Improved ESG metrics: Can smart facility management skyrocket your property value in 2022?

13 January, 2022

Buildings are known to consume a very substantial part of global energy resources throughout their different life stages: construction, usage, renovation and demolition. According to a 2020 European Commission in-focus report on Energy Efficiency in Buildings, buildings are responsible for:
• 40% of total EU energy consumption and
• 36% of total EU greenhouse gas emissions
The European Commission has been consistently establishing directives and regulations to address the above concerns, like the recent Ecodesign and Energy Labelling Directive, which focuses on the energy efficiency of equipment and machines. On a global scale however, it was a 2005 United Nations Environment Program Initiative that introduced the ESG (Environmental, Social and Governance) movement, as an evolution of Socially Responsible Investing (SRI).

Why ESG evaluation is important
Nowadays, the ESG factors are used to evaluate how likely is for companies to achieve sustainable growth and can have a positive, long-term impact on business performance, people and the planet. It has become a standard procedure for banks and investment groups to run analysis algorithms on ESG-related information, identifying an investment’s advantages and potential risks. The main idea is that companies which achieve higher scores across the ESG metrics are more probable to outperform competition and, thus, constitute a safer and more attractive investment.
To fathom the impact of the above on an enterprise’s perceived value, we should also consider the World Economic Forum initiative to publish a set of universal disclosures, the Stakeholder Capitalism Metrics. These unified metrics list have been co-assembled by 50 companies, to promote alignment among existing ESG frameworks, as they realised the inability to form an objective analysis of ESG risks and opportunities without consistent ESG reporting.

How smart building technologies can improve your facilities’ ESG footprint
Commercial, corporate and public buildings have proved to consume much more energy than the residential ones. And that’s where one should focus, to achieve a greater impact in favor of the planet and the society. With the available solutions for intelligent facility management today, the building owners are in position to improve many of their everyday operations and present much better ESG-related results. In the following paragraphs, we will show different ways in which smart building technologies can help optimizing a property’s ESG profile.

Minimized energy consumption (environmental & social impact)
In a 2016 Commercial Buildings Energy Consumption Survey, it has been found that energy in commercial buildings is consumed on average as shown below:
• Space heating 25%
• Ventilation 10%
• Cooling 9%
• Lighting 10%
• Refrigeration 10%
• Water heating 7%
• Cooking 7%
• Computing 6%
• Office equipment 3%
• Elevators 3%
• Other applications 10%

yodifemarticleimageSmart HVAC control
Heating, Ventilation and Air-Conditioning (HVAC) accounts for 44% of the overall energy consumption, means that even minor improvements in the HVAC systems operation can yield significant gains. One way is to substitute old equipment with new ones of highest efficiency. This will improve the overall HVAC system’s energy efficiency, but the ROI may not be so tempting.
A much quicker and more sustainable way is to invest on smart facilities management solutions. Usually in the form of IoT, cloud-based platforms, these systems can leverage real-time information from pressure, temperature and activity sensors, to monitor and effectively control the operation of HVAC equipment according to the actual needs, keeping the running cost down.

Smart lighting control
Using a similar approach, data from activity detecting IoT sensors can be correlated with information on desk occupancy, so that the intelligent facility management platform can automatically decide on which lights should be on and at which intensity levels, to guarantee adequate – but not excessive – lighting in all areas of the building.
Both these intelligent ways of equipment control can immediately affect the amount of energy consumed in a facility, lowering the utility bills and the GHG (greenhouse gas) emissions. Moreover, a proven environmental-sensitive profile can decrease a company’s reputational risks and build better relationships with the local communities.

Improved working and living conditions (environmental & social impact)
An intelligent building must enable better working and living conditions for the employees or tenants. Real-time monitoring of temperature, humidity and other air quality measurements allows the optimal use of heating and ventilation systems.
By identifying and analysing the space occupancy conditions and the actual indoor air quality characteristics, ventilation systems can be self-regulated to provide just the amount of air flow required for maintaining a healthy indoor atmosphere. The same applies to the operation of the heating systems, where the smart facility management platform can ensure that each room is heated according to its exact needs.
This dynamic functionality, apart from decreasing costs, it helps creating comfortable and healthy conditions for employees or tenants, adding to a higher level of satisfaction or occupancy rate. In the context of a corporate environment, it can boost business productivity and the employees’ moral, as they will feel more appreciated and satisfied working for an environmentally-responsible organization.

Reduced operational and maintenance costs (environmental & social impact)
To take the above benefits a bit further, we should consider a smart building’s maintenance capabilities. Indeed, the continuous monitoring of critical equipment not only allows for clean-cut operation, but it also gives valuable information for their condition. Moreover, advanced AI/ML algorithms can help detect abnormal behaviour at very early stages, making the implementation of an effective preventive maintenance strategy possible. The Operations and Maintenance teams will know exactly when to intervene to prevent equipment faults, saving on repair costs and avoiding all the associated discomfort caused to the building users.
Furthermore, the running costs limitation deriving from such smart facility management will have a positive impact to the property’s evaluation and help raise its investment value.

Detailed reporting (environmental, social and governance impact)
Corporations struggle not only to identify but also to monitor and report on ESG KPIs. Multiple enterprises retain unstructured data from different sources, making it difficult to integrate them into reporting and decision-making processes. Smart facilities management solutions integrate multiple data sources for live ESG performance monitoring, with a comprehensive reporting approach. By interfacing with existing systems, such an intelligent solution can automate data capture based on defined ESG metrics and automatically export the data in the required format.
Reporting is in the heart of the ESG framework and is expected to be available for the public eyes, i.e. on a corporate website or in a company’s annual reports. Building owners can also use it to strengthen their position in meetings with shareholders, stakeholders and investors. Furthermore, by disclosing this sensitive information they can provide proof on how they protect the environment, which helps in building trust with the society.
Since its introduction, ESG’s importance has been growing exponentially and it has already become the main deciding factor for a property’s perceived value. Investing in smart facilities management solutions can really be the single, most intelligent decision, to protect and reinforce your real-estate portfolio. For guidance on which smart building technologies to use and how they can be configured to match your facilities’ specific characteristics, you may book your own free consultation call with one of Yodiwo’s facility management experts.