Executive Summary of “More Sustainable Leased Space” visit www.sustainround.com. To learn how SR Inc. can help organizations achieve greater sustainability portfolio-wide, please contact Larry Simpson, SR Inc.’s Executive Vice President of Advisory Services at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/aboutst/blog/)


The Juxtaposition in Sustainability of the Built Environment

May 23, 2011

“Out with the new, in with the newer”…there is the juxtaposition occurring in sustainability of the built environment.

There is a shift from new to newer technologies; a migration of leadership within some companies from the corporate real estate professionals to chief sustainability officers; and an evolution of not just to embrace best practices but, advance them and to define the future of sustainability in corporate facilities.

New to Newer Technologies

At a recent Green Best Practices Summit in Boston, New England’s sustainability leaders heard from Jim Gorton of Cape Wind, a company who is developing America’s first offshore wind farm off the coast of Massachusetts with 130 wind turbines that will produce clean, renewable energy. Gorton highlighted that less than a month after the federal government gave approval to start construction, a major coal power plant in Massachusetts announced it would shut down by 2014. Gorton said, “the juxtaposition of these two announcements … illustrates where we are going as an industry, and what we have to do to move toward creating a healthier environment and increasing energy independence.”

Migration of Leadership

There is a juxtaposition occurring in many of today’s corporate cultures where the responsibility to develop sustainability strategies has transitioned beyond the corporate real estate department to manage energy consumption, waste reduction and water conservation and others within a company who address corporate social responsibility. Sustainability has reached “C-Suite” prominence with the emergence of Chief Sustainability Officers to coordinate the convergence between environment, economic and social aspects that will result in top-down leadership and more comprehensive corporate environmental stewardship.

The Horizon of Sustainability

But, the most exciting advancement is that companies aren’t just utilizing the principles of sustainability to meet the objectives of occupancy cost reduction, enhanced enterprise value and overall commitment to environmental preservation. Some of the most innovative companies are redefining what sustainability will be as they push the limits to exploit opportunities and minimize risk of what is on the horizon for sustainability.

With the progression of these and other developments, the juxtaposition of today and tomorrow lies with the question each of us must ask ourselves of, “are you ready?” Will you be poised to take advantage of emerging technology, industry best practices and processes to create sustainability strategies that support your organization’s objectives, appeal to your sense of “doing the right thing” and collaborate as a society in the move to greater sustainability?

Are you ready for the juxtaposition of who you are and who you need to be to play your role and move an industry?

(The author is Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.  who can be reached at larrysimpson@sustainround.com. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/forum/ )


“Blue is the New Green: Water Scarcity and Efficiency Takes a More Prominent Role in Greater Sustainability”

April 13, 2011

In recent years, “green” has become a dominant theme in the corporate and social lexicon, and a critical business driver in many companies’ overall strategy.

Senior level executives publically proclaim the “green” high ground as a corporate philosophy while middle management supports the organizational objective with “green” real estate strategies, many of which tend to be focused on energy efficiency because it has the greatest potential for savings.

More recently, water scarcity and associated rising costs have become critical issues bordering on a crisis, as a survey of recent headlines attests: “metro eyes evening lawn sprinkling ban to conserve water,” “water shortage warning issued for 16 Florida counties,” “Pasadena will face water shortage emergency this month,” and “spring watering restrictions now in effect.”

The Sustainability Roundtable, Inc. (SR Inc.) recently released a client briefing with the following key takeaways:

  • The five market drivers for water efficiency in corporate real estate portfolios are rising costs, increasing water scarcity, reputational risk, green building certification, and investor concerns
  • Domestic use, heating and cooling, landscape, and kitchens are the four main categories of water demand in commercial buildings
  • Water foot printing is important to evaluate both direct and indirect water use
  • Mapping flows and measuring water consumption using metering, sub-metering, and estimation are essential to benchmarking and setting goals

Water scarcity has increased average water rates of 310% over the past 25 years compared to a 207% increase in the CPI. In many areas, water consumption charges do not yet reflect the true cost of water, but they are rising quickly because subsidies that kept them artificially low are being phased out. For instance, NYC has raised water rates 12.9% for three years in a row, and plans to do so again in 2011. Water districts are raising prices to cover the full cost of water treatment, storage, and delivery. As water scarcity intensifies and water rates increase so does the pressure for governments to mandate efficiency.

Companies that utilize LEED standards on new construction and existing building retrofits can reduce water consumption by 20-50%. The LEED certification guidelines include a pre-requisite for water reduction (20%), water efficient landscaping, innovative wastewater technologies, water performance measurement and cooling tower management.

Water scarcity and increasing costs are getting attention from investors who are interested to learn how companies manage their water use. In 2011, for the second year running, the Climate Disclosure Project is requesting information on the risks and opportunities companies face in relation to water on behalf of 354 institutional investors with assets of $43 trillion. Water is sometimes called “the new carbon,” but while CO2 emissions are only priced in some markets, water costs and risks are increasing in all markets.

Most companies already focus on energy efficiency, but water and energy are interconnected. Efficient use of water reduces on-site energy use, as well as the energy required to supply fresh water and treat wastewater and recycle water. Power plants which produce electrical power use water for cooling or to turn turbines. By extension, water use causes carbon emissions because of the energy required to source and pump it. The Environmental Protection Agency reports that about 8% of US energy demand goes to processing and moving water.

