Organisational Measurement & Reporting Report from the UK Green Building Council Task Group

July 2008

© UK Green Building Council, July 2008

The Building Centre 26 Store Street

London WC1E 7BT Telephone: + 44 (0) 207 580 0623

Email: info@ukgbc.org

Report available to download from www.ukgbc.org

List of Contributors The UK-GBC would like to thank representatives from the following organisations for their participation in the Task Group: Aggregate Industries, Architects Journal, Bennetts Associates, CB Richard Ellis Ltd, Future Housing & representing CIOB (Chartered Institute of Building), Davis Langdon, Faithful + Gould, Fulcrum Consulting, Lend Lease, Mace Ltd, Michael Dyson Associates, Quintain Estates & Development, Upstream, WT Partnership.

Acknowledgements Particular thanks to Upstream for their pro bono work in analysing existing frameworks and measures. The Task Group would like to thank the following organisations for the provision of case studies: Foster & Partners, Aedas Architect, Marks Barfield Architects, Fulcrum First, Upstream, Faithful+Gould, Aggregate Industries, Kingspan Insulated Panels, Quintain Estates, Lend Lease Retail & Communities, Skanska, Balfour Beatty, Atisreal, CityWest Homes (CWH), Westminster. The Task Group would also like to thank the following organisations who have met with the Task Group during the past few months: Association of Chartered Certified Accountants (ACCA), Constructing Excellence, British Property Federation (BPF).

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Contents Executive Summary .......................................................................................4 1.1 Background .....................................................................................4 1.2 Scope & Process ...............................................................................5 1.3 Key Findings ....................................................................................5 1.4 The Measurement & Reporting Schematic ...............................................6 1.5 Recommendations.............................................................................7 1.6 Next Steps for the UK-GBC ..................................................................8 2. Introduction...........................................................................................9 3. Definitions........................................................................................... 11 3.1 Glossary........................................................................................ 11 3.2 Glossary of Terms ........................................................................... 13 4. Scope ................................................................................................. 14 5. Measurement & Reporting - Barriers & Benefits............................................. 15 5.1 Challenges to Measurement & Reporting ............................................... 15 5.2 Benefits of Measurement & Reporting .................................................. 16

Improved Corporate Image ........................................................................ 18 Improved operational efficiency ................................................................. 18 Motivating staff ..................................................................................... 19 Preparation for meeting new government standards ......................................... 19 Better strategic overview of operations ........................................................ 20 Ability to respond quickly to stakeholder enquiries........................................... 21

5.3 Key Findings .................................................................................. 21 6. Understanding existing frameworks & measures............................................ 22 6.1 The landscape of Measurement and Reporting........................................ 22 6.2 Organisational Reporting................................................................... 24

The Global Reporting Initiative (GRI)............................................................ 24 Sustainability Indices & Industry Initiatives .................................................... 25

6.3 Management Processes..................................................................... 26 6.4 Data Inputs.................................................................................... 28 6.5 User preferences ............................................................................ 28 6.6 Key Findings .................................................................................. 29 7. The Organisational Measurement & Reporting Journey ................................... 30 7.1 The Principles of Reporting ............................................................... 31 7.2 Establishing your indicators and boundaries .......................................... 33 7.3 Where to Start - Just start................................................................. 33 7.4 Data Collection............................................................................... 34 7.5 Reporting publicly........................................................................... 34 7.6 Knowing what you didn’t know........................................................... 35 7.7 Establishing Targets......................................................................... 35 7.8 Consolidating early progress .............................................................. 36 7.9 Expanding the scope........................................................................ 37 7.10 Getting Strategic Value..................................................................... 38 7.11 It doesn’t have to be costly ............................................................... 39 7.12 Size doesn’t matter ......................................................................... 40 8. Recommendations ................................................................................. 41 8.1 Next Steps for the UK-GBC ................................................................ 42 9. Annex I – Case Studies ............................................................................ 43 9.1 Architects ..................................................................................... 45

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Aedas Architects - Dr. Judit Kimpian, Head of Sustainability and Advanced Modelling . 45 Foster + Partners - Thouria Istephan, Partner ................................................. 45 Marks Barfield Architects - Julia Barfield MBE RIBA, Managing Director ................... 46

9.2 Consultancy Practices ...................................................................... 47 Upstream - Jonny McCaig, Consultant ........................................................... 47 Fulcrum First - David Altabev, Sustainable Design Engineer ................................. 49 Atkins/Faithful+Gould - Sean Lockie Director, Head of Sustainability ..................... 50

9.3 Product Manufacturers ..................................................................... 52 Aggregate Industries - Ben Vivian, UK CSR Advisor ............................................ 52 Kingspan Insulated Panels - Seamus Cussen, Building Technology Manager ............... 53

9.4 Construction Companies ................................................................... 55 Balfour Beatty Capital - Ed Bartlett, Whole Life Costing Director .......................... 55 Skanska - Matthew Jansen - Sustainability Programme Manager............................ 56

9.5 Developers / Asset Managers.............................................................. 57 Quintain Estates - Hilary Reid Evans, Head of Sustainability Initiatives ................... 57 Lend Lease Retail & Communities UK - Janet Kidner, Head of Sustainability ............ 58

9.6 Property Agents.............................................................................. 59 Atisreal - Arlette Anderson, Director CSR & Sustainability................................... 59

9.7 Owner / Occupier............................................................................ 61 CityWest Homes (CWH), Westminster – Julie Day – Head of Asset Strategy............... 61

10. Annex 2 - UK-GBC References................................................................... 63

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Executive Summary

1.1 Background Many organisations find that financial reporting alone no longer satisfies the needs of shareholders, customers, communities, and other stakeholders for information about overall organisational sustainability strategy and performance. Organisational sustainability measurement & reporting is a method by which an organisation can demonstrate its performance against a wider range of factors than financial reporting. Furthermore, with sustainability targets becoming increasingly set as regulation, measurement against these targets is essential to define focus and assess progress. Organisational measurement and reporting is still not well understood or embraced by industry. As a result, while we know the built environment accounts for approximately 44%1 of total carbon dioxide emissions and the UK government is targeting a 26-32% reduction by 2020, the vast majority of organisations that operate within the sector do not understand their carbon impact or know if it is getting better or worse year on year. Sustainability Reporting is much more than an output of data. It is a journey that an organisation embarks on to understand and integrate the relationship between sustainability and the strategic direction of a company. A product of this journey is a regular (usually annual) snapshot of strategy and performance where an organisation publicly discloses its economic, environmental, and social performance forming a key communication to stakeholders. Implementing sustainability at an organisational level requires organisational alignment between strategy and policy, processes, structures, tools and most importantly, people. These will enable the organisation to define where it is, where it may be headed and opportunities for improvement. This report presents the findings of the UK Green Building Council’s (UK-GBC) review into organisational measurement & reporting undertaken by the UK-GBC’s Measurement & Reporting Task Group.

1 McAlister of Cyril Sweet (2007) “Transforming Existing Buildings: The Green Challenge”, RICS Research

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1.2 Scope & Process The objectives for the Task Group were to:

• Understand the benefits and challenges of organisational measuring and reporting

• Understand the existing measurement and reporting landscape • Identify the role of the UK-GBC in promoting organisational measuring and

reporting.

1.3 Key Findings

• A significant amount of confusion exists with regard to the application of measurement and reporting tools, frameworks and methodologies at the organisational level.

• Organisational measurement and reporting serves to report on the holistic

performance of an organisation, rather than management processes2, which aim, more directly to drive performance improvement for a specific product, service, or portfolio.

2 Processes (which include measurement frameworks, tools and methodologies) that are used to consider what management actions should be taken for different business activities with the aim of defining benchmarks and/or improving performance.

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1.4 The Measurement & Reporting Schematic

• When applied to the schematic above, the Task Group found that the majority

of measurement and reporting processes, frameworks and tools in the market place were issue or product focussed on, for example, the design and measurement of building performance, and are categorised under Management Processes in the Measurement & Reporting Schematic.

• Consequently, the Task Group could only identify a handful of organisational

reporting frameworks as opposed to a plethora of measurement frameworks, tools and methodologies. The Global Reporting Initiative (GRI) (excluding its indicator sets) is widely acknowledged as the most appropriate framework for organisational sustainability reporting.

• Of the UK-GBC members asked if they measure sustainability at an

organisational level, 77% said that they did, whereas only 42% of respondents report externally on their sustainability performance in a stand-alone Sustainability/CSR Report, however, it should be noted that the quality, credibility and comparability of this reporting varies.

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Overall the Measurement and Reporting Task Group found (as many of the case studies in annex 1 demonstrate) that:

• The vast majority of organisations, regardless of size and core business activity3, who measure and report at the organisational level have seen ongoing benefits.

• Organisational level measurement and reporting is a unique journey for each organisation. Its benefits take time to realise, and it requires commitment and resources. The sooner an organisation embarks on this journey the sooner it will be able to benefit from the strategic value it can provide.

• Organisational level measurement and reporting improves sustainability performance as organisations understand their impact and set business direction to improve performance over time.

1.5 Recommendations The Task Group recommends that:

• The UK-GBC play an active role in promoting organisational sustainability measurement and reporting

• The Global Reporting Initiative (GRI) Sustainability Reporting Framework is adopted as the common international organisational sustainability reporting standard (for the built environment sector)

• Greater coordination and collaboration between sectors, measurement frameworks and tool providers is required to drive sustainability performance improvement

3 The report includes a number of case studies from a cross-section of organisations’ experiences of M&R

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1.6 Next Steps for the UK-GBC • Within 3 years, ensure that all member organisations measure and report

using the (GRI) Sustainability Reporting Framework • Establish the minimum levels to which members must apply the (GRI)

Sustainability Reporting Framework • Set out what the membership will need to do (the Roadmap) to reach the

target date to comply with the reporting requirements, together with an assessment of the resources needed

• Support the membership with the process of organisational measurement and reporting

• Work with the GRI organisation to establish the Sector Supplements and Indicator Protocols that members require to achieve a balanced and reasonable representation of the sustainability performance of our member base

• Facilitate a range of activities for framework providers to discuss future direction for frameworks and tools, seeking to achieve greater coordination between models and sectors

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2. Introduction Buildings in the UK account for approximately 44 percent4 of total carbon dioxide emissions and the UK government is targeting a 26-32% reduction by 2020. It is essential the built environment sector understands its holistic impact in order to guide itself towards these targets, and other key sustainability impact areas both efficiently and effectively. Ten years ago Sir John Egan released the influential report called Rethinking Construction. The report put in place recommendations that would attempt to improve the image of construction in Britain. There were a number of recommendations which including the need for data and Key Performance Indicators (KPIs) the construction industry could use to measure itself at a project level. Many will be familiar with these KPIs, which have been managed by Constructing Excellence, the agency set up to deliver the Rethinking Construction programme. In his address to the House of Commons in May 2008, Sir John Egan, reported that 'I’m delighted that at least people are measuring performance, because when I got involved to start with, people weren’t even measuring it, so they didn’t even know if they were getting worse or they were getting better'.5 Despite the emergence of product and service tools and frameworks, organisational measurement and reporting is still not well understood or embraced by industry. While sustainability tools such as the Code for Sustainable Homes and BREEAM are essential in improving the sustainability performance of buildings, it is important to understand that they are only part of the solution. Such tools provide codified methodologies to guide the design, development and operation of certain built form products and services. They do not inform how organisations should strategically embrace the challenge presented by sustainability, nor do they holistically measure the sustainability impact of organisations within the built environment sector. This leaves material gaps in understanding how the sector needs to react to improve its sustainability performance holistically and specifically work towards meeting future targets. While organisations have sought out new methodologies and tools to improve the sustainable design of their products and services, many have struggled to understand their baseline sustainability impact and performance at an organisational level. An additional challenge for organisations has been the establishment of a strategy that embraces sustainability and is core to business operations rather than an adjunct. If the built environment sector is going to understand, as well as maximise, the progress that can be made in this area they need to embed sustainability in strategy and decision-making, understand its impact and set targets and commitments not just at a product and service level, but also at the organisational level.

