FMJ Facilities Management magazine providing industry-specific intelligence to FM and property professionals
THE SUSTAINABILITY EXPERT’S VIEW
NATHAN GRAY,
HEAD OF SUSTAINABILITY AT RECONOMY
Companies are increasingly being judged not just by their products or profits, but by their actions. Environmental, Social, and Governance (ESG) has become a yardstick for measuring a company’s commitment to sustainability and ethical practices. However, failing to meet or maintain ESG standards can have dire consequences for a company’s brand reputation – which will inevitably lead to diminishing corporate performance.
When a company falls short against ESG criteria, it can damage its reputation in several ways. Firstly, clients and customers are becoming more conscious of the environmental and social impact of the products and services they buy. If a company is losing customers due to this it can hit their bottom line hard and reduce its market share.
Secondly, investors are increasingly factoring ESG performance into their decisions. They understand that companies with poor ESG practices may face regulatory fines, lawsuits, or other financial risks in the future, thus rendering them as poor investments. This will make it harder for the company to raise funds for future projects or expansions.
Thirdly, employees are becoming more selective about the companies they work for. If a company’s ESG reputation is tarnished, it may struggle to attract and retain top talent, leading to productivity losses and increased recruitment costs.
For the facilities management sector, meeting ESG standards on behalf of their clients poses unique challenges. FM companies are responsible for managing the physical assets and operations of buildings, including energy, waste, and maintenance. Therefore, they play a crucial role in helping clients reduce their environmental footprint, improve their social impact and operate efficiently.
A primary challenge for the FM sector is ensuring compliance with ambitious targets set by organisations like the Science Based Targets (SBTi). The SBTi helps companies set emission reduction targets in line with the Paris Agreement’s goal of 1.5°C by 2030. Meeting these targets requires significant investments in energy-efficient technologies, renewables, reduced waste, and sustainable procurement. However, some FM companies may lack the expertise to implement these changes effectively.
Another challenge is that of successfully navigating evolving regulations such as the Corporate Sustainability Reporting Directive (CSRD) in the European Union. The CSRD aims to standardise ESG reporting requirements for companies who have a foothold or operate within the EU, making it easier for investors and stakeholders to compare performance across different organisations. FM companies must stay abreast of these regulations and ensure that their clients’ ESG data is accurate, transparent, and compliant with the legal requirements.
Ultimately, non-compliance with ESG standards can have serious repercussions for a company’s brand reputation, affecting its relationships with customers, investors and employees. The FM sector faces unique challenges in meeting these ESG standards on behalf of their clients, including ambitious targets set by initiatives like SBTi and regulatory requirements such as CSRD. Overcoming these challenges will require collaboration, innovation and a commitment to sustainability across the entire value chain.
