ESG and facility management - everything you should know about sustainability reporting

There’s a good chance you’ve heard about ESG reporting, but what is it, why should you care, and how do you get started with it?

In this article we’ve gathered everything facility management professionals need to know when it comes to ESG reporting along with a useful checklist for those of you who want to analyze your ESG compliance and check for any issues within the practices of your company.

What is ESG?

ESG, which is short for Environmental, Social, and Governance, is a framework used to evaluate the sustainability and ethical impact of an organization’s operations. It takes various factors such as environmental performance, social responsibility, and corporate governance practices into consideration.

Which companies report on ESG?

In the EU and the UK many publicly traded companies are required by law to file ESG reports, and over the past years ESG reporting has seen an increase for other companies too, as investors and stakeholders begin to recognize the importance of incorporating non-financial factors into investment decisions.

In the United States companies are not required to report on ESG matters, although Californian companies that generate over $1 billion in annual revenue are required to report on greenhouse gases.^[1] Further in March 2022 the US Securities and Exchange Commission (SEC) proposed climate risk disclosure requirements. ^[2]

Why facility managers should care about their impact in ESG reporting

Considering that 75% of EU buildings are energy inefficient, there’s plenty of reason to talk about how we can make our buildings more sustainable, and facility management teams often find themselves in a unique position to promote sustainable practices and reduce the environmental impact of buildings.^[3]

How does ESG reporting affect facility management professionals?

The first place facility management teams will be affected by ESG is when it comes to the ecological footprint of a company. And with buildings making up 40% of the European energy consumption this isn’t going to be a small task.^[3]

The footprint left by construction is one thing, but facility operations actually make up around half of the building related emissions, and reducing the ecological footprint of these are:

• Preventive maintenance

• Long-term planning

• Fleet management

• Move management

• Short-term space reservations.

But the environment isn’t the only place facility management can impact the ESG reporting of an organization. Things like the WELL certification makes it possible to rate how well a building supports the health and well-being of its occupants.

Getting started with ESG as a facility manager

As a facility manager it can be a difficult task to get a grasp on where to begin when it comes to ESG reporting. Especially because you will rarely be the one carrying out the report yourself. In most cases, however, an ESG professional will rely on information from you to carry out their report.

IFMA’s 7 step video on how to get started with ESG as a facility manager is a good place to start. Following that you need to figure out what areas to focus on both for your reporting and when it comes to making ESG related improvements to your facilities. What should you calculate? Why? And how?

1. Sustainable building operations and calculating greenhouse gas emissions

Calculating things like greenhouse gas emissions for a building is fairly easy, and a good way to get an overview of the environmental impact of your facilities.

Building emissions are divided into three scopes:

• Direct greenhouse gas emissions, which are things like on-site fuel combustion for cooking, water heating and space heating, as well as refrigerant leaks;

• Indirect greenhouse gas emissions such as emissions from electricity purchased from the grid or other energy sources (for instance, steam)

• Other indirect greenhouse gas emissions such as waste disposal, commuting, travel, and water consumption and disposal.

In most cases calculating direct greenhouse gas emissions is as simple as looking at the gas consumption values on your energy bills. Reducing direct emissions usually include upgrading gas burning equipment (water heaters, furnaces, space heaters, ovens, cooktops with electrical counterparts).

Because electricity is delivered indirectly from multiple generating sources (natural gas, biomass, solar etc.) calculating indirect emissions is often a lot more difficult. This means that calculating indirect emissions usually requires different tools or specific mathematical formulas. In addition, because even building owners aren’t in control of grid emissions, the only way to reduce indirect emissions of this type is to reduce overall electricity consumption through upgrades to electricity efficiency.

The category of other indirect emissions is tied to an organization’s supply chain and operations. This is usually also the biggest source of an organization’s total emissions.^[4] The diverse nature of this category also means that calculating other indirect emissions will differ widely depending on different companies. For one organization commuting might be a big item, and because of that a hybrid work model might be a way to reduce emissions, where it might not have an effect at all for others.

2. Social sustainability in the workplace and the WELL certification

The social aspect of ESG spans everything from diversity and inclusion to human rights, health and safety, security and ethics. This also means that reporting on this matter can look very different from company to company.

For facility managers there’s usually a question of how this ties into their field of work, but actually there’s a rather strong connection especially when it comes to health and safety.

One way to go about it would be to get your facilities rated according to the WELL certification. The WELL certification is a global rating system used to evaluate the way buildings are designed and constructed to support the health and well-being of its occupants.

References

^[1] https://ww2.arb.ca.gov/our-work/programs/mandatory-greenhouse-gas-emissions-reporting

^[2] https://www.sec.gov/news/press-release/2022-46

^[3] https://commission.europa.eu/news/focus-energy-efficiency-buildings-2020-02-17_en

^[4] https://www.epa.gov/climateleadership/scope-3-inventory-guidance