4 McAlister of Cyril Sweet (2007) “Transforming Existing Buildings: The Green Challenge”, RICS Research 5 http://www.bre.co.uk/filelibrary/CLIP/SirJohnEgan21-05-08.pdf

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Some see organisational measurement and reporting as an outcome often not worth the cost or effort involved. However, the work of the UK-GBC Measurement and Reporting Task Group has identified it to be fundamental to facilitating and progressing sustainability outcomes across industry for the reasons outlined below:

i. Provides a catalyst for improving an organisations sustainability performance.

ii. Assists organisations in identifying and understanding the material impact of all their operations.

iii. Provides a facilitated framework for an organisation to set its strategic direction so as to embrace sustainability

iv. Allows an organisation to understand sustainability performance. for example its carbon footprint, and set targets for itself moving forward

v. Allows an organisation to understand the benefit of tools in assisting with ensuring best of class sustainability design and operation while ensuring where tools do not exist that methodologies are applied to ensure effective sustainability performance

vi. Acts as an enabler for changing organisational culture to focus on sustainability as core to business operations

vii. Enables comparability between organisations and business units viii. Can ensure an important feedback mechanism is established to better

focus efforts in the future. Given the importance of organisational measuring and reporting as a catalyst for measuring improvement and improving sustainability performance, the UK-GBC established a Measuring and Reporting Task Group to explore the anticipated barriers and opportunities. This report looks first at the barriers and benefits to organisational level measurement and reporting. It then goes on to describe the existing landscape of measurement and reporting, and describes the measurement and reporting journey. This is followed by some high level recommendations for industry and the UK-GBC, and a series of suggested next steps. The final section of the report provides a series of detailed case studies from a range of organisations, large and small in the built environment sector, who describe their measurement and reporting journey.

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3. Definitions

3.1 Glossary

ACCA - Association of Chartered Certified Accountants BiE- Business in the Environment BitC – Business in the Community BPF – British Property Federation BREEAM – Building Research Establishment Environmental Assessment Methodology BS8555 – British Standard “Guidance to the phased implementation of an environmental management system including the use of environmental performance indicators” BS8900 – British Standard Guidance for Managing Sustainable Development CfSH – Code for Sustainable Homes CDP – Carbon Disclosure Project CR – Corporate Responsibility DJSI - Dow Jones Sustainability Index FTSE4Good - Financial Times and the London Stock Exchange Index designed to measure the performance of companies that meet globally recognised corporate responsibility standards. GHG Protocol – Greenhouse Gas Protocol GRI - Global Reporting Initiative IEMA – Institute of Environmental Management and Assessment ISO 14001 – International Standards Organisation: Environmental management systems. Requirements with guidance for use ISO 9001 - International Standards Organisation Quality management systems — Requirements

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KPI – Key Performance Indicator LEED – Leadership in Energy & Environmental Design M&R – Measurement and Reporting OHSAS 18001 – Occupational Health and Safety Management Systems – Specification SME – Small to medium sized enterprise UK-GBC – United Kingdom Green Building Council

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3.2 Glossary of Terms Organisational Reporting – Sustainability reporting, to external audiences on performance and information relating to the total organisation; including operations, portfolio, and product/service level activities. Principles & Reporting Framework - Approach to, and structure for, reporting that is applicable to all organisations regardless of size or sector. (Example provided in Figure 4). Public Reporting Indicators – Key Performance Indicators the organisation has identified to report on publicly after applying the principles of measurement and reporting to its organisations' activities. Data should be normalised using appropriate units to create meaning and comparability. (Examples provided in Figure 4) Management Processes - Processes (which include measurement frameworks, tools and methodologies) that are used to consider what management actions should be taken for different business activities with the aim of defining benchmarks and/or improving performance. Measurement Frameworks -– Frameworks that assist in measuring performance at the portfolio and/or product/service level. (Examples provided in Figure 4) Tools & Methodologies – Inform, process and/or monitor sustainability performance of specific products or services. (Examples provided in Figure 4) Data Inputs - Individual data that provides a measure of impact and/or performance. Data, which can be either quantitative or qualitative, is used as inputs into the measurement process. (Examples provided in Figure 4)

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4. Scope The original objectives for the Task Group were to:

• Establish the benefits of organisational level measuring and reporting • Understand the existing measurement and reporting landscape • Identify the role of the UK Green Building Council (UK-GBC) in driving greater

transparency about the sustainability performance of an organisation through encouraging measurement and reporting

The Task Group aimed to understand measurement and reporting at an organisational level; to identify the benefits and tools applicable to all organisations in the built environment, regardless of their size or business activity; and to identify how the process of measurement and reporting can be better understood and used by organisations in a way which enables them to gain strategic value from the process. Rather than develop another organisational reporting framework, the aim was to look for commonality between methods used to measure and report and attempt to bring clarity to the measurement and reporting landscape. The work of the Task Group has been informed by:

• A survey of UK-GBC members and non-members • Background desktop research on existing literature on Measurement &

Reporting • A desktop mapping exercise of existing frameworks and measures carried out

by Upstream6 • Regular discussion amongst the Task Group members who represent a range of

organisation types in the built environment sector

6 www.upstreamstrategies.co.uk

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5. Measurement & Reporting - Barriers & Benefits There is a growing general awareness of sustainability issues within the business community; this is demonstrated by the widespread attention given to a broad spectrum of concerns from climate change to human rights. As sustainability moves towards the forefront of the business agenda, it has become increasingly important to be able to measure accurately and report robustly on the sustainability impacts and performance of organisations. This section of the report outlines the challenges and benefits for organisations wishing to begin the Measurement & Reporting journey Many organisations find that financial reporting alone no longer satisfies the needs of shareholders, customers, communities, and other stakeholders for information about overall organisational sustainability strategy and performance. Organisational Measurement & Reporting is a method by which an organisation can demonstrate its performance against a range of sustainability factors. Sustainability Reporting7 is much more than an output of data. It is a journey that that an organisation embarks on to understand and integrate the relationship between sustainability and the strategic direction of a company. A product of this journey is a regular (usually annual) snapshot of strategy and performance where an organisation publicly discloses its economic, environmental and social performance, forming a key communication to stakeholders. Implementing sustainability at an organisational level requires organisational alignment between strategy and policy, processes, structures, tools and most importantly, people. This will enable the organisation to define where it is, where it may be headed and opportunities for improvement. There are instruments that can help to set objectives and targets, others that can be used to monitor and report on progress, while there are still more which are useful in exploring alternative futures. All of these tools are essential for developing effective sustainable development strategies and for effective adaptive management.

5.1 Challenges to Measurement & Reporting There are many challenges to companies measuring and reporting their sustainability impacts and performance. The Accounting for Sustainability Report (The Prince’s Charities) states that the challenges include issues about deciding what information to report and where to report it; and concerns about the disclosure of competitive

7 The term ‘Sustainability Reporting’ is synonymous with social reporting, citizenship reporting, triple-bottom line reporting and other terms that encompass the economic, environmental, and social aspects of an organisation’s performance (Global Reporting Initiative, 2008).

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information and publication of targets. The report also states that companies are confused by the lack of consistency in measurement, and are fearful of adding to the amount of information already reported on by the company, unless added benefits can be clearly demonstrated. In the UK-GBC survey, participants were questioned about the key challenges to measurement and reporting within their organisation. The analysis below highlights the most significant responses given8. The results have been split according to whether or not the organisation currently measures and reports their sustainability impacts. The results have been broken down in this way to identify whether organisations that currently measure and report have different perceptions to those that do not.

Challenges measure &

report Do not measure

& report

Inappropriate M/R frameworks ●●●●●● ●●●●●●●●●

Insufficient resources ●●●●●●● ●●●●●●●●

Concerns regarding reporting inaccurate data ●●●●●● ●●●●●●

Risk of reputational failure ●●●● ●●

Other ●● Figure 1: Challenges to Measuring &/or Reporting9

From these results, it is apparent that a higher percentage of organisations that currently do not measure or report, perceive insufficient resources (cost & time constraints) to be their most significant barrier to M&R in comparison to organisations that currently measure and report. These results also highlight that both reporters and non-reporters agree that numerous and competing M&R frameworks result in confusion, as are concerns in some quarters with the quality of data reported.

5.2 Benefits of Measurement & Reporting Our desktop research and the survey results indicate that measurement and reporting can have many benefits for organisations. According to the Global Reporting Initiative (2008), reporting can help organisations to compare its sustainability performance against its peers, improve brand and reputation enhancement, enhance differentiation in the marketplace, help to protect against

8 For further data and graphical analysis, please refer to the UK GBC website. 9 Each dot represents approximately 4% of the total survey response to this question

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brand erosion resulting from the actions of suppliers or competitors and improve networking and internal and external communications. “The process of embedding sustainability deep in an organisation and making sure that sustainability issues are reported alongside and connected with more conventional financial information is now recognised to be of enormous importance”

Richard Reid, vice chairman - KPMG and Board Member - Accounting for Sustainability

(Accounting for Sustainability Report (The Prince’s Charities))

In the UK GBC survey, participants were questioned about the key benefits to measurement and reporting within their organisation. Each participant was asked to rank their selection against a set of pre-defined statements. The analysis below highlights the most significant responses given10; again, the results have been split according to whether or not the organisation currently measures and reports.

Benefits measure &

report Do not measure

& report

Improved corporate image ●●●●● ●●●●●●●●

Better strategic overview of operations ●●●● Preparation for meeting new government standards ● ●●●●●

Improved operating efficiencies ●●●● ●●●●

Motivating staff ●●● ●●●● Ability to respond quickly to stakeholder enquiries ●●●● ●

Ability to pro-actively influence policy direction ●● ●

Other ●

Figure 2: Benefits of Measuring & Reporting11

It is clear from these results that both reporters & non-reporters feel that enhanced corporate image is the most significant benefit for M&R. It is interesting to note that for companies who currently do not measure or report preparation for meeting new government standards was also cited as a strong perceived benefit. Conversely, this was not stated by reporters to be a significant benefit. Another key finding, from those who do M&R is the better strategic overview of operations that it provides, which is also reflected in a number of the case studies provided in Annex 1 of this report. Other benefits of reporting included; improved operating efficiencies, ability to respond quickly to stakeholder enquiries, and motivating staff.

