Not so long ago, few would have imagined that in 2023, Grosvenor would be leading the way on sustainability and innovation. Yet, defying expectations, it is. By 2040, it aims to have reduced its emissions across its buildings, developments and supply chain by 90%. It also has aspirations to make its 147 acres of public realm in Mayfair and Belgravia climate positive, and its ambitions don’t end there, as its sustainability director Ed Green revealed during a keynote speech and interview with BE News editor Liz Hamson at the BWT UK event at Ministry Venues, home of the Ministry of Sound, in London, on 29 June.
Here are some selected highlights from his rallying call of a speech and interview:
The speech:
We develop and manage neighbourhoods and have a long experience of pioneering change acquired over more than 340 years. As a people and planet positive business, we look to the look long-term and give equal weight to the social, commercial and environmental impact in everything we do.
Our heartland is in London’s West End, where we support nearly 1,000 businesses and thousands of residents, workers and visitors each day. We also invest in new neighbourhoods in Liverpool and across England.
Our sustainability journey stepped up a level in 2019 when we made it central to all parts of our business strategy.
For an investor that holds its assets as long as we do, it was pretty clear that the environmental crisis poses an existential threat to our commercial success.
We realised we needed to set ambitious goals. They would give us our purpose. We set ourselves the challenge of being leaders in our sector, and so knew we would have to innovate across the business as, by definition, if you are a leader you are an early adopter. It’s a big mental and cultural shift for a heritage business that hadn’t sought to drive industry change in recent times.
In the environmental space, we sought to focus on four areas:
- Carbon – We aim to achieve net zero in line with keeping the planet to 1.5 degrees as per the Paris climate agreement. Grosvenor is the first European property company to have had a long term science based target verified – 52% by 2030 and 90% by 2040.
- We want to be zero waste – By 2030, we will send zero non-hazardous waste to landfill.
- We need to value nature – Initially, this is about increasing the biodiversity in the places we manage by 20%, and in our developments by 100%. But there are other factors to consider like water, nutrients and material provenance. We have committed to doing this through transforming how we work with our suppliers occupiers and Investors.
- The other focus is, of course, social impact. As businesses that work in the built environment, it’s important we remember that a key part of our role is to ensure that the places we create have a positive impact on people’s everyday lives.
We have three specific goals: to increase the people’s wellbeing in the place we manage; to enable thriving local economies, prioritising inclusive growth and championing diversity; and to maximise positive impact, making sure our people and our partners have the tools and know-how to have a positive impact in everything they do.
Each goal requires baselining and target setting, and ultimately a strategy. So far, we have detailed strategies built out for carbon, biodiversity and social impact. This rounded approach is key. The industry as a whole is too focused on carbon. There are massive issues across the spectrum that need addressing.
But we did indeed start with carbon, and we quickly realised how massive a challenge this was. We knew we had some of the tools and capabilities, but we were relying a lot on unidentified technology and processes, and it was clear that business as usual was simply not going to get us there. Innovation had to form a key part in how we moved forwards.
So, we commenced a root and branch innovation programme. This involved a massive culture change initiative to embed an innovation mindset and empower individuals to innovate and try new things. It worked. In 2019, 34% of staff thought the business was innovative – two years later, it was 88%.
The other key component was building strong partnerships with peers, as we’re all grappling with similar issues, and with industry bodies like UKGBC.
We also realised that our supply chain represented most of our impact, so we set about thinking about how we could improve. We work with a lot of SMEs, which don’t tend to have the resources to work out how to address these sorts of issues. So last year, we ran a supplier mentor programme for 28 key suppliers to help them develop their own Science Based Targets.
In 2021, we launched an employee-led innovation programme, called Future, with devolved budgets available for all teams to trial innovative solutions to whatever pain point they may have. We delegated responsibility for decision making to teams to create ownership and independence. To drive adoption, we made clear that failure was an accepted part of the process.
So far, we have had 120-plus trials. Amazingly, 60% are already embedded – a much higher hit rate than we expected, which I think goes to show that teams understand the potential solutions to their problems already. They just need to be empowered to deploy them.
We track the results, mapping savings in terms of cost, time and impact. We’ve looked at everything from low carbon materials to BMS add-ons and energy-generating solutions.
We’ve had some big wins that have resulted in material carbon savings or step changes in the way we can support our communities.
