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.
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.