10 For further data and graphical analysis, please refer to the UK GBC website. http://www.ukgbc.org/site/taskgroups/info?id=3 11 each dot represents approximately 4% of the total survey response to this question

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A review of existing literature concurs with the survey findings and provides a more detailed insight into the benefits of M&R. Improved Corporate Image The business case for Responsible Business put forward by Business in the Community states that attitudinal surveys show members of the public prefer companies that are seen to be positively contributing to the environment and society. A good reputation is one of the most valuable, intangible assets that a company can have, and maintaining it is a key motivation for companies to engage in responsible business. By being responsible, and measuring & reporting, organisations can:

• Enhance brand value by managing and influencing the expectations of their stakeholders

• Build trust through actions that increase customer satisfaction and add to shareholder value

• Enhance positive relationships that deliver business advantages that maintain and improve market share.

Improved operational efficiency A key benefit identified through the membership survey, case studies as well as desktop research, is that organisational measurement & reporting improves the sustainability performance of organisations relative to not reporting. While many organisations that don’t report have numerous sustainability initiatives in place, it is difficult for those companies to assess whether those initiatives and the costs involved are contributing to an improved and focussed overall sustainability performance. Organisational measurement & reporting ensures that individual sustainability initiatives and the associated resources and costs are deployed strategically such that they are focussed towards a specific set of outcomes, goals and targets. Business in the Community12 states that responsible business can present opportunities to reduce costs to the business by:

• Improving competitiveness, market positioning and profitability • Anticipating impending legislation and so reducing future costs of compliance • Understanding how it uses natural resources and energy and the operational

benefits of managing these more effectively • Integrating environmental specifications into new assets, which can reduce

life-cycle costs and improve efficiency

12 Business Case for Responsible Business; (Undated); Business in the Community; http://www.bitc.org.uk/resources/business_case_for_responsible_business/responsiblebusiness.html

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The report concludes that a company which measures and reports its sustainability impacts and performance can attract investors who believe social and environmental risk management can have a significantly positive impact on a company’s long-term market value. Furthermore, it can highlight a management style that is forward-looking and more able to manage uncertainties in the future. These benefits are also highlighted, on a practical level, in a Carbon Trust Report13, which stated that small to medium-sized enterprises (SMEs) can make average carbon savings of over 5% per year by measuring their carbon emissions with advanced metering leading to reductions in consumption. Furthermore, a Survey of European Fund Managers, in 2003, stated that for 79% of fund managers and analysts surveyed, the management of social and environmental risks has a positive impact on a company’s market value in the long term14. Motivating staff There is a “war for talent” – Business in the Community15 states that businesses are dependent on their employees to deliver and create value. Responsible business practice:

Is increasingly a contributing factor in attracting and retaining a talented and diverse workforce, and in being an employer of choice

Builds employee morale and loyalty Creates a more motivated, engaged and inspired workforce that can improve

long-term productivity Adds to the bottom line by improving staff retention - eliminating recruitment

costs and reducing absenteeism which helps maintain or improve productivity. Preparation for meeting new government standards Business in the Community16 believes that responsible business practice can help companies to better understand and manage risk, which reduces avoidable losses and identifies new emerging issues, including upcoming government standards. M&R can also be used as a tool to audit and improve every aspect of the company. The Companies Act 2006, which received Royal Assent on 8 November 2006, made changes to narrative reporting requirements for quoted companies (in direct

13 Carbon Trust, (2007) Advanced metering for SMEs Carbon and cost savings www.carbontrust.co.uk/Publications/publicationdetail.htm?productid=CTC713 14 Investing in Responsible Business: The 2003 Survey of European Fund Managers, Financial Analysts and Investor Relations Officers, 2003 15 Business Case for Responsible Business; (Undated); Business in the Community; http://www.bitc.org.uk/resources/business_case_for_responsible_business/responsiblebusiness.html 16 Business Case for Responsible Business; (Undated); Business in the Community; http://www.bitc.org.uk/resources/business_case_for_responsible_business/responsiblebusiness.html

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response to the EU Accounts Modernisation Directive). The requirement set out in the Act is for a 'Business Review', a new form of reporting which is included in the Director's Report of UK plc Annual Reports (as opposed to the 'Operating and Financial Review' which was abandoned in favour of the Business Review - considered a lighter touch reporting requirement). The Business Review is intended to provide meaningful strategic, forward-looking information that it will add value to the quality of reporting without resulting in significant compliance costs. Critically from a measurement and reporting perspective, as part the Business Review, directors are now required "to the extent necessary for an understanding of the development, performance or position of the company’s business" include where appropriate analysis using key performance indicators and information relating to environmental, social, community and employee matters. Therefore, rather than being prescriptive, the Business Review is intended to allow companies to tell their own story on issues of strategic importance, rather than being purely driven by financial reporting requirements. This relatively light touch approach to legislating for non-financial reporting underlines the importance of the work done by the M&R Task Group and emerging frameworks such as the forthcoming GRI Sector Supplement for Real Estate and Construction. Better strategic overview of operations Measurement and reporting can also provide organisations with a more strategic overview of their operations Business in the Community17 states this will help companies to:

Identify new market opportunities and new relationships Establish more efficient business processes Maintain competitiveness and improve understanding of the needs of the

communities in which they operate Ensure long-term survival, long-term profitability and operational security.

“Companies that report on sustainability generally have higher returns on assets, higher gross margins and returns on sales, and stronger cash flow and rising shareholder returns”

The Financial Express, 2008 18

17 Business Case for Responsible Business: (updated) Business in the Community www.bitc.org.uk/resources/business_case_for_responsible_business/responsiblebusiness.html 18 http://www.financialexpress.com/news/Sustainability-reporting-is-profitable/326116/)

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Ability to respond quickly to stakeholder enquiries Many organisations decide to report their impacts and performance so that all of this information is captured in one place. This prevents disclosure of information on an ad hoc basis in response to enquiries. Requests for sustainability information will increase with new regulations, and as the investment community and other stakeholders become more aware of sustainability issues. A Sustainability Report is a good way to capture this information in a consistent manner.

“Many companies complain of ‘questionnaire fatigue’ because of the number of enquiries about their sustainability performance from

investors and others. If all leading companies were required to make reliable, comparable reports, many such inquiries would no longer be

needed” R Cowe & J Porritt; (2002); Government’s Business Enabling corporate sustainability;

Forum for the Future

5.3 Key Findings

The benefits of measurement and reporting are quantifiable and directly link to business or organisational success. These are identified as:

o Improved corporate image o Better strategic overview of operations o Improved operational efficiency o Ability to respond quickly to stakeholder enquiries o Motivating staff o Preparation for meeting new government standards

But…

The majority of built environment firms do not currently measure and report at a corporate level. This is primarily due to a) not knowing how to get started due to the confusing plethora of M&R tools and frameworks and b) insufficient resources (cost & time constraints).

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6. Understanding existing frameworks & measures

6.1 The landscape of Measurement and Reporting The M&RTG has found through its research that the measurement and reporting landscape is confused. The key reasons for this include:

Misunderstanding with regards the difference between organisational measurement and reporting (and its benefits) and product/portfolio level frameworks, tools and methodologies.

Confusion in the crowded product/portfolio level frameworks, tools and methodologies.

In the interests of providing clarity, the Task Group identified that there are distinct categories that need to be recognised to understand the landscape of measurement and reporting. These are defined in the Measurement & Reporting schematic below. MEASUREMENT & REPORTING SCHEMATIC – DEFINITIONS

Figure 3: M&R Schematic

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MEASUREMENT & REPORTING SCHEMATIC EXAMPLES

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Figure 4: M&R Schematic Examples

19 Examples provided above are for illustrative purposes only

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6.2 Organisational Reporting The work of this Task Group has been focussed on organisational measurement & reporting. This included:

Principles of Measurement & Reporting: Reporting principles guide an organisation to strategically examine its business impact from a sustainability perspective and determine its approach to measurement & reporting. The Global Reporting Initiative (GRI) and the Greenhouse Gas Protocol both offer helpful examples of reporting principles, and a summary of the key elements of both of these is provided in the ‘Reporting Journey’ section of this report.

Reporting Frameworks: The structure by which an organisation publicly

reports its sustainability impacts and measures. Currently, the GRI provides the most established and widely used reporting framework. There is not yet, however, a universally accepted reporting framework.

Public Reporting Indicators: These are the measures by which a company

declares its performance externally to demonstrate performance. The GRI indicators would be one such example. It is important that the indicators used reflect a careful consideration of the reporting principles, rather than being a reflection of what is easy to measure, or what an external body deems to be material to the organisation. Only the organisation can determine the relevant measures and their materiality.

The Global Reporting Initiative (GRI) The Global Reporting Initiative (GRI), a worldwide, multi-stakeholder network, has pioneered the development of the world’s most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide (www.globalreporting.org). This framework sets out the principles and indicators that organisations can use to measure and report their economic, environmental, and social performance. Business, civil society, investors, and others all collaborate to create and continuously improve the Reporting Framework20. The research undertaken by Upstream clearly revealed there are relatively few reporting frameworks, but a multitude of frameworks and tools available for companies to use to measure sustainability performance. The Task Group identified that there is a need to establish a single and endorsed reporting framework, and that the GRI reporting guidelines (not including the indicator sets) offers the most established approach, and therefore should form the basis of any move to establish an international and universal standard for reporting, such as is used in financial reporting.

20 www.globalreporting.org

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The GRI also suggests a range of core and additional indicators, which can be used by organisations to demonstrate their sustainability performance. The relevance and usefulness of these indicator sets currently varies considerably between organisations, and has been the catalyst for the GRI to develop a number of sector supplements, including a Real Estate/Construction Sector supplement, which is currently being proposed. While GRI is not perfect, it is the most developed organisational reporting framework globally. Part of the attractiveness of GRI is its multi stakeholder approach ensuring its continuous evolution and market penetration.21 Sustainability Indices & Industry Initiatives Sustainability indices and industry initiatives include any index or initiative that publicly ranks and/or selectively includes organisations according to specific performance criteria. Although not included in the M&R Schematic - sustainability indices, such as FTSE4Good, DJSI, BitC CR Index (these indices are defined as any tool that publicly ranks and/or includes/excludes respondents according to performance) provide an important role in organisational disclosure. These indices were not included in the schematic as they were considered to be of a different order to the other measures since they are defined by an external party to address their areas of interest. The schematic identifies frameworks and measures that can support organisations in defining their own strategic approach to M&R. This is not to say that the indices are not significant, as they represent an important consideration for some organisations in determining and disclosing impacts to stakeholders A further industry initiative is the Carbon Disclosure Project. The Carbon Disclosure Project (CDP)22 is an independent not-for-profit organisation which provides a coordinating secretariat for institutional investors to understand the implications for shareholder value and commercial operations presented to corporations by climate change. It seeks information from companies on an annual basis on the business risks and opportunities presented by climate change and greenhouse gas emissions from the world's largest companies: 3,000 in 2008. The CDP has become a well-recognised and useful tool for investors, but as it does not specifically seek to drive performance improvement, it would not be included in the management process portion of the schematic.

21 For further information on the impact of GRI from the point of view of report readers, see - Count me in The readers’ take on sustainability reporting, published by SustainAbility & KPMG http://www.sustainability.com/downloads_public/insight_reports/Count_Me_In.pdf 22 http://www.cdproject.net/whatiscdp.asp

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6.3 Management Processes This is the area where there is currently most confusion, and where the majority of new frameworks, measures, tools and methodologies are being developed, therefore, although not strictly within the scope of the Task Group, mapping these was a key workstream identified by the Task Group. The conclusions from this workstream were that the majority of frameworks are intended to drive performance improvement and provide feedback to strategic aims. Therefore, they are more appropriately identified as management processes, comprising both measurement frameworks and tools and methodologies. There is some overlap between measurement frameworks and tools and methodologies, as some can be used at product/service and portfolio level. They are broadly defined as follows: Measurement Frameworks

Gather portfolio / sub-sector and product data collection and prioritise areas for improvement. They are typically cyclical, can enable benchmarking, and inform strategic decision-making at the portfolio or business unit level. Some measurement frameworks may also apply at the product/service level. Tools & Methodologies

Collect, process, and monitor specific product, building or service data, with the aim to improve performance, and can also enable benchmarking. Figure 5 below provides an indicative illustration of Upstream’s findings with regards to the number of frameworks and tools that exist at different stages of the property lifecycle. Given the fact that new tools are emerging constantly, although this is not meant to be a complete picture, it is clear to see where there are concentrations of many tools and frameworks and where there are few. The complete output of Upstream’s work can be found on the UK-GBC Web Site.

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Figure 5: Number of frameworks and tools that exist at different stages of the property lifecycle

Methodology Three key areas of work informed this workstream:

Survey of UK-GBC members and non-members Regular discussion amongst the Task Group members who cover a range of organisation

types Desktop research carried out by consultancy firm Upstream on a pro bono basis

Mapping such frameworks can only ever be a snapshot, as new frameworks and methodologies are appearing all the time. The compressed time and resources available to undertake this task was not sufficient to complete this piece of work and maintain it appropriately. However, this is something the Task Group recommends is considered for further development. The survey investigated the range of methodologies, frameworks and tools currently being used by organisations for existing building, new build and products; and whether or not survey respondents would recommend them.

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The UK-GBC membership was categorised, and a short desktop search for each members’ publicly available information on M&R was carried out1. The frameworks, measures, tools and methodologies were categorised according to:

Scale1 to which the it applies (i.e. from organisational level to portfolio level to product)

Stage of the property lifecycle (i.e. acquisition through to construction and operation) Key issues addressed (i.e. carbon, biodiversity, etc)

6.4 Data Inputs Data inputs can be quantitative, such as the data on electricity and gas consumption that is needed to understand carbon impacts, to qualitative inputs such as feedback from external stakeholders.

6.5 User preferences Through the Upstream analysis and survey work some frameworks stood out as being more widely used for measuring and reporting on sustainability in the built environment than others. As a caveat to these findings, they are based on the relatively few responses we received from members to the survey questions asking them to identify frameworks they use (between 30 and 51 responses per question) and a non-comprehensive search of members’ publicly reported material.

GRI receives lots of mentions from UK-GBC members; with nearly a third of members’ surveyed saying they use it in some way to inform their reporting.

Sustainability indices – the Dow Jones sustainability Index (DJSI), FTSE4Good and the BITC CR Index/BiE Environmental Index in particular – are also widely mentioned, with around a quarter of survey members23 saying that they use at least one of these to report on sustainability at a corporate level. However, it is not clear how these are used, if it is to assist in determinmaterial impacts, or if the questions are used as a framework for repothemselves.

e rting in

Over half of members’ surveyed claim to use the Investors in People Standard. The well-known management standards (ISO 14001, ISO 9001 and OHSAS 18001

most notably) have the highest number of mentions as a group out of all the other frameworks in the survey, and have significantly more mentions from members than any other framework in the Upstream research. These are often reported on at a company level and are used to manage risk or comply with stakeholder demands. For more information on the findings outlined

23 Out of those that answered the specific question on frameworks

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above refer to the full survey and desktop analysis reports available on the UK-GBC website.

6.6 Key Findings

1. Measurement and reporting of sustainability is confusing for the significant majority of organisations and has been overcomplicated by the range and number of frameworks, methodologies and tools

2. Despite this confusion, organisational measurement & reporting sits separately from portfolio/product level frameworks, tools and processes.

3. There are universally applicable organisational measurement and reporting principles and the GRI currently offers the most established framework for reporting.

4. There is a lack of guidance in helping organisations choose the right methodologies and tools for the right circumstances, and how elements of these can be used to develop organisational level indicator sets.

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7. The Organisational Measurement & Reporting Journey

The case studies, research by the M&R Task Group, commentators on organisational measurement and reporting of Sustainability, and the experience of Task Group members, support the assertion that the development of successful measurement and reporting will not happen overnight. There is no ‘instant fix’. Performance improvement requires the evolution of both measurement and method, and the cultural change required becomes fundamental to this journey takes time to evolve. There is no fixed path and few waypoints that are common to all, the start point and duration will differ between organisations and the specifics of the destination will vary. What is clear is that a common platform and guiding principles will assist significantly in providing companies with a common foundation by which to start the journey and move forward. Logically, this suggests that since M&R is a journey and the sooner the organisation starts, the sooner it will get to a position where the process of measurement and reporting is adding real value to the organisation. Performance improvement requires iteration of both measurement and method, and the cultural change that is inevitably a part of the journey has to evolve. Given the complexity and the many variables organisations will experience in their measurement and reporting journey, the UK-GBC should not add yet another model or framework. Rather it is seeking outline reporting principles to illustrate the experience of the reporting journey through case study examples, and offer some generic advice so as to de-mystify the process and help organisations to shape their journey to best effect. Guidance, not specific to the built environment, is available such as with processes and a maturity path as laid out in BS8900, from other sustainability inclined institutions (such as IEMA) and increasingly from specialist consultancy services are available to support organisations in developing their own measurement and reporting journey, but the basic cycle of reporting is outlined in Fig 6.

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ORGANISATIONAL MEASUREMENT & REPORTING PROCESS - YEAR ONE

1. Establishmeasurement & reporting principles

2. Determineboundary and

scope for measurement and reporting

3. Collectdata & report

Figure 6: Organisational Measurement & Reporting Process – Year One

7.1 The Principles of Reporting Before embarking on the measurement and reporting journey, it is essential that the organisation has a clear vision and commitment to measuring and reporting sustainability, and that this commitment should be supported by a clear strategy, objectives and a call to action. However, many organisations get to this stage, and the enormity of the task soon becomes overwhelming, which could lead to poorly targeted actions, and meaningless data being reported. Therefore, it is important that the organisation filters all of its decisions regarding what to measure and report through the lens of the following principles.24

Stakeholder Inclusiveness The reporting organisation should identify its stakeholders and explain in the report how it has responded to their reasonable expectations and interests.

24 These broad principles are identified from the common themes identified in both the GHG Protocol (page 7) and the GRI Sustainability Reporting Guidelines (pages 8-17)

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Examples of reports which show an excellent approach to stakeholder inclusiveness are Traidcraft plc 2006, Xstrata 2007, and Vodafone 200725

Relevance & materiality

What an organisation measures and reports should appropriately reflect the significant economic, environmental, and social impacts of the organisation. These should serve the assessment needs of all stakeholders identified. Performance should be presented in the wider context of sustainability, to enable the user to judge the overall picture. There are many tools, processes and consultancies that can assist organisations in determining their material impacts. A good example of identifying materiality can be seen in the BT report Changing World: Sustained Values 2007; The Holcim 2007 Report also includes a good example of how stakeholder inclusiveness can be used to identify materiality.26

Completeness and balance

All issues defined as material and relevant should be measured and reported in sufficient detail to enable stakeholders to assess the organisations performance in terms of economic, environmental and social impacts. When reporting specific exclusions should be disclosed and justified. Both negative and positive aspects of performance should be reflected. The BT report Changing World: Sustained Values 2007 is a good example of completeness, while the Workspace Group report for 2005 and 2006 shows an excellent example of sustainability context, being benchmarked against the London Plan.27 A good example of balance is the FRC Group We Do Good Things in 2004 which "demonstrates a willingness to discuss problems as well as successes"

Consistency and comparability

Issues, information and methodologies should be selected, compiled, and measured and reported consistently. This ensures that changes can be analysed, and that meaningful comparisons of impacts over time can be made. This may also enable comparison between organisations or business units.

25 Unless otherwise stated the reports mentioned were recognised in the ACCA Judges Reports 2007, 2006

available from - www.accaglobal.com/uk/publicinterest/sustainability/uk_archive 26 http://www.holcim.com/gc/CORP/uploads/Holcim_Corporate_SD_Report_2007.pdf 27 http://www.workspacegroup.co.uk/sustainability/document_library/

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Transparency and clarity

All information measured and reported should be factual, and understandable and accessible to stakeholders. Any assumptions made should be disclosed, and clear references made to methodologies and data sources used. Many organisations seek external assurance of their sustainability report, including BP Sustainability Report 2006, which won a Commendation for Transparency in Approach to Assurance.

Accuracy and reliability

All information should be as accurate as possible, to enable users to assess the organisation’s performance with reasonable assurance as to the integrity of the information. The use of information and processes should be done in such a way that they could be subject to examination for reliability. Any assumptions made should be disclosed. These themes will vary in prominence during the journey and should be considered as parallel rather than sequential activities. The emphasis on, and progress with, each will vary with the situation and the rationale for undertaking the journey.

7.2 Establishing your indicators and boundaries Establishing indicators and boundaries is essential to developing an effective and meaningful process of measurement and reporting. In the first year, when processes and procedures may not be fully established it may be important to start small, focussing on the most significant impacts with a commitment to expand in future years. The principles of relevance and materiality are essential in determining indicators and boundaries. Where the organisation is simply not ready to report on certain impacts, the principles of both completeness and transparency are upheld in communicating the scope of the report clearly.

7.3 Where to Start - Just start Once you have established your early measures and boundaries, the process of collecting data and measurement can begin. Resistance and inertia should be anticipated as the benefits have yet to be widely appreciated at this stage.

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7.4 Data Collection Data collection isn’t simply about collecting information; it is a capability that is developed over time. Think of what it takes to collect, measure and report financial information, the systems and people combine in a capability that ensure timeliness and accuracy. Sustainability data collection is no different. Over time an organisation will need to build the people and systems to collect this information. As such, a key enabling activity for all M&R is the selection and process for initial data collection. These early efforts can be relatively small and unsophisticated relative to the material impact of the organisation but are fundamental to begin to build and understand the challenges associated with data collection. Pressure for quick wins may encourage a focus on internal activity and the establishment of management systems (such as ISO 14001 or BS8555) within which to mobilise the cultural change more widely across the organisation. However, it is important that the uptake of certain tools and methodologies to assist in the measurement and reporting process does not become the principle upon which measurement and reporting is based. The outputs of the tools, and what ultimately is reported at the organisational level should still be guided by the principles of reporting.

7.5 Reporting publicly The first report is a key milestone for any organisation, as often it is the first time a range of data and initiatives being undertaken are pulled together into one place. There are standard disclosures organisations are encouraged to make, particularly in a first report, and the GRI provides perhaps the most detailed framework for guiding organisations in what these disclosures should be. Reviewing existing reports can also be helpful in determining the structure and tone of the report. However, the Task Group hopes that in the future an international standard for reporting will emerge in the way it has for financial accounting. It seems logical that the GRI, with further development becomes this standard. Currently the standard disclosures widely acknowledged for sustainability reporting are:

Strategy & Profile: High-level, strategic view of the organisation’s relationship to sustainability in order to provide context for subsequent and more detailed reporting. Includes organisational information, report parameters, and information on governance. Intended to provide a concise overview of the risks and opportunities facing the organisation as a whole.

Management Approach: A brief overview of the organisation’s management

approach to the Aspects defined under each Indicator Category in order to set the context for performance information. This section of the report is

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intended to address the next level of detail of the organisation’s approach to managing the sustainability topics associated with risks and opportunities.

Performance Indicators: The data used to demonstrate performance against

the sustainability topics identified.

“Once you start reporting you can identify strengths and weaknesses in the organisation in a more holistic way, and target improvements.”

Seamus Cussen, Kingspan Insulated Panels

7.6 Knowing what you didn’t know One of the key benefits of organisational M&R is beginning to “know what you didn’t know”. The best example of this is understanding, for the first time, an organisation’s sustainability impact. It is clear from the survey and desktop research undertaken by this Task Group that many organisations have sustainability initiatives, and policies, but less understand what their carbon impact actually is, or their biodiversity impact, etc. One of the greatest advantages of organisation level reporting is the clarity it can bring to a range of ad hoc initiatives, understanding what initiatives have a material impact on an organisation’s sustainability performance and which ones do not, thus making the course of action much clearer.

7.7 Establishing Targets The first reporting cycle will provide and organisation with an understanding of its impacts and allow it for the first time to begin setting targets for improvement. This is an empowering milestone enabling an organisation to proactively work to minimise its impact and clearly witness the outcome of its efforts.

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ORGANISATIONAL MEASUREMENT & REPORTING PROCESS SUBSEQUENT YEARS

Figure 7: Organisational Measurement & Reporting Process – Subsequent Years

7.8 Consolidating early progress Having completed at least one complete measurement and reporting cycle, the opportunity to review process, progress and direction against that benchmark is offered for the first time. A strong emphasis on refining materiality is usually beneficial as organisations recognise where their greatest potential impact lies – be it internally (such as for a materials supplier, constructor or portfolio owner) or externally (such as for an architect or other professional services firm). This identification of the true materiality is a crucial milestone. It will reflect the organisation’s assessment of the important as opposed to the merely measurable. It is thus a key vehicle for transitioning between an introspective M&R activity and one in which stakeholders are fully identified and their needs appropriately reflected. Following the first steps the wider involvement and experience now present in the organisation allows for refinement of the vision. It can become more fully articulated as policies for both internal consumption and, where appropriate, for release to external stakeholders, for example to suppliers, so that the benefit of their improved sustainability performance can be vicariously derived.

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With M&R becoming an integral part of normal business, and examples of the benefit likely to become increasingly apparent, the cultural change may now accelerate and sustainability ‘push’ be increasingly balanced by ‘pull’.

7.9 Expanding the scope As the initial progress is consolidated, iteration of the M&R strategy is likely to result in a shift in emphasis from measurement to reporting and an increased emphasis on stakeholder inclusion. As with measurement earlier in the journey, the initial reporting focus may be somewhat introspective, but will evolve into a methodology that is not only inclusive in its approach to stakeholders and their issues, but also complete in its coverage of material sustainability issues. Completeness of reporting requires the organisation to have a clear understanding of both its context in the wider sustainability debate and of its reporting boundaries. This could relate, for example, to the inclusion of subsidiaries/joint ventures, or a ‘cradle to grave’ approach for key material supplies. The accuracy, timeliness and reliability of the supporting data needs to evolve to be beyond reproach and external verification is one way in which an organisation can not only test this, but also demonstrate openness and transparency. Openness is also generated by the clarity and comparability (both with previous reports and wider benchmarks) of the presented data which adds to the value stakeholders may place on the report. It is further strengthened by the balance with which both the good and the bad are presented. Commensurate with the external dissemination of the report and its adoption into a regular process, which is aligned with other corporate reporting is the increased internal attention that the report will receive - both for its content and to the underlying issues.

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7.10 Getting Strategic Value

1. Well established & understood

is reviewed annually and based on feedback from

stakeholders

Data gathering & reporting

processes are well established &

delivering strategic value

Measurement & reporting principles

2. Boundary and scope

3.

ORGANISATIONAL REPORTING

MANAGEMENT PROCESSESPortfolio; Product; Service; Operational level

Figure 8: Organisational Reporting – Getting Strategic Value As the journey continues, the characteristics can be expected to include a culture where M&R is fully integrated into not only corporate governance (and hence strategic direction), but also into routine business decisions. Thus the push has been replaced by pull and the M&R process has become self-sustaining. The confidence of an organisation at this stage of the M&R journey stimulates further learning and innovation as well as engendering trust that risks and opportunities are appropriately managed to best effect from a sustainability perspective. Thus, whilst the scope of M&R may have crystallised, the potential for ongoing performance improvements becomes the new focus. As you can see from the

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diagram above, driving performance improvement is where measurement ensure performance improvement is achieved across all key impact areas identified at the organisational level. In the ACCA UK Awards for sustainability reporting 2007, the following seven companies were commended as providing excellent reporting of sustainability strategy and governance: Anglo-American Extractive industry, Rio Tinto Extractive industry, BHP Billiton Extractive industry, Vodafone Communications, Boots Retail, Xstrata Extractive industry and Camelot Lottery

7.11 It doesn’t have to be costly There is a common misconception amongst non-reporters that reporting costs excessive amounts of money that would be better spent on other sustainability initiatives. This does not necessarily have to be the case. An organisation can spend considerable amounts of money on the production of a report, but this is not an essential ingredient in the measurement and reporting journey and is entirely the discretion of the organisation itself to decide the most appropriate format to satisfy its aims and target audience. Indeed, most organisations find the most costly aspect of M&R is in the time taken to gather and analyse data. However, if the data being gathered is well targeted it can often result in significant efficiency savings, and more robust management processes, which are beneficial to the effective operation of the organisation as a whole. “We started a campaign of measuring the carbon emissions from each of our offices 5 years ago. We now have in place a carbon base line, and a system which is providing significant utility cost savings”

Donald Lawson Chief Operating Officer of Faithful+Gould UK To realise the value of M&R as opposed to the cost, it is important to focus your efforts on areas of highest impact. Start small and commit to a process of continual improvement.

“The cost of preparing sustainability reports is minimal, as leading reporters such as The Co-operative bank can show. But the cost is

increased for new reporters because the absence of an agreed format and clear requirements makes the task of producing a report more onerous than it needs to be. Having got to the stage of deciding to

report, these companies want guidance”

R Cowe & J Porritt; (2002); Government’s Business Enabling corporate sustainability; Forum for the Future

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7.12 Size doesn’t matter The majority of businesses in the UK are SMEs28, so the potential impact of organisational sustainability measurement and reporting will be limited, if not embraced by smaller organisations as well as large. What is challenging for smaller service providing companies is that their direct impacts – i.e. those of their premises or directly employed staff, tend to be small relative to the impact of the advice or services they provide, but this is much harder to define and measure. “Our approach recognises that, as a small (but growing) service firm specialising in sustainability consultancy, the greatest sustainability impact that we have (and indeed can control) comes indirectly from the provision of our services”

Jonny McCaig, Upstream There are case study examples provided at the end of this report that illustrate the reporting journey undertaken by some smaller companies and how they have addressed this.

28 Although individually small in size - up to 250 employees - SMEs cumulatively account for approximately 90% of businesses worldwide, and are responsible for 50-60% of employment www.globalreporting.org

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8. Recommendations The measurement and reporting Task Group has attempted to map the existing landscape of measurement and reporting, highlighted the distinction between organisational measurement and reporting and product/portfolio level frameworks, measures, tools and methodologies, outlined the organisational reporting journey and endorsed a set of guiding principles required as a prerequisite to effective organisational measurement and reporting. The task group found that the most well-established organisational reporting framework was the GRI framework29, and the reporting principles of stakeholder inclusiveness; Relevance & materiality; Completeness and balance; Consistency and comparability; Transparency and clarity; Accuracy and reliability can be applied to any organisation. But there are many measurement frameworks, tools, methodologies, measures and indices, which need to be specific in some instances and in some instances can apply across the board. Where we can find synergies in data we should, but the reporting pathway remains the same across all organisations – that is one that recognises the strategic value of sustainability and drives continual improvement in company practice. While the task group’s aim for this report is to bring some clarity to the landscape of measurement and reporting, and to encourage UK-GBC members and the built environment sector to begin the reporting journey, however small, there is still much that needs to be done to make sense of the many approaches to driving performance improvement. The Task Group recommends that:

• The UK-GBC play an active role in promoting organisational sustainability measurement and reporting

• The Global Reporting Initiative (GRI) Sustainability Reporting Framework is adopted as the common international organisational sustainability reporting standard (for the built environment sector)

• Greater coordination and collaboration between sectors, measurement frameworks and tool providers is required to drive sustainability performance improvement

29 The task group acknowledges that the GRI framework is not without challenges requiring resolution, however, it is in the task group’s opinion the most established framework that can be evolved in the form of sector supplements to facilitate the reporting needs of the built environment sector.

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8.1 Next Steps for the UK-GBC • Within 3 years, ensure that all member organisations measure and report

using the (GRI) Sustainability Reporting Framework • Establish the minimum levels to which members must apply the (GRI)

Sustainability Reporting Framework • Set out what the membership will need to do (the Roadmap) to reach the

target date to comply with the reporting requirements, together with an assessment of the resources needed

• Support the membership with the process of organisational measurement and reporting

• Work with the GRI organisation to establish the Sector Supplements and Indicator Protocols that members require to achieve a balanced and reasonable representation of the sustainability performance of our member base

• Facilitate a range of activities for framework providers to discuss future direction for frameworks and tools, seeking to achieve greater coordination between models and sectors

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9. Annex I – Case Studies Experiences of Reporting from the built environment sector Organisational sustainability Measurement and Reporting is still relatively new to most organisations in the built environment sector, therefore the majority of ‘best practice’ examples of the core elements of reporting are often found in sectors which have been reporting for much longer due to a longer history of external pressure for transparency. However, built environment sector companies are increasingly demonstrating their commitment to measurement and reporting, and as sustainability awareness grows, so does the pressure on all sectors to increase measuring and reporting of sustainability impacts. The benefits of measurement and reporting are not realised overnight, but the case study examples below describe the experiences of organisations in the built environment sector that have embarked on this journey. The following organisations have provided case studies: Organisation Type

Name of Organisation

Provided by Role

Architects (small)

Marks Barfield Architects

Julia Barfield MBE RIBA

Managing Director

Architects (large)

Aedas Architects Dr. Judit Kimpian

Head of Sustainability and Advanced Modelling

Architects (large)

Foster & Partners Thouria Istephan

Partner

Consultancy (small)

Upstream Jonny McCaig Consultant

Consultancy (medium)

Fulcrum First David Altabev Sustainable Design Engineer

Consultancy (large)

Atkins/Faithful+Gould Sean Lockie Director

Head of Sustainability

Product Manufacturers

Aggregate Industries Ben Vivian UK CSR Advisor

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Organisation Type

Name of Organisation

Provided by Role

Product Manufacturers

Kingspan Insulated Panels

Seamus Cussen Building Technology Manager

Construction Company

Balfour Beatty Capital

Ed Bartlett Whole Life Costing Director

Construction Company

Skanska Matthew Jansen Sustainability Programme Manager

Developers / Asset Managers

Quintain Estates

Hilary Reid Evans

Head of Sustainability Initiatives

Developers / Asset Managers

Lend Lease Retail & Communities UK

Janet Kidner Head of Sustainability

Property Agent

Atisreal Arlette Anderson

Director CSR & Sustainability

Owner / Occupier

CityWest Homes (CWH), Westminster

Julie Day Head of Asset Strategy

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9.1 Architects Aedas Architects - Dr. Judit Kimpian, Head of Sustainability and Advanced Modelling Aedas Architects have over 2,000 staff in 32 offices worldwide. Aedas released a Green Book and nine Green Design Guides in Spring 2008 after a year-long process developed with consultancy XC02 Energy and has set itself the target of reducing carbon emissions from its own operations by 25% by 2011. Aedas began by measuring its own footprint, which represents only a fraction of emissions from projects, and looked for savings in its offices and employee travel patterns. Ricardo Moreira of XCO2 Energy believes that the most effective way for architects to understand carbon is to deal with their own housekeeping first. “The first step on the journey,” says Moreira, “is for a practice to track its own emissions; it’s not the same as changing the design process, but it helps develop an understanding of what carbon is.” Aedas office managers are responsible for tracking energy use. Modes of travel and mileage are recorded through timesheets and Office Sustainability Coordinators generate energy reports every six months. Coordinators and Office Managers conduct regular ‘energy walkarounds’ to identify potential savings. Recycling and green procurement are also in place. Foster + Partners - Thouria Istephan, Partner Foster + Partners is a leading London-based architect practice. Foster + Partners measures its environmental performance in three key areas. Firstly, we measure our own environmental footprint, by evaluating the operational energy requirements of our buildings, air miles travelled by our employees, amount of paper used and waste created. Through collecting this information, we have developed a four-year Environmental Leadership plan to significantly reduce our environmental impact by improving the efficiency of our offices, reducing international travel and encouraging people to take alternative means of transport to work. We also measure the long-term sustainability of our projects by auditing both quantitative data such as water and energy consumption figures, glazing ratios and U-values, and qualitative data such as the ventilation strategy, social and environmental gains. This audit is used internally to create in-house benchmarks for the different sustainability issues, helping us continually improve the performance of

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our buildings. It is also a useful tool in designing buildings around the globe as it contains region-specific information, supporting the design teams with statistics on which technologies have been proven in different climatic conditions. We conduct Post Occupancy Evaluations (POEs) where possible in our completed buildings to monitor how they are performing and compare operational and predicted energy figures. We are currently seeking to expand this service to include envelope studies – these will compare the performance of the façade with our modelling software and further improve the performance of our buildings. However, gaining access to our completed projects presents an ongoing challenge for POEs and it is only economically feasible and sustainable to evaluate British projects. Foster + Partners therefore plans to expand the scope of its POE service by building the means to measure the buildings’ performance and efficiency into the initial design. In terms of reporting on our projects, the sheer scale of the operation provided a considerable barrier to the reporting process. With over 150 projects undergoing design at any one time, it was difficult to design a data collection process that could gather information from projects around the globe and present it graphically. This is something we seek to further improve. There have also been problems in collecting information on completed projects because historically less value was placed on sustainability issues, especially with regard to quantifiable data collection. To ensure that this will not be a recurring problem, we are now educating the practice in the type of information that will be collected in the future, so that new projects can design with an understanding of what will ultimately be required. In collecting data on our current projects, we are already seeing significant benefits arising from our reporting process, especially in new projects, with architects seeking information on either a climatic zone or a building type. While this is a relatively new process, we are already able to identify benchmarking possibilities and potential minimum standards that our projects should achieve.

“It is important for an international organisation such as Foster + Partners to have a centralised benchmarking system that ensures all projects maintain the same high standard” In terms of evaluating the company’s performance, we constantly assess the impact of our Environmental Leadership report on the office to gauge how effective each strategy is in improving how the office performs in terms of sustainability. Marks Barfield Architects - Julia Barfield MBE RIBA, Managing Director Marks Barfield Architects have approximately 30 staff at their practice in London. Marks Barfield achieved ISO14001 after an intensive 6-month process. For travel, journeys to work of office employees and business-related travel was documented.

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The building C02 emissions were calculated based on square metres of office space, density of occupation and utility bills using an online tool (www.carbonuk.co.uk). The following figures are based on data for January to June 2008, doubled to obtain annual figures:

Building: 23.819 tonnes of CO2 Flights: 25.192 tonnes of CO2 Cars/ Scooters: 0.184 tonnes of CO2 Bus and Rail: 5.382 tonnes of CO2

Total: 54.577 tonnes of CO2 Average: 1.819 tonnes of CO2 per employee

Measures which have been adopted include:

Weekly recycling of all paper and cardboard (the practice pays for a private firm because Lambeth does not recycle business waste)

Water cooler replaced by filter on office tap Regime for ensuring computers are switched off Minimise use of artificial light (office has rooflights) Carbon offsets for flights

A service engineer participates in Marks Barfield’s weekly design reviews so that sustainability is embedded in design process from the outset. The office recently hosted a CPD session on the ‘science of sustainability.’

9.2 Consultancy Practices Upstream - Jonny McCaig, Consultant Upstream (part of Jones Lang LaSalle – a financial and professional services firm specialising in real estate) are strategic sustainability consultants who work with key players in the property sector to embed sustainability principles and practices into all elements of the property process. We combine a commitment to sustainability with an in-depth knowledge of the property sector, to translate concepts into useful advice that supports everyday business activities. Upstream has been reporting on its sustainability performance since 2004. As the company has grown, so too has the complexity and scope of our measurement and reporting, culminating in our latest Sustainability Report and Executive Summary (published in May 2008) which represent our most detailed disclosures yet. As a service firm specialising in sustainability consultancy, we realised early on that the greatest sustainability impact we have comes indirectly from the provision of our services and impact on our clients' own sustainability performance from the advice that we give. We have built our sustainability strategy (and by extension our measurement and reporting strategy) primarily around this understanding.

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We have found it particularly difficult to determine key performance indicators to measure our sustainability impact through service provision. For example, we know through direct client feedback that participants in our Upstream Benchmarking for Properties services30 derive significant value from their involvement in these services, and indeed improve the sustainability performance of their properties and portfolios as a result. However, it has proven very difficult to accurately quantify Upstream's positive 'sustainability impact' on clients and indeed the extent to which our support has brought about performance improvements. That said, we continue to devise more meaningful measures of performance in this area, in our search for the ‘holy grail’ of measuring our true impact. Beyond the impacts arising from our services, we also acknowledge the direct impacts we have as a business on key stakeholder groups close to Upstream (such as employees, the local community, suppliers and the environment which is included as we recognise this as a stakeholder in its own right). Our measurement and reporting therefore seeks to incorporate more traditional key performance indicators associated with these impacts, largely to reflect our commitment to 'practicing what we preach'. “Our approach to performance measurement and reporting is grounded in the principles of the Global Reporting Initiative (GRI)”. For example: • Materiality: Whilst we have not formally undertaken a materiality assessment in consultation with our stakeholders, we have informally identified the key stakeholders who drive business (and sustainability) performance. We actively seek feedback after the report is produced to ensure that we are addressing the key impacts arising from our services and operations. • Balance: We always strive to present the full picture, even where our performance may be less positive. Our Sustainability Report is not a marketing brochure; it is a transparent account of our sustainability performance from the previous 12 months. The following client quote demonstrates our candid honesty: "I think this is an excellent document which does exactly what is intended and I am very impressed with some of the detail, as well as some of the honesty where things aren’t quite as you would like" (John Searing, Hermes). • Comparability: Where data permits, we only use the key performance indicators that we would recommend to our clients, in doing so promoting comparability. In some cases, we have been reporting the same key performance indicators since 2005 allowing for comparison of our performance over time. Ultimately, our measurement and reporting philosophy has been to approach our own reporting in the same way as we would advise our clients to do so. In future

30 For both owners & occupiers of office and retail /leisure properties

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years, we look forward to the opportunity of publishing more integrated reports of our sustainability performance as part of Jones Lang LaSalle. This in itself will present new challenges but the lessons we have learnt along the way – particularly in regards to measurement - will stand us in good stead. To view our report or find out more www.upstreamstrategies.co.uk Fulcrum First - David Altabev, Sustainable Design Engineer Fulcrum First are an International consulting engineers practice the controlled application of innovation combined with robust engineering and reliable delivery. Fulcrum has six offices and 150 employees, 75% of staff are based in the London office and this has been the main focus of sustainability measurement and reporting. Fulcrum has tackled strategic measuring and reporting over the last year with a target to issue a Sustainability Report in April 2009 to accompany our financial reporting. Previously some aspects of sustainability (primarily energy) were measured for the Chartered Institution of Building Services Engineers (CIBSE) 100 Carbon CleanUp. A Director (Andy Ford) and budget have been assigned to the task, called Fulcrum Footprint, which is being led by David Altabev. Altabev says the report will “illustrate the process rather than simply provide a snapshot of measurements. It’s a gradual process which cannot be done all in one go, and it must engage the whole company.” Individuals have been assigned to examine how to measure in each of the following issues:

1. Energy supply and metering 2. Heating (monitors, controls, fittings) 3. Lighting – minimum standards 4. Office equipment and server room 5. Water, appliances, fittings and metering 6. Materials 7. Waste 8. Transport 9. Biodiversity

Champions have also been identified in each office to feed in relevant data, though the non-London offices tend to be in serviced office space where change is likely to be more difficult. Altabev notes that the Champions are “very enthusiastic, but underestimate the impact on administrative, financial and human resource procedures which are required to implement the changes.” Simple measures such as reporting expenses and travel need to change in order to report correctly and this impacts all staff. Admin staff need guidance on ordering more sustainable office supplies. Once all

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the initiatives have been identified, the time and resources for each will be estimated, costs and benefits will be assessed, so that next steps can be prioritised. “The most important reason for measuring office operations is to bring home to staff the practical difficulties of measuring. It’s easy to talk about but difficult to deliver,” says Altabev. Atkins/Faithful+Gould - Sean Lockie Director, Head of Sustainability Faithful+Gould is a wholly owned subsidiary of the Atkins group. Atkins is the largest engineering consultancy in the UK, the largest multidisciplinary consultancy in Europe and the world’s fifth largest design firm employing 18,000 people and generating fees in excess of £1.2 billion last year. Faithful+Gould is one of the world’s largest project and cost management consultancies, employing over 2,200 staff with fees of circa £160 million providing primarily cost consultancy, building surveying, project management and specialist services in the sustainability area. Both Faithful+Gould and Atkins have systems complaint with Environmental Management Standard ISO 14001 and are independently assessed by Lloyds on a 6 monthly basis. As part of our environmental management system we measure the following:

Waste generated from our offices Energy (carbon) consumed in our offices Paper from photocopiers and printers Carbon emissions from transport use Health and safety incidents The impacts of the advice we give through a training programme based on the

One Planet living principles. We report this information externally via our website and internally via our intranet. We are now in our fifth year of holding Environmental Management Standard ISO 14001. “Our formal reporting systems allowed us to secure certification to Environmental Management Standard ISO 14001.” ISO 14001 was becoming more of a mandatory requirement from our client base and our feeling was we needed to secure this standard in order to remain competitive. However, after we had set up the systems we were able to benefit in the following ways:

Knowing the impacts we have as a corporate body Making operational cost savings

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Reducing the need to travel for internal meetings using instead video / audio conferencing

Retaining a number of existing clients Obtaining new clients Identifying risks and put in place processes to manage them; and Developing new services (in the sustainability area).

While it has been beneficial and there has been support for our environmental management system within our organisation, there have also been some barriers:

Perception of another administrative burden Communicating the message in a consistent way Resistance to change Lack of ‘off the shelf tools and processes. This meant we had to invent our

‘own way’ which was time consuming and expensive. We are now assessing the impact of our environmental management system and our measurement & reporting through:

An annual survey of all staff Introducing a ‘balanced scorecard’ as part of our business reporting. Benchmarking performance feedback on projects against the UK Construction

Consultants KPI’s. These are published annually by Constructing Excellence using performance data collected from across the UK construction sector by the Department of Trade & Industry (DTI).

All of these have indicated that measurement and reporting are vital to provide us with a baseline and a platform for generating ideas. In the long term this helps to us remain competitive by creating positive impacts on the services that we offer our clients.

At Faithful+Gould we feel that the UK GBC could support organisations in the M&R process by:

Reducing the confusion on what M&R framework to use Identifying best practice companies Representing the construction / property industry (UK-GBC members) on M&R

networks such as the Global Reporting Initiative (GRI) and Construction Excellence.

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9.3 Product Manufacturers Aggregate Industries - Ben Vivian, UK CSR Advisor The Aggregate Industries is a construction and building materials company that supplies construction materials including aggregates, asphalt, ready-mixed concrete and precast concrete products. Our Sustainability Report uses the structure created for the Business in the Community (BiTC) Corporate Responsibility Index and therefore concentrates on four key areas. These are Workplace, Marketplace, Environment and Community and as we also submit data to the BitC within this framework, we include overall and sector specific comparisons of our performance in each of these four areas. Within each area we include relevant data. For example, in Workplace we record information such as Health and Safety, Marketplace shows material extracted and supplied etc, Environment includes water, energy use and waste and Community information such as stakeholder engagement, charity work and donations. Although reporting is not necessarily directly related to winning business or helping planning processes, the transparent communication helps key stakeholders to understand our business. The barriers to reporting were obtaining corporate support, improving the quality of data and defining the audience. Once these have been overcome it was just a case of making the commitment to get the reporting done. Owing to our sustainability reporting, internally there is a greater idea of the scale of our business as it shows detail on the whole scope of our processes. It allows us to have a key output that assists with monitoring of data internally and shows year on year trends. The report itself is only one part of the process, however, as we also contribute data to the Business in the Community Corporate Responsibility Index and internally we report to our parent company Holcim’s Annual Environmental Reporting process. A few years ago we attempted to asses the impact of our reporting on our stakeholders. We found that our reports are very selectively read and that stakeholders chose the issues that are relative to them and if they couldn’t find it then they don’t find the report very useful. There very few stakeholders that look at the whole report so signposting where the data is and a consistent structure is vital or people will get frustrated if they can’t find what they need. Simplicity is vital so don’t overcomplicate reporting and keep the sub segments and chapter set up the same year on year. We plan to keep our sustainability reporting fresh yet familiar in the future, but we are a long way off people considering Sustainability Reports to be as relevant as financial reports and the readership is completely different. Shareholders and financial stakeholders are the readers of financial reports and the way they are

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written is therefore very different. Sustainability Reports that are written in the same way are not well received so there is a need to keep it fresh and interesting. UK GBC members need to make the first move to start reporting either through their own momentum or through prompting by their customers and not rely on the UK GBC to give them this assistance. There is already enough information out in the marketplace with people like the Institute of Environmental Management Association (IEMA) and any more information will just flood the market. There is a knowledge gap, not just in the reporting but the interpretation of this information by the customer when coming to make choices. In terms of the construction sector, it is the most heterogeneous sector there is with a wide variation of structures and stakeholders and therefore the use of all encompassing as well as sector specific methods is extremely difficult. There is a confused structure due to being both the supplier and customer to the same company within the sector e.g. McAlpines can be extracting rock from our quarries as a contractor and then be supplied with it by us to one of their sites. Kingspan Insulated Panels - Seamus Cussen, Building Technology Manager Kingspan Insulated Panels is a division of the Kingspan Group. Kingspan Group, which became a public company in 1989, was initially involved in the manufacture of metal cladding and roll formed structural sections. Kingspan Group’s turnover was €1,863.2m in 2007. In 1977, the company introduced its first insulated panel and by 2007, the manufacture of insulated panels as a whole made up 40.9% of the Group’s total turnover. In 2007, Kingspan Insulated Panels published its first Sustainability Report, and has recently launched its second. Our decision to report was driven largely by the fact that we had undertaken a lot of sustainability initiatives, such as the BRE environmental profiling, and adoption of our carbon management programme through our membership to dcarbon8, and we wanted to raise our profile as a sustainable brand as we consider this to be critical to the future success of the business. We were being asked a lot of questions about sustainability, such as our approach to carbon management or environmental standards and policies we had in place, and without a formal document it was difficult to capture everything that was being done in the business. We also wanted a more official structure around what were doing, and by making target setting public, we believed this would drive internal management improvements. We had been monitoring a lot of our operations for a long time, but this was mostly driven by our environmental management system. But the process of reporting publicly has really driven more analysis of the data we were gathering and better target setting. We used the Global Reporting Initiative (GRI) guidelines, which was helpful as it identified some areas we didn’t report on. Once you start reporting you

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can identify strengths and weaknesses in the organisation in a more holistic way, and target improvements. The first report is by far the hardest, but it gets easier once you start. Obtaining information in a manner that is easy to read and understand to a public audience, and making sure this is accurate and verified is not easy, but this all gets easier the second time around, as employees’ awareness is much higher and they know what you are trying to achieve. The scope is also difficult for us as we have operations in many countries and legislation varies and acquisitions are made during the reporting year. We have made the decision to focus on the UK and Ireland as this is where the majority of our operations are, but intend to increase the scope as our processes get more established. We have managed to increase the number of indicators we are reporting against by a third in our second report, and we intend to increase the number of indicators we report on each year. The public recognition, and recognition amongst investors and the industry has been huge and beyond our expectations. The document has been really well received by a great range of stakeholders. We have been recognised in the Sunday Times top 50 greenest companies, and have won the Wales business and sustainability award. We also won Best sustainable business practice, in the Building Sustainability awards where judges made specific reference to the report and how comprehensive it was. We have no doubt that the recognition we have achieved this year for sustainability has been helped by the report. The impact of this on staff motivation and determination has been very positive, and all the bar charts are going in the right direction. The report has really contributed to raising awareness of sustainability in the business and has created a good sense of collective responsibility amongst employees, encouraging them to think of sustainability in everything they do. Reporting has also helped to highlight priority tasks and where there is a need for clearer strategy and direction. For example this year we are looking to develop an ethical procurement strategy and set up a community trust. It is a no-brainer for us to continue reporting, it has definitely had a positive impact, both on brand recognition for sustainability and driving improvements in our sustainability performance. There are plans to publish a Group level report next year, and the Board are encouraging the other divisions to follow suit. We plan to increase the scope and number of indicators reported on year on year. The biggest hurdle is the first report. But once you get the first one done the process is simpler. It really helps to have clear objectives because you can structure the report around those, and don’t just jump into it without setting parameters. It is important to be clear about scope, and look to increase this as your reporting processes become more established.

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9.4 Construction Companies Balfour Beatty Capital - Ed Bartlett, Whole Life Costing Director Balfour Beatty Capital is an operating company of Balfour Beatty Plc, which promotes and invests in privately funded infrastructure assets and employs 259 staff. The Company along with the Group’s Operating Companies report to the Health, Safety and Environmental Team their annual safety and environmental performance. Reporting is undertaken at the beginning of each calendar year for the previous year’s position and the question set alters on an annual basis to monitor continual improvement. The data from each Operating Company is complied together at the Group level, which is externally reported via the Balfour Beatty Plc Corporate Responsibility Report. Further, the data is used within the Group’s assessment on the Dow Jones Index, Business in the Environment Index and within the Carbon Disclosure Project. 2007 performance was based on the following indicators:

Health & Safety Environment Safety Management Financial, Audit & Incident Data Leadership and Behaviours Waste & Recycling Safety by Design Energy Public Health and Safety Harmful Substances Occupational Health Water & Biodiversity Specific Risk Issues Timber Regulatory Action Benchmarking and Strategic Focus

As part of the Company’s normal day to day activities monitoring of energy, paper and travel are key to managing significant environmental impacts. Internally, the data is reported to Senior Management and the Board and is used to raise awareness and change staff behaviour. The Balfour Beatty Capital’s ‘Our Communities’ Corporate Responsibility Report is used to communicate performance towards the Company’s objectives and targets on community engagement, health and safety, our people and the environment. It also provides an opportunity to communicate to a wide audience new initiatives and the Company’s approach to sustainability. To continually improve and monitor performance the Company operates management systems to BS EN ISO 9001:2000, BS EN ISO 14001:2004 and BS OHSAS 18001:2007.

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Skanska - Matthew Jansen - Sustainability Programme Manager Skanska is one of the world’s leading construction groups with expertise in construction, development of commercial and residential projects and public-private partnerships. The Group currently has 60,000 employees in selected home markets in Europe, in the US and Latin America. In the UK, Skanska employs 5,500 people and operates across building and infrastructure. Over the past several years in the UK, a number of sustainability indicators have been tracked and reported at a project and office level, such as:

Financial performance Health and safety performance Proportion and value contracts for the local supply chain Proportion of local labour Number of apprentices in the supply chain Number of positive interactions with the community, for example workshops

through the Construction Ambassadors Programme Project performance against Considerate Constructors and similar schemes Waste management including the amount of waste and recycling rates Resource efficiency Use of energy, both amount and percentage of renewable Use of water Recycled content of materials Environmental incidents Project performance against environmental rating tools such as BREEAM Percentage of staff who have received training in sustainability, for example

through our Sustainability e-learning tool Fuel consumption and carbon dioxide emissions from our fleet The personal carbon footprint of staff

However, these indicators have not all been consistently tracked across all projects and business units. In recent years, the process and structure for measurement has been amended to reduce duplication and ensure measurement is used effectively to help improve our sustainability performance. Most metrics are measured monthly, with progress against Skanska’s Strategic Environmental Plan being reported by projects on a quarterly basis. The measures are normalised to improve interpretation and enhance the value to the business, for example by turnover or staff numbers. Measures are also compared against the stage of a project, for example earthworks, demolition, frame, envelope and fit-out. This helps with comparison against other projects to identify and replicate best practice.

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Skanska is working with its supply chain towards measurement of embodied energy, embodied water and other metrics. Skanska’s experience is that simplicity, streamlining processes and demonstrable value for reporting are vital. Although reporting does not necessarily guarantee winning work, measurement enables us to improve business efficiency, share knowledge through the business and add value for our clients. We achieve this by setting ever more challenging targets for ourselves against the environmental and social agenda, both on specific projects and corporately.

