Business 2.0, Sustainability

Case study: Investa Sustainability Institute

As I mentioned in my last post, I had the chance to speak to a number of small and medium businesses last year about how they have benefited from a shared value approach. This is the first case study that supports the paper (PDF 1.3MB) I wrote exploring strategic CSR.

The Investa Property Group owns and manages commercial and industrial buildings across most Australian capital cities and the ACT1, managing assets worth AUDfi8.6 billion2. With 230 employees as at 20113, Investa is just over the nominal 199 employees that represents a medium-sized business according to ABS criteria. However, the Group’s experience remains worthy of examination as an example of shared value applied in an Australian context.

Sustainability credentials and building efficiency are key competitive factors in the Australian commercial property market, not only infiuencing operating costs, but also building valuations and rents achieved. Beck Dawson, Sustainability Manager at Investa, expands:

…in commercial office, there’s a very competitive market. That competition has bred a lot of forward momentum on sustainability compared to a lot of other industries, because we’ve had that intrinsic industry pressure.

With a desire to encourage greater industry transparency, Investa took the bold step in 2009 of releasing seven years’ worth of historical building performance data as part of their sustainability report. Reported data ranged from energy consumption and water use through to recycling and tenant complaints. The online report included an interactive tool to make this information more engaging and easier to work with. Beck highlights the tool was effective at engaging senior levels of management in understanding the importance of efficiency and to identify key areas for further investment:

[the tool allowed] for the first time that whole portfolio view of environmental performance of the organisation. [It] engaged more people … particularly at the higher level within the organisation, because it was visual. It has specifically encouraged investment in buildings that were not performing. … So the organisation’s gained through making that investment, seeing an improvement and with those come potential valuation uplifts, investment returns and the ability to attract different and more engaged tenants.

Many organisations might consider this kind of transparency radical and/or risky. However, the Investa team see this as a key competitive differentiator, as Beck explains:

At the moment you’ve got five different property companies saying “we’re sustainable.” How do you prove it? So now our partners are saying “well what does a green building really mean?” How do you classify that? How does anybody, any normal ordinary citizen or tenant look at this and go “well that’s a green building, and that’s not?” Well they don’t really have a way of doing that right now, because the detailed data’s not there.

This high level of transparency serves to build Investa’s credentials, providing evidence to support the company’s claims and strengthening their competitive positioning within the market.

Also in 2009, Investa launched the Investa Sustainability Institute (ISI) as a vehicle for action research, leveraging Investa’s building stock and the data it generates as a “real world ‘testing ground’ where promising ideas, investments in technology and non-technological interventions can be applied and analysed by researchers working with the Institute.”4 Part of the impetus for establishing a separate research arm, particularly one with a non-profit structure, was to reduce barriers to participation by external stakeholders, according to Beck:

…we wanted to participate in research and make good partnerships with other external bodies including academics, other property companies, … clients, tenants in the industry in which we work. … [We wanted to] develop a forum that would allow all those parts to come together to do really good action research. … We really wanted to be an engaged partner in research projects. And that’s much easier to do when you’re a research body.

Such an approach to data sharing and industry-wide collaboration is highlighted by Porter and Kramer:

Major competitors may also need to work together on precompetitive framework conditions, … Successful collaboration will be data driven, clearly linked to defined outcomes, well connected to the goals of all stakeholders, and tracked with clear metrics.
Investa’s initiatives also recognised that efforts at bringing about new innovations would benefit from multi-disciplinary dialogue.

This open innovation approach, incorporating network relationships into their business model, features in the innovation strategy of an increasing number of firms, as outlined by Scott-Kemmis.

Dawson points out the ultimate goal is “improving the environmental performance of the buildings [leading to] improved financial performance.” But while these insights are valuable internally, the Institute has also made efforts to engage a wider group of interested people. This is in part to build a wider awareness and skill set within the local market, to help skill up local practitioners to better support Investa’s goals. But it also aims to educate Investa’s potential customers, “to raise the level of the debate from ‘oh, it’s got green stuff stuck on the outside like solar panels,’ which is very visible … aren’t necessarily very material in terms of carbon emissions from commercial office buildings,” as Beck explains.

External engagement initiatives include the Green Buildings Alive (GBA) program, which seeks to provide “an in-depth look at how meaningful data can trigger actions in buildings that improve performance and services to occupants at the same time.” GBA seeks to provoke multi-disciplinary dialogue between interested parties within the industry.

Pulse building insight

Investa are continuing their drive towards greater data transparency, releasing the Pulse tool in early 2012. Pulse enables near real-time data from a sub-set of Investa’s building portfolio, providing more timely feedback to Investa’s building managers. In keeping with ISI’s action research approach, Pulse builds on the learnings from previous initiatives, aiming to better support building managers in making decisions.

Where earlier efforts to publicise data were in part an attempt to spur a competitive spirit between managers, Craig Roussac, Investa’s General Manager, Sustainability, Safety and Environment, explains that this emphasis has now shifted:

[Previously] we were talking about using an audience or external communications as a means to motivate. It probably doesn’t really motivate [building managers] very much. … rather than someone telling them there’s a problem, fix it, there’s actually this [tool] to give them feedback. And they would have a better idea than anyone else as to what might have contributed to that out performance or under-performance yesterday. … and further, because they’re in charge of whether an issue is worth pursuing or not, they can prioritise their time a lot better that someone saying “what was that six kilowatt hours they’ve used at 3:00am three weeks ago, I want to find out?”