Storm water is typically a problem which requires expensive infrastructure both on-site and off-site to solve. Leading corporate real estate executives are seeking ways to re-assess the management of storm water to capture its value and reduce capital as well as operating costs.

As water is beginning to play an increasingly important part of an overall sustainability strategy, measuring and auditing water use is essential to create a baseline and to benchmark. Common corporate water efficiency goals are incremental 2-3% annual improvements as a reduction in the volume of water used by area (gallons per square foot), but some organizations are targeting 20-30% 1-year goals.

An integrated approach to implement water efficiency includes:

  • potable water use reduction – low-flow fixtures, cooling towers, leak repair, xeriscaping;
  • water recycling – onsite water recycling and rainwater harvesting; and,
  • water diversion – incorporating storm water management for re-use will yield optimal results to address the increasing water crisis.

Michael Gresty, SR Inc.’s Executive Vice President of Research and Consulting, comments that “many corporate real estate executives remember the poor quality of the first generation of more efficient low flow fixtures, and associate water efficiency with thoem and associated municipal mandates that had low or no payback. Today, there are numerous solutions on the market that have been thoroughly tested and work extremely well. Moreover, while bathroom fixture replacement is important, our research shows that the biggest gains can often be in leak detection and repair, cooling tower efficiency, and non-potable irrigation or xeriscaping, all of which can both be easier and less costly to implement.” 

The operational market drivers of rising costs and increasing scarcity, in concert with strategic drivers of reputational risk, green building certification, and investor interests are compelling leading corporate real estate executives to create value through water efficiency.  To achieve this, industry best practices are to:

  • Meter and measure water use across your portfolio to establish baselines
  • Benchmark using ENERGY STAR
  • Track changes in water to identify leaks and other anomalies
  • Focus on preventive maintenance of cooling towers (responsible for a high percentage of water consumed) and improve fixture efficiency
  • Implement green roofs, bio-swales, and other solutions to manage storm water for re-use (irrigation or on-site filtration)

Clearly, “blue has become the new green” due to the importance of water conservation to address operating cost reduction and as an integral part of a successful “green” sustainability strategy.

(The post was originally published in the Sustainability Roundtable’s blog found at http://www.sustainround.com/forum/ and was republished with permission by the author, Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.)


Carrot or Stick: What Motivates Your Company to Disclose Sustainability Initiatives?

March 21, 2011

Increasingly, companies are publishing information about their greenhouse gas emissions, climate change initiatives, and sustainability strategies because they believe that doing so makes them more attractive to investors. This is the carrot.

A number of organizations promote voluntary sustainability disclosure and reporting, such as the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP). The GRI provides guidelines for reporting, while the CDP compiles voluntary disclosures from over 2,500 companies, including 330 members of the U.S. S&P 500, in response to it’s annual questionnaire issued on behalf of hundreds of leading investors.

Some companies already incorporate information about their sustainability initiatives in their annual reports and Securities and Exchange Commission (SEC) filings. The latter has become a necessity for most, given that in February 2010 the SEC clarified that existing disclosure rules requiring companies to report on issues material to investors also cover climate change risks and opportunities. This is the stick.

Which, carrot or stick, does your company respond to?

Many companies still decline to disclose voluntarily or file with the SEC on the issue of climate change. The extent of non-compliance with the SEC requirements was recently highlighted in a report developed with input from Ceres’ Investor Network on Climate Risk, which outlines generally weak climate disclosure by businesses, and proposes steps for improving such disclosure, especially in the annual 10-K financial filings due by March 31, 2011. The Ceres report comes just after Mercer issued a new study warning that climate change could increase investment portfolio risk by 10 percent over the next 20 years.

Sustainability Roundtable EVP of Research, Michael Gresty, observes that “failure to disclose signals either that companies are unwilling to reveal poor performance that will present them in bad light, which is a red flag to investors, or that they have not assessed the risks and opportunities, which is an even bigger red flag. Since real estate assets are the main source of direct and indirect GHG emissions for most companies, and these correlate closely with their cost of energy, we see the sector leaders in our Sustainable Real Estate Roundtable working actively to measure and manage energy and GHG emissions, and to report on their portfolio-wide sustainability initiatives.” (See SRER report Portfolio-wide Sustainability Strategy for more information.)

A proactive response to the carrot (voluntary) and SEC mandated (stick) disclosure has created competitive advantage for companies that have been developing and implementing successful sustainability strategies. To some companies the underlying driver behind sustainability initiatives is to reduce operating expenses by applying the principles of sustainability that include: improve energy efficiency; resource utilization and waste reduction; procure renewable energy sources; and, space optimization through alternative workplace environments to reduce the overall size and cost of the real estate portfolio — for many companies, the OPEX reduction is ‘carrot’ enough. But, as mainstream investors increasingly use broader environmental, social and governance (ESG) research to mitigate risk and seek alpha, those companies that fail to disclose raise doubts about what they may be hiding, and cede the terrain of transparency to their competitors.

(The post was originally published in the Sustainability Roundtable’s blog found at http://www.sustainround.com/forum/SOR/ and was republished with permission by the author, Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.)