Eco-Finance

Joining the dots between cost and carbon reduction for finance directors

Leadership or management?

Long term thinking and concern is sacrificed to short/medium term financial considerations.

I recently attended an interesting event, organised by London First and the BIFM, entitled “Future Proofing your buildings: best practice in retro fitting to reduce carbon emissions”, which perfectly illustrates the distinction between leadership and management I discussed in an entry a while back.

There was a presentation from Arup about a sexy spreadsheet they have developed to help you calculate the most cost-efficient way to reduce your building’s carbon usage, delivering a choice of packages for the client to choose from, ranging from low-cost/low carbon reduction through to high cost/high carbon reduction and others inbetween.

Hurley Palmer Flatt talked about their management of the Shell building refurbishment project, where they also started with a range of options from a rebuild all the way through to low-cost, ‘feel good’ measures and, finally, Johnson Controls presented their Empire State Building retrofit project as a case study for sustainability process, complete with the same package of choices for the client to choose from to suit pocket and taste.

Are you getting the theme? Arup used their spreadsheet tool on one of their own buildings as an exercise to see if it worked and decided on option 2, as option 3 would reduce their carbon footprint a little more but did not raise the value of the building above that of option 2. The others had similar stories of compromise to parade and seemed very proud of their achievements.

When I challenged all the speakers on this issue of taking an ‘aggressive’ stance with their client(s) on the basis that rental value is irrelevant if, in 50 years time, you no longer have access to energy to power the lights or air-conditioning systems, the answers were, by and large, the same – the customer may not always be right, but he/she is always the customer.

Leadership or management?

My sadness at this sorry state of affairs is that these are companies who have superior reputations in their fields of expertise, they are global leaders in their market sector and deal with companies that reside in the highest carbon emitter locations – cities. Yet what are they doing? They are managing; managing the customer, the project, the situation.

These are companies who understand the issues (as ably demonstrated by the speakers who gave the presentations) – they really do. But when, as was the case with one of the companies presenting, you engage on the basis of a risk-and-reward contract, it is easy to see why long term thinking and concern is sacrificed to short/medium term financial considerations.

The Empire State Building is just over 70 years old at the time of its much heralded retrofit (with even ex-President Clinton jumping on the self-publicity bandwagon). Without a demonstration of a little leadership from the parties above, it will just be an empty, disused husk in another 70 years time; no energy, no business, no tenants.

If you have superior knowledge and solutions, you have a superior responsibility to inform, educate and take control of the client. That’s leadership… it is also the future of your business!



One comment on “Leadership or management?”

  1. Paul Rode says:

    Hello, I am an engineer working for Johnson Controls, and besides carbon reduction projects being my profession, it is also my hobby, and life’s pursuit.

    If over the past five years we were able to convince even a small fraction of our clients to chose the “option 2” approach we would be much further along the road of achieving a sustainable society then we are today. The fact is in order to move the carbon needle with these projects we need to achieve the type of scale that comes by attracting large capital flows, which will only happen when clients realize the work can provide competitive returns. Deploying capital on a project that delivers a sub optimal return in these economic times will bleed off some of the good momentum that has built up so far. I posit that a great deal of leadership is exercised just helping clients do anything in this arena in the first place. From my perspective, let me lead them to do a project this year, prove the value of the work, so that next year I can come back and do more.

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