The property market is being transformed by demand for reconceived products and services, with sustainability criteria and so-called “green buildings” emerging as a significant competitive driver in the local market. Investa’s experience demonstrates the need for engagement across the value chain in delivering community benefits (more sustainable building stock), which also illustrates the increasing expectations on suppliers to larger organisations in engaging in the delivery of shared value outcomes. Investa’s transparency agenda provides both internal benefits, but aims to strengthen local clusters by increasing the capabilities of practitioners working towards greater building efficiency. The boundary of this cluster extends beyond the property market, encompassing academics, information technology infrastructure providers, property managers, and more.

Business 2.0, Sustainability

Shared value and SMEs

As part of my Masters studies, I had the pleasure of interviewing a few businesses that were doing really interesting things in the shared value space. While some of these businesses didn’t formally recognise their activities as being related to shared value (some hadn’t really heard the term), I put together a short paper with corresponding case studies that linked what they were doing with this broader concept.

I thought it might be of value to present these in a short series of posts that I’ll be putting up over the next few weeks. I hope that they contribute constructively to discussion around shared value, and particularly how this concept relates to smaller businesses.

As a starting point, I think it’s worthwhile to ground shared value in a broader context of what some have termed “strategic CSR” and to look at some of the challenges that small to medium businesses face in applying these principles in daily practice.

I wrote a (relatively) short paper on this topic (unimaginatively titled Strategic CSR and small to medium businesses in Australia (PDF 1.3MB), which:

…explores the concept of shared value as it relates to small to medium businesses (SMB) in an Australian context. It begins by lightly tracing the evolution of the concept of corporate social responsibility (CSR) from “defensive” to “strategic” positions. It then brie!y outline the core principles of shared value and related work around economic clusters. It then considers the role that SMBs can play in achieving sustainable outcomes and some of the potential impacts of shared value on SMBs. The paper concludes with three brief examples of Australian small to medium businesses who illustrate aspects of strategic CSR as outlined in this paper.

(Note that I’ve left the case studies out of that paper, as I’ll be posting them here individually in the next few weeks.)

One short note: my lecturer took (constructive) issue with my closing statement that “We are in the midst of a significant shift in thinking about the role of CSR within the business community.” He noted that perhaps this was more prevalent in the circles that I frequent, which is probably true. I very much based this on my experience and reading and there does seem to be a lot of discussion about these concepts, from Porter & Kramer’s HBR articles to commentary on the web to my own discussions amongst peers and with interview participants etc. I’d be interested in your thoughts: is this shift more broadly applicable, or is it a niche thing?

Business 2.0, Sustainability

The circular economy

Explaining concepts like Product Service Systems and “service dominant logic” can be tricky, so it’s always great to come across good resources like the video below from the Ellen Macarthur Foundation (via Good.is):

The video uses the term “circular economy” to explain one of the aspects of Collaborative Consumption (product service systems). It strikes me as a great introduction to the key concepts and benefits.

Business 2.0, Social media & networking, Sustainability

Platforms for shared value creation (redux)

I’ve just completed 3rd semester of my masters degree, and I wanted to share one of the papers I wrote on the concept of Platforms for shared value creation, that builds on the model that I outlined in my Web Directions South 2010 talk.

Diagram outlining the 'Platform for shared value creation' concept

The paper, which is provided under a Creative Commons license:

…proposes a model of service delivery that has the potential to create shared value (Porter & Kramer 2011), addressing pressing societal and environmental needs while delivering commercial returns. The aim of this paper is to introduce the model — the “platform for shared value creation” (PSVC) — as a first step towards further exploration in the future. The model is not yet fully-formed and as such this paper should be considered more as “thinking in draft” for further discussion and refinement.

While the nature of these things means it takes an academic tone, I hope that it provides some value as a contribution to discussions around shared value, Collaborative Consumption, and social innovation. I would love to know any feedback you might have, so please drop me a note in the comments if you find it useful, or want to challenge or probe any of its assertions.

Design, Sustainability

Report on design thinking and sustainability

Posting has been light here the past few weeks, partly due to most of my writing energy being focused on my project report on Design thinking and sustainability (PDF 1.5MB), my first major assessment for the Master of Sustainable Practice postgraduate degree I’m currently undertaking at RMIT.

The summary of the report is:

Media coverage of the impact of ʻdesign thinkingʼ – also described as ʻhuman-centred designʼ or ʻservice designʼ, among other terms – on business and society seems to be on the increase, with much of the discussion focusing on its application to innovation practice.

Simultaneously, the need for business and public services to integrate socially and environmentally sustainable practices is becoming more urgent and important to address pressing issues such as climate change, resource scarcity, environmental degradation and growing social challenges and perceived deterioration of community.

This paper briefly explores the impacts of design on business before providing a working definition and overview of the key themes of design thinking. It then outlines commonly recognised environmentally-focused sustainable design principles and considers how design thinking could be applied in support of these.

Although a (non-exhaustive) review of specific examples of design thinking applied to environmentally sustainable objectives was undertaken in preparation of this paper, such examples are relatively few. As such, while specific examples are touched upon, the primary focus of the paper is on the potential application of design thinking in this context.

While academic in tone (it is a uni assessment after all) and relatively long (20+ pages), I thought it might be of interest to some readers of this blog given the topic/focus.

As is often the case with this sort of things there are elements I’d improve/extend if I had more time – particularly I’d like to provide more than just passing comment to the link between sustainability and innovation – but I do hope the result provokes some interesting and beneficial dialogue.

I’d also like to publicly thank the following folks for their support through inspiration, conversation, experience and pointers to examples and resources before and during the preparation of the paper: