You may have noticed that we’re spending a lot of time talking about the ways that lighting technology and practice will have to evolve in order to embrace the needs of a climate-challenged society. But is there a single entity that we can look at that might help us with the signposts along the way?
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What is ESG
I’m not suggesting that we don’t already know this stuff:
- E: Environmental
- S: Social
- G: Governance
With the development of ESG as a guiding principle for project development and building management, it’s just possible that ESG might be the thing that we’ve been waiting for.
Those headline topics have been around for a decade and more, within the overarching theme of SUSTAINABILITY. It’s a concept that’s taken a long time to gain traction, particularly in the lighting industry, but ESG has been taken up by the MONEY . . . so there must be something in it. More and more investment companies now have office doors with ‘Head of ESG’ on them. The latest announcement comes from the London office of Hines, an international estate company. Hines has joined with the UK Green Building Council, driving its ESG agenda forward across the built environment. That’s no small ambition.
Hines publicises five important pillars for their ESG commitment:
- Mitigate and adapt to climate change
- Eliminate waste and maximise resource efficiency
- Embrace and restore nature and promote biodiversity
- Optimise people’s health and wellbeing
- Improve quality of life while creating long-term value for society
Hines is just the latest in a burgeoning marketplace that is promoting ESG commitments. The important thing for the lighting industry is that these commitments turn into real buildings.
And this – if you’ll excuse me saying this – is where we need to stop deluding ourselves and Follow the Money.
Estates and asset managers are deeply familiar with the 3-30-300 Rule. This came out of a US survey of business costs that demonstrated how companies spent their money. It came out looking like this:
- $3 /sq.ft: cost of Utilities
- $30 / sq.ft: cost of property rents
- $300 / sq.ft: the company payroll.
The loud clanging sound was the realisation that, if you could find a way to keep your staff happy in their work, a potential 1% improvement in that payroll figure would pay for all your utility costs.
Lighting: chasing the wrong hare
As an industry, we’ve always looked at reducing energy costs by improving lumen efficacy. Obviously, that’s an important aim because everyone talks about the importance of energy reduction. And it’s the one thing that we could directly do something about.
Here’s a pie chart, inevitably; it represents the overall cost of running a business.It suited us to think that our contribution to cost savings came in that huge deep green portion.
No – of course it doesn’t.
How about the mid-green – surely, the mid-green?
Nope – sorry.
Those 3-30-300 analysts tell us that the cost of utilities in running a business amounts to a mere 1% of the overall pie.
It’s possible that one of the reasons that we’ve never achieved the desired level of traction because we’ve been chasing the wrong hare.
No one is going to argue that energy efficiency isn’t important (double negative: energy efficiency is important), but when it comes to the things that matter to a business, it’s very small beer indeed. What a business cares about is that huge deep green slice – and that’s the one that reflects the cost of the PEOPLE that work in a business. A huge 90% of a business’s outgoings.
That mid-green slice? That’ll be the cost of keeping buildings open for business; the rent and suchlike.
Our clients are learning what matters – we need to respond accordingly. It’s a matter of inputs and outputs: ESG and PPP
ESG provides the structure for developing and delivering projects capable of delivering on the 3-30-300 platform. ESG provides the INPUT framework.
The measurable OUTPUTS look like this:
- PLANET = the energy cost of a lighting installation (whole life cycle analysis, please)
- PEOPLE = the impact of the lighting on the building occupants (reduced staff churn)
- PROFIT = making the business run successfully (delivering on company targets)
PPP – The triple bottom line:
Our sustainable future, and that includes The Pursuit of Commerce, relies on the triple bottom line that is enabled by ESG management principles.
For our industry, it feels like 2022 could be the year when the conversation finally shifts away from that one-dimensional aspect of pursuing energy efficiency towards a new three-dimensional overview that demonstrates how lighting input serves all three of the PPP triple bottom line outputs.
And, let’s face it, where the investors go, the facilities managers will surely follow, if they want to keep their jobs. Historically, the facilities manager has looked at energy and maintenance costs, leaving the cost of people to the HR department. That situation no longer pertains, because all three aspects of the business have to be seen together, especially in respect of the percentage weightings of costs.
Take any one leg away from the three-legged stool that is an ESG/PPP commitment, and the stool falls over. It’s no longer a stool – it just doesn’t work. It’s no longer a stool.
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And if you’d like to learn more about ESG, with a viewpoint coming from the investment side of things, here’s an article from NASDAQ (published 19 November 2021)
Dr. Shelley James and the Age of Light Innovations Group held the first Drivers for Change webinar in December. You can watch it HERE . A series of Drivers for Change webinars is being planned for 2022, all on the topic of ESG. We’ll be featuring them on The Light Review and, of course you can find information on the Age of Light Innovations Group website
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