9.5 Developers / Asset Managers Quintain Estates - Hilary Reid Evans, Head of Sustainability Initiatives Quintain Estates and Development PLC operates in three areas: regeneration, fund management and asset acquisition and management. The company was founded in 1992 and listed on the London Stock Exchange in July 1996. It is a constituent of the FTSE 250. This year is the first time that we have published a Sustainability Report and it forms a natural evolution of our sustainability strategy. We have identified our non-financial key performance indicators (KPIs) and set targets against or a statement of intent against each of these KPIs. We have focused our attention on our key impact areas to include energy, water, waste, transport, sustainable lifestyles and health & safety. We have not utilised one M&R framework in particular but carried out an analysis of a number of relevant areas, including DEFRA’s KPIs, the Global Reporting Initiative (GRI) framework and also looked at what our peers were reporting on; our intention has been to identify all those areas of significant impact and take relevant action. We have not been driven by legislation but wish to be proactive for all our stakeholders (including for example residents, tenants, shareholders and employees, plus significant partners such as English Partnerships and the Housing Corporation). “We feel that our sustainability strategy and reporting methodology will help give us a competitive advantage over our peers” The main barrier we had to contend with is that the data required is not normally gathered in our routine accounting processes. However, going through the data collection process has proved an invaluable educational process for all of our employees and helped raise awareness of our sustainability agenda here at Quintain. The reporting process has also helped formalise our decision-making framework and sustainability has now been embedded as a key factor in all decisions we make at Quintain.

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Going forward, we feel that the UK GBC could offer support in a mentoring capacity to organisations that wish to report or improve their reporting by linking organisations at a similar stage in the reporting journey. Lend Lease Retail & Communities UK - Janet Kidner, Head of Sustainability In 2007 we produced our first Sustainability Report – a ‘transparent mark in the sand’ with regard to our sustainability performance and we will continue to publicly report this year. We now see this as a fundamental part of our business operations. There are a number of driving forces for M&R within our organisation, the first one is to understand our impact; we found when we started this process we had many adhoc sustainability initiatives that weren’t tied together. This process allowed us to consolidate those, focus our efforts on where it counts and understand where our business has the greatest opportunity for improvement through our operations. The key barriers for us starting the M&R journey was understanding the M&R process, organisational cynicism as to its importance and having sustainability run as an adjunct as opposed to core to our operations. We are now beginning to understand our impact and how we can make a difference; it has forced us to reset our strategy, to look at, for example, how we get involved into investing into new business opportunities. It has allowed our teams to understand their impact at a local level and to develop ground-up initiatives to deal with these. “Measurement & reporting has allowed us to integrate sustainability into our core operations – from project reviews, to setting performance targets to making investment decisions. It has sent a clear message to our people that we are serious about sustainability” During our first reporting cycle, we discovered Bluewater, one of our retail assets, made up 65% of our total operational carbon footprint. Since this time, we have been working with the Carbon Trust & Envirowise as well as other agencies to establish resource reduction initiatives that will help us improve the non financial aspects of the centre. Examples of our reduction initiatives include:

Replacement of 6,000 lights in the car parks which are 50% more efficient than the original fittings

Switching off car park lighting at night when centre is closed between 2.00am - 5.45am

Introducing seasonal climate control of the centre, i.e. better control over heating and cooling systems

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This year we will also look to more closely align our aspiration with the 380 tenants that lease retail units at Bluewater – this is key to both parties achieving their common sustainability goals. We will also be embedding sustainability KPI’s into senior management performance and the remuneration review process. We are using this framework for all of our assets and look forward to reporting transparently on our progress. Lend Lease feel the UK GBC can act as an educator to help companies understand why they should measure and report. We believe the UKGBC can act as an advocate for a set of principles for reporting and act as a hub for networking between organisations who report to learn from one another. We also believe a commitment to M&R should be a prerequisite to membership to the UKGBC. At Lend Lease we strongly believe that businesses who actively measure and report will produce better sustainability outcomes than those who don’t and these organisations will achieve better long-term performance.

9.6 Property Agents Atisreal - Arlette Anderson, Director CSR & Sustainability Atisreal is one of Europe's leading real estate consultancies, with over 2,600 employees in 58 offices. We are committed to delivering the right solutions for property owners, investors and occupiers worldwide. As part of BNP Paribas, one of the top 20 companies in the world, Atisreal has strong financial backing. From this base we have expanded and developed in order to meet our clients' needs in an ever evolving and demanding environment. We are in the early stages of our reporting journey as we wished to build on our existing risk management processes to ensure these are sufficiently robust to be able to provide auditable information. To date we provide information on our CSR performance to our parent company BNP Paribas for the group report. BNP Paribas produces a CSR/Sustainability report annually including reporting on standards and improvements on human resources, environmental impact, customers and suppliers, corporate governance, community involvement and human rights. Atisreal has been accredited to ISO9001 Quality Management for over 12 years and OHSAS18001 Occupational Health & Safety since 2007. We have achieved accreditation to ISO 14001 Environmental Management System since 2005 and the results of continuous environmental improvement are included in the company’s financial report. Results of the management of significant environmental impacts are included together with progress of achieving set objectives are targets such as energy, water and waste for the offices we occupy in the UK but also our professional advice, part our surveying practices. We are also members of Business in the Community and participate in the May Day Climate Change Summit. Being

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part of these we set objectives and targets on reducing our impact on climate change annually. We also propose to use the Business in the Community Corporate responsibility (CR) Index as a method to benchmark our current CSR policy and strategies with a view to setting clear objectives for improvement. “Whilst we are not obliged to produce a CSR or Sustainability report, we consider producing this as a clear method to detail to our stakeholders an openness and transparency, reasons today that are now increasing more apparent not only in our supply chain and with our clients and our staff. We have therefore proposed to publish a UK report by the end of the year” Whilst our main drivers for measuring and benchmarking our CSR performance include compliance and adding value to our clients, one of the biggest drivers for reporting has been the need to attract and retain talent. Each year we recruit circa 35 graduates as part of our graduate recruitment programme. Noted as part of this, has been the significant increase in the questions graduates are asking regarding the company’s sustainability performance. Graduates are keen to understand what they can do to participate in the community volunteering programme and also to understand how they can reduce their environmental impacts. Sustainability understanding is also part of our graduate surveyor APC programme (Assessment of Professional Competence). This is an ongoing training and assessment programme required for RICS membership to demonstrate our surveyors are competent to practice as a chartered surveyor. There is also an increasing expectation and requirement from clients for greater openness and transparency regarding our sustainability performance. This has been specifically demonstrated by major corporates who now not only request our policies with regard to CSR and sustainability but now require information on our targets, benchmarks, results of our programmes. We propose to report around topics and indicators that reflect our organisations significant economic, environmental and social impacts using the GRI reporting guidelines, and we will use this to support our responses to the BitC CR Index. We have audited our main impact areas to scope our reporting parameters and to develop our action plan for improvement. We have also referred to the DEFRA Environmental KPI indicators specifically for environmental impact to build upon our accredited ISO14001 Environmental Management System. The government U-turn on the Operating and Financial Review (OFR) was a real setback in getting measurement and reporting processes firmly established in our organisation, but the drivers for compliance, competitive advantage, market leading and employee and client expectations still remain. The challenge has been identifying and creating, priorities, defining responsibilities and gaining ownership throughout the organisation to ensure the programme becomes part of the business

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strategy. Introducing the recommendations from our audits and starting to benchmark performance will be the next step. The challenge at this stage is that, as we have not yet published a report, the perceived benefits are still quite intangible, and it will take a leap of faith in the first year that it is something worthwhile without clear guidelines, standards and requirements. Our marketplace expectation, client requirements and increased media coverage of the issues has made it easier to make the case for reporting. The challenge is then to ensure that the correct parameters are included to ensure openness, transparency and credibility. The concern at present is that you can select what is included in the voluntary reporting process. A single measuring and reporting framework that is relevant to all business sectors would prove invaluable in determining the criteria company’s are required to report on as standard, irrespective of how it might make them look. The UK-GBC can certainly play a role to guide us through what existing reporting guidelines are there already, rather than creating new frameworks, and making this relevant to specific business sectors such as the professional service sector.

9.7 Owner / Occupier CityWest Homes (CWH), Westminster – Julie Day – Head of Asset Strategy CityWest Homes is a 3 Star ALMO (Arms Length Management Organisation). It manages 22,000 homes, asset value £4.2 Billion, Turnover £100 Million – New to measurement and reporting Drivers for reporting were identified as follows:

1. Reduce bottom line costs; efficiency gains and quick wins 2. Regulatory and legal compliance 3. Efficiencies in energy, water, and waste for its customers and supply chain 4. Seamless operational integration and effective structure 5. Respond to customer/global demand for action on climate change 6. Environmental sustainability ‘branding’ 7. Access to work with stakeholders increasingly demanding partners with

environmental credentials 8. Staff and customer engagement and commitment; ‘buy in’ 9. To ‘green’ new and existing homes and their offices 10. To measure and report upon year on year performance improvement

The CEO wants to make a difference to customers. The business is already active in various sustainable activities but has no means of measuring differences in performance from one year to the next. Activity at CWH that reduces environmental impacts include an Sustainability Manager, use of EEC/CERT grants, and has one of the most renowned CHP plants in the country. However CWH in common with many client organisations in the construction sector, require clarity

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over what is material, comparability, and striking an optimum balance with existing strategies and sustainability measurement and reporting. Westminster can now capture their performance and report on it. The system they use also provides clear guidance for residents to become more efficient for energy, water, and waste. Plus the opportunity to commit and engage in community initiatives that develop awareness and reduce fuel poverty. “In common with many clients in the construction industry sustainability is a ‘nice to have’ part of the business that is becoming a ‘must have’ for which good measurement and reporting frameworks can be used to support corporate change, and to set targets and KPIs which improve business outcomes”

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10. Annex 2 - UK-GBC References Members and non-members survey findings The overall findings for each of the questions in the UK-GBC member survey can be found at: http://www.ukgbc.org/site/taskgroups/info?id=3. Upstream Desktop study The findings of the Desktop study undertaken by Upstream can be found at: http://www.ukgbc.org/site/taskgroups/info?id=3 Upstream carried out analysis of:

• The proportion of members mentioning some form of Measurement and Reporting Frameworks

• Most frequently mentioned frameworks • Sample mapping of frameworks against stages of the property process and

sustainability issues A key finding from the Survey was that the issue of measurement and reporting of sustainability is confusing for the significant majority of organisations. It is encouraging that this does not appear to detract from the desire to either measure or report, although it is a key area of frustration and may detract from organisations effectiveness in their reporting. Anecdotal evidence suggests that the number of initiatives and schemes that have emerged over the past few years to encourage companies to address their sustainability has become somewhat overwhelming. This is especially true for companies starting out on the measuring and reporting journey. Although not within the scope of this Task Group, the group clearly identified there is much confusion in this area, and there is a need to clarify the difference between the relatively universal principles of organisational level reporting, with the more specific tools and techniques required to measure and report specific aspects of an organisations activities. It is within this area that much more work will be needed to identify the most appropriate tools for the job to improve performance whilst also increasing comparability and consistency between similar organisations. Within the various different frameworks and tools used by UK-GBC member companies to measure and report, there was a mixture of generic and built environment sector specific tools and measures. The Upstream analysis categorised the various measurement and reporting frameworks, that were mentioned by members, according to the ‘scale’ or ‘level’ at which a company would

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typically use them i.e. the corporate or organisation level, the portfolio or existing building level, for a new building or project, or for a single product. However, survey findings and anecdotal evidence suggest that this distinction is not as clear as it may have first seemed. For example, several ‘tools’ that are focussed on measuring performance at the building or project level – such as BREEAM – are also reported on and are therefore significant at a corporate level. This example represents a wider finding, that measurement and reporting frameworks are often applicable to several levels of corporate activity.