Skydiving can make you anxious. You may be reluctant to try it, you may not even entertain the thought of doing it. You’d certainly want to know that safety has been thoroughly planned, that you’re dealing with an experienced crew and a plane that actually works. Once you do it though, you’ll probably love it, want to tell everyone about it and do it again, but next time from even higher! Fortunately, if you don’t want to do it, no one is going to force you out the plane. This is not the same as when it comes to setting real estate fund and asset sustainability performance targets.
Taking a few steps back though, I have seen many similarities in people’s thought process when considering performance targets, as you may see when skydiving for the first time. Like skydiving, that hesitation has a rational basis. Companies may not want to set a performance target due to barriers including:
- Knowledge – where does one start
- Uncertainty – how to drive forward improvements
- Cost – a lack of budget
- Responsibility – a lack of authority
- Ultimately – a fear of failure
Planning, with the right expertise, can overcome all of the above barriers.
There are two common approaches to performance targets:
- Top down – identifying where you want to be (often in the long term and often with far-reaching improvement targets) and then setting about to accomplish the target through a series of strategic goals. This approach is commonly seen when setting Science-Based Targets.
- Bottom up – identifying improvement actions and setting a performance target based on the expected improvement to be gained from each action. Consolidating a range of asset level improvements can lead to the establishment of portfolio-level performance targets.
EVORA is experienced in applying both approaches. Often, it is a combination of approaches that deliver most success for a simple reason that people find it harder to associate with (and then take accountability for) a long-term target and then recognize how it can be achieved. This is particularly true in commercial real estate where asset transactions in funds concerned can cause disruption.
There is plenty of literature available on setting top-down Science-Based Targets and I draw your attention to our posts here.
Less guidance is available on delivering successful bottom-up strategies, and it is often these shorter-term targets that help companies on the road to longer-term more ambitious journeys. As such, we provide below, a staged approach, using insight from our experiences.
|1||Prioritization||Understand your portfolio and prioritize action at assets that have the greatest impact, greatest opportunity for improvement and/or where you have greater influence over performance.|
|2||Identification and analysis||Undertaking energy audits is a necessary step to identify performance improvement actions; EVORA has experience of more than 400 audits in the past eight years. Recommendations need to be technically and economically feasible, and importantly, aligned with the asset business plan to gain most chance of approval.|
|3||Asset level improvement plan||From our experience, this is a critical step. Property and Asset Management teams must work to agree and budget for implementation of specific actions within agreed and defined timescales with responsibilities and budgets clearly set out. Change does not happen without action and action does not happen without buy-in.|
|4||Portfolio level performance target||Portfolio level performance targets can be set through rolling up multi-year savings expected from asset level improvement plans. Establishing an accurate baseline and having clarity on reporting outputs and metrics is essential at this stage.|
|5||Implementation and tracking||Improvements can rely on operational and technology change. At EVORA, we have experience of both. Our SIERA Monitoring & Targeting software has led to operational energy savings up to 30%. While our engineering EDGE team has substantial experience on design, specification and project management of M&E installation. All performance data should be tracked in sustainability software such as SIERA to enable review|
|6||Communication||Finally, and importantly, success must be shared with stakeholders including tenants and investors. Often the value of communicating responsible investment practices can be greater than the value of energy saved through such programmes|
The above approach has proved successful for our clients and helped many get underway with performance targets. The process works as it delivers assurance to key stakeholders at all levels that the programme is practical, feasible and, importantly, adequately resourced to deliver success.
As for the obligatory targets, there is already a certainty that these are coming for new and existing buildings. It may be driven by a combination of legislation and industry-wide programmes but we can see these coming on the horizon. Planning now will help you keep pace with the industry.
To find out how we have assisted clients to develop and then achieve UK and pan European performance targets please do get in touch.
If you want to go skydiving, please make sure your trip is planned, on a well-maintained plane and with an experienced crew (and don’t forget to share the news with us!). Happy flying!