Today the Guardian Environment Blog published a piece by Doug calling for the word ‘Sustainability” to be banned from all technical and political discourse as it has become so corrupted as to be meaningless. Read the article
About a decade ago it became all the rage for corporations to develop Corporate Social Responsibility (CSR) policies. Originally CSR was clear. It encouraged corporations to consider their impacts on the societies that quite literally sustain them. Society consumes their goods and services, provides them with staff and, especially in the case of bankers, pays for their mistakes. Initially CSR had very worthwhile aims, but now is more commonly used simply to out-worthy competitors.
So how was CSR – Corporate Social Responsibility replaced with CSR – Corporate Sustainability Rhetoric?
Well, like many aspects of business the innovators and early adopters have a clear mission and understanding of what they are doing and why. However, by the time that any new practice becomes the subject of business improvement handbooks, it simply becomes a fad that everyone has to follow in order to maintain market share. At this point the followers are simply looking for the easiest route to show compliance.
Thus CSR has gone the way of Quality Assurance (QA). In the early days both CSR and QA were business improvement activities. A CSR policy allowed business to connect with the community that supported it. A well written QA system supported and enabled the business operations. Now both of these ideals have been reduced to tick-box auditing with the simple purpose of allowing businesses to demonstrate that they are no worse than their competitors.
So, we have now reached the point of “Sustainability Accounting”. Rather than recognising that all human activity has impacts, and taking responsibility for these, sustainability accounting uses a limited set of performance indicators to demonstrate worthiness whilst often obscuring the real issues. This approach clearly has great appeal to judge by the burgeoning of sustainability or carbon consultancy.
Now I guess political leaders must also be reading these same business improvement handbooks. Because, as we know, the private sector has all the answers doesn’t it? Maybe this explains why we are seeing rhetoric replace action on sustainable development in all spheres of life, including politics and national leadership. Competing organisations in any sphere from supermarkets to governments now vie to be seen to be more sustainable than each other without actually doing anything concrete.
We need to stop obfuscating and start taking responsibility for our actions once more. To begin with, we have to acknowledge that all human activity has impacts and that these impacts may go far beyond the present sustainability indicators. We need to take responsibility for all these impacts and work to minimise or mitigate them.
We need to start taking responsibility for our resource and energy consumption, for social development, for the health of our economy and for protecting our vital biosphere. We cannot continue to cherry pick just those issues which allow us to demonstrate our worthiness in limited spheres. These responsibilities also extend across the generations. We cannot simply ignore our responsibilities because we will not be around to be held accountable by future generations.
Its time to throw out the sustainability rhetoric and put responsibility back in business!
An extended version of this article was published here: The Conversation
And Here: The Guardian Environment
And Here: 2 Degrees Network
You can comment and join in the conversation at any of these locations, or just comment below:
I am currently preparing my talk for the annual Lignacite Lecture which I will be giving next month entitled ‘Building on Evolution’. I have taken as my theme the tacit knowledge of historic builders and what we could learn from them. However this has also got me thinking about our tendency to allow nostalgia to blind us to reality.
How often do we hear that it was ‘better in the old days’, that Georgian or some other architectural period was the ‘pinnacle of achievement’, that pop music these days is not as good as the 70s, that the modern world is poor by comparison.
By comparison with what?
All aspects of our culture suffer from the same delusion. People of my generation often lament the decline of popular music. It was so much better in the 70s they say. Well that’s probably because they are judging the past by their own collection of music. They bought a small selection of what was available because it appealed to them, and it probably still does. However, they have long since forgotten all the rubbish that was also played on the radio. This creates a distorted impression of the past. Lets face it there was just as much rubbish recorded in the 70s as there is today, we have just forgotten about it!
Well, the buildings that we use to judge the past are also the few, finest examples of their genre. Lets face it, the majority of Georgian buildings no longer exist. They were not fit for purpose and have gone, they failed to endure. Many buildings of the Georgian period were cheaply built by speculators, just like today, and sometimes they even fell down.The Georgian buildings that remain are the ones which were well enough built to endure and functional enough to still be useful to future generations.
The same goes for Gothic cathedrals. The ones that we are familiar with are the ones that were well enough built as to not fall down already (although the reformation had a little to do with it too). But even enduring cathedrals show the signs of constant alteration and repair. The history of British cathedrals is replete with collapses and reconstructions; Hereford, Chichester and Lincoln all suffered major collapses amongst many others. However, the Gothic style developed through expression of the structural imperatives of construction and so such buildings can be easily repaired and altered.
So we could reasonably expect that buildings from any period in history varied in quality and only the best still survive. It is wrong therefore to assume that any period was a golden age based on only the surviving evidence. The buildings that survive are either the product of enduring institutions such as the church and government or they are buildings that managed to appeal to successive generations.
