How to Make Modernization Projects Profitable and Sustainable
Data can help facility managers unlock value and monetize their modernization investments
The race to modernize commercial buildings is accelerating, fueled by mounting business pressures related to carbon footprint, resource stewardship and ESG (environment/social/governance), along with factors like C-suite directives to optimize space for the post-pandemic hybrid work era.
As facility managers mobilize to bring their buildings and infrastructure into the digital age, one resource in particular will be critical to their ability to meet the sustainability goals that are driving many of their modernization projects. It’s a resource you can’t touch or drive a screw into: data. In fact, data could well be among an operator’s most important assets in the effort to reduce carbon footprint, use resources more efficiently and maximize return on their assets.
There’s growing urgency for them to do so. According to the World Green Building Council (WGBC), the building construction sector is globally responsible for 36 percent of energy consumption, 38 percent of energy-related carbon emissions and 50 percent of resource consumption. What’s more, about 30 percent of the energy used in commercial buildings is wasted, according to figures cited by the U.S. Dept. of Energy.
Reversing these trends, according to the WGBC, “requires deep collaboration across the entire value chain, and radical transformation in the way buildings are designed, built, occupied and deconstructed.”
And perhaps above all, it requires the ability to manage, share and draw insight from data.
Advanced data capabilities will be key to the success of initiatives like the WGBC’s Net Zero Carbon Buildings Commitment, in which more than 130 businesses and organizations around the world, along with various cities, states and regions, have agreed, by 2030, to reduce energy consumption and eliminate emissions from energy and refrigerants in existing buildings, replace fossil fuels as fast as practicable, and ensure that major renovations are highly efficient and maximize use of renewable resources.
Motivations to Modernize
With buildings currently accounting for 30 to 40 percent of total city emissions, and construction and operations responsible for 36 percent of energy use globally, meeting 2050 climate accord targets would require a reduction of 80 to 90 percent in building emissions, according to figures cited by Deloitte.
Regulators are responding to troubling trends like these by enacting stricter requirements for building construction and operation, which means owners and operators likely will face new responsibilities to disclose their carbon footprint-related activities and comply with other environmental regulations.
They also are feeling the pressure from insurers and investors, who are re-evaluating their options based on new sustainability-related risk, brand image and other factors. Likewise, sustainability metrics are factoring more heavily into tenant decisions about where to situate themselves.
Therein lies an opportunity for facility managers to use the sustainability/carbon-reduction attributes of their buildings and their overall portfolio to earn more favorable terms from investors and insurers, and to attract the most desirable tenants. Sustainability is an increasingly marketable attribute for commercial developers and facility managers, one they would be wise to leverage in promoting their properties.
Another appealing aspect of modernization projects is their potential for creating new revenue streams for building owners and operators around value-added services for tenants like electric vehicle charging, for example, or data as a service. There’s a golden opportunity to monetize modernization investments.
What to Put in the Digital Toolbox
To make the most of the opportunities that building modernization presents, while also meeting compliance responsibilities and ESG goals, it’s going to be critical for the various stakeholders in a modernization project to have access to the right data, and to the right digital tools to make sense of that data. That includes:
- End-to-end capabilities that provide a full lifecycle view of the data associated with the operations of a building. When it comes to a building’s carbon footprint and resource efficiency, you can’t understand and improve what you don’t measure. That’s why any building modernization project should focus on digital upgrades that enable the owner and operator (using Internet of Things-connected sensors and the like) to collect data about every aspect of building operations and utilization — emissions, lighting, space utilization, HVAC, etc. The data provided by these devices can inform where to target improvements in critical areas like energy performance and the occupant experience. It also can be used for reporting and compliance, tracking progress toward ESG targets, and marketing based on sustainability/ESG performance.
- Embedding economic, environmental/sustainability and social performance into strategic decision-making across the business. As the green line — carbon footprint and other sustainability-related KPIs — becomes a larger factor in core strategic decision-making, from material sourcing to finishes, having some type of central sustainability “control tower” can give owners and operators the holistic perspective they need to understand the trade-offs and make decisions based upon the interrelationships between financial, operational and sustainability performance. What they need, essentially, is a clear line of sight into the relationship between sustainability investments and business success. By applying advanced analytics from that control tower perspective, they’ll be able to detect patterns across locations and units, and take action accordingly. Would it make more sense to switch to a renewables-heavy energy supplier or install and operate your own solar equipment, for example?
- A single source of trusted data about individual facilities and all the buildings in a company’s portfolio. Whether a firm wants to buy or sell a building, having the ability to tap into a detailed accounting of that building’s carbon footprint and sustainability profile will be essential to the due diligence process. That data could reside within a digital twin, a digital representation of the physical building that stores a huge variety of operational data across the building’s lifecycle.
As a complement to digital twin, how about an online registry for buildings and the materials and products that were used in their construction? The Madaster Foundation has established such a registry, an important step in encouraging materials reuse, smart design and waste reduction.
- Tools to evaluate suppliers based on their sustainability performance. Organizations have the power to do a lot of good when it comes to the money they spend on suppliers. To do so, they need to see the complete picture, including the carbon footprint and sourcing/origination of the myriad materials and components that comprise their buildings. That means having access to data beyond company walls, from all the entities in the supply chain, in order to procure with purpose and enforce responsible, traceable sourcing. Not only will suppliers and partners need to provide actual reportable and auditable data (not just averages or ballpark estimates), your firm will need the ability to collect and standardize that data in order to evaluate suppliers and partners based on their sustainability and ESG performance. All this is enabled by a connected business network, in which the various parts of the value chain are sharing data with the common goal of carbon-reduction.
- Digitally enabled services that add value for occupants. To distinguish themselves from the competition, owners and operators can leverage data and digital technology to offer flexible office-as-a-service options that scale to tenants’ needs, for example. Or they could offer Intelligent, automated parking solutions that are equipped with plentiful access to electric vehicle charging outlets.
With a mastery of their data and a mindset that views carbon-reduction and ESG as an opportunity rather than a burden, building owners and operators will be in a strong position to make sustainability profitable and profitability sustainable.
Johnny Clemmons LEED AP, BD+C, is Global Vice President, Industry Head, and former Chief Engineer for the Engineering, Construction, & Operations industry business unit of SAP America.