This appeal in surviving historic buildings must be tangible. The buildings had to survive long enough on their own merits to become historic and therefore worthy of legislative protection. So we should be able to learn an awful lot about how to make buildings for the future by trying to understand why historic buildings survived, physically, functionally and culturally. After all enduring is synonymous with sustainable.
Doug has been invited to give the annual Lignacite Lecture at the Royal Society on the evening of 26th September. ‘Building on Evolution’ will explore the tacit knowledge of historic builders and examine how we could apply it to developing the sustainable buildings of the future. Limited tickets are available from Lignacite, but its first come first served: http://www.lignacite.co.uk/News/lecture.html
We are used to seeing environmental protection at the centre of sustainability arguments. We are not so used to thinking about the economic sustainability of what we do in construction. I believe that we may need to rethink the economic model behind commercial construction in the UK or face some dire consequences. Let me explain:
Back in 2009/2010, early in the recession, I was seeking new premises for my business. I identified a recent development in Bristol which was still unoccupied several years after completion. Normally, we would not have been able to afford city centre rents, but I thought that this building should have been ripe for negotiation, having no tenants. However, when I approached the agents I found that commercial property rent is not subject to the usual market forces of supply and demand. The agents gave me the following reason for being unable to reduce the rent. The asset value of the building is determined by the anticipated rental yield. Having purchased the building at a value based on predicted rent the landlord will not reduce the rent in order to attract tenants as this would reduce the asset value leaving them with a loss on their balance sheet. Apparently the paper value of a building is more important than it actually generating revenue. Why would this be?
Well, consider our typical commercial development model. A developer borrows money from the banks in order to construct a building which nobody actually wants. In order to maximise the potential return, the building is constructed to the lowest acceptable specification for its target market. Shortly after completion, the building will be sold to a landlord, typically a pension company. The pension company uses the asset value of the building to underwrite its future pension commitments. The pension company appoints an agent to market the building and then largely forgets about it. Rental revenue pays for the operation of the building. The developer repays the bank loans and pockets the profit.
So, now I understand. The pension companies hold these buildings on their books as assets on paper. It is these paper assets that underwrite the security of my (and your) future pension. However, it seems to me that this is based on the premise that:
If the building does not have tenants and is not generating a revenue then what value does it actually have? Consider this other example:
Green Park is a business park development near Reading originally owned by Prudential. The park, which was valued at £500M – £600M in 2008, was held in the Prudential’s Life Fund. Green Park’s principle claim to fame is its highly visible wind turbine next to the M4. Green Park’s other landmark, 450 South Oak Way, the building facing the M4 motorway, together with its sister, 400 South Oak Way, have sat empty since completion in 2002.
450 South Oak Way has sat empty for 10 years, consuming capital rather than generating revenue.
These buildings were leased by Cisco shortly before the dotcom crash and never occupied. Cisco has been trying unsuccessfully to find alternative tenants since. Now, in order to prevent the building fabric from deteriorating, it must be the case that basic heating and cooling systems are kept in operation and basic maintenance is carried out. This will not be cheap considering the buildings’ fully glazed south facing elevations. So, without tenants, these buildings are consuming capital rather than generating revenue. How does that affect the asset value held on Cisco’s books? Well, Cisco gave up and surrendered their leases in July 2012.
So now the cost of maintaining these empty buildings falls once again on the landlord. Interestingly, by now, Prudential had also gotten out of Green Park, selling to Oxford Properties, the property arm of a Canadian pension fund, in 2011 for £400M (a loss of at least £100M for the Pru, such are the shenanigans of the property world). So the costs of maintaining these “assets” must now be borne by Canadian pensioners until tenants are found. I wonder if they will fare any better than Cisco or Prudential did.
In the past, commercial property has clearly been a good investment for pension funds as the assets typically always appreciated. However, this paradigm is changing. As regulations on building energy consumption are continually drawn tighter, underperforming commercial buildings will quickly become obsolete. Commercial tenants are beginning to demand energy efficiency in buildings and, further, from 2018 landlords will be unable to offer for rent any building with an EPC rating lower than E. 450 South Oak Way is Band D according to the agent’s particulars and so it is not in immediate danger of becoming obsolete. Nevertheless, the longer that buildings such as this sit empty the less likely it becomes that they will ever find a tenant, as newer buildings come along with substantially better energy ratings. Do we face the prospect that recently constructed buildings may even be demolished without ever having generated revenue? I wonder what this does to the asset value recorded in the pension fund’s books. Will we find ourselves in a few years time faced with pension funds loaded down with a whole load of toxic assets as bad as the sub-prime mortgage situation?
I’m not an economist and don’t know the answer to this question, but I do know that if my business does not produce revenue then it has no value as an asset and cannot be used to underwrite borrowing or liabilities. It worries the hell out of me that my pension might be underwritten by assets with no value other than paper. Does anyone else have any insights on this situation?