On the former, we have rolled out Demand Logic across the portfolio. It monitors energy usage with and without a BMS, and we’ve been able to identify some huge inefficiencies in the way our buildings were operating. In one case, we made a saving of £110k for a £7k cost.
On the social impact side, we’re really excited about a digital engagement tool called Commonplace. It will transform how landlords and developers engage with communities, and is going to make a real difference to how people experience and contribute to the places where they spend time. It supports conversations about place and not just for pre-planning consultation but ongoing conversations where insight can be accumulated over time to feed into decision making.
It’s a fascinating time to be working at the intersection of sustainability and innovation. Ultimately we’re trying to answer questions that no one has tried to answer before, but we need maximum ambition if we’re going to have a chance of doing what’s required.
Forget the big transactions. Without a doubt, this is the most exciting thing going on in our industry. We’re seeking out new solutions to solve the biggest challenge of our time, in one of the most difficult sectors to transform.
There is no doubt it’s difficult. There is no set recipe for creating the conditions to enable innovation to flourish, and for the adoption of new technologies to be successful, particularly when it comes to something as new and urgent as transforming the built environment into a sustainable industry.
The interview:
Your current goals to date revolve around carbon, biodiversity and social impact. What’s next?
We’re starting to think about nature more holistically. It’s all very well being proud about an increase in biodiversity in the places we directly manage, but what if that’s at the expense of other places? Where our materials come from and the impact that has on the plant (not just carbon) has to become a key part of the conversation.
We also need to think harder about waste. It’s a huge challenge. The chain of custody for construction waste is surprisingly leaky – despite being regulated – and if we can’t even keep track of materials as they come off building sites, how are we ever going to develop material circularity for the sector. We recently adopted a system called Qflow, an environmental management platform that automates the capture of material delivery notes and waste transfer notices on construction sites, allowing us to track everything that is moving on and off our sites. We are seeing massive improvements in the data we are able to collect and therefore the behaviour we are able to influence in this space.
How are you going about identifying what data you need and how are you then gathering it?
Data has always been tricky for the real estate sector – as ownership is so fragmented and no two assets are alike. I also think there’s a real cultural challenge in the sector about the value of data that many are only just waking up to with the dawn of AI and what that can do.
Sustainability data is even harder as everything is still so new. It’s still a challenge to understand what to measure and how to measure it and that’s before you even get to how to effectively collate and analyse it. It’s often very resource intensive.
We have lots of different collection tools. We rely quite heavily on our suppliers, which are required to input data into an online portal on an annual basis. As with Qflow, we are increasingly sourcing tools that simplify this process and drive accuracy.
You mention AI. What role is that playing at Grosvenor and what role do you see it playing in the future?
We see increasing number of AI powered solutions, and as generative AI accelerates, the opportunity will only grow. The challenge is the quality of data it runs off. We’re doing a lot of work currently to get our house in order. Those that achieve this will get the most out of AI solutions and therefore have an inherent advantage.
Commonplace is supporting us in delivering a step change in the data we hold about what our communities think about us and our places and what they want to see. It’s the kind of insight that we could only dream of a few years ago and it’s AI that makes this possible.
How have you gone about cleaning your data or ‘getting your house in order’, as you put it?
It’s about culture change. Just as we have made sustainability part of everyone’s job, we’re now doing this with data. We’re also using Stak, a one-stop-shop for all data on the physical attributes of the building.
How have you gone about embedding innovation within the business?
It’s been hard and we are still working on it! We’ve worked hard to understand and communicate our purpose – and it’s something that our teams have really bought into. Seeing this come alive through the goals has been hugely motivating for many people in the business.
Key has been ensuring there’s a sense of personal responsibility for success, with support and recognition for those who give it a go. Our sustainability and Innovation teams sit together and are constantly sharing insight into priorities and action plans. They are small teams. The idea is they are enablers, not there to do it for the business.
Roadmaps are really important in breaking down 10-year goals into annual steps for each team, making the vision real and deliverable. Every single person’s performance is linked both to their own contribution to our environmental and social impact goals as well as the business’s collective progress against our annual roadmaps.
Initiatives such as Future+ also are empowering. The fact that people across the business know that if they have an idea, there is money available and that they will be celebrated for giving something new a try, has been really effective.
You’ve had some big wins. What about the challenges, especially across your wider supply chain?
Materials are tough. Convincing design teams and contractors to work with new and different [materials] can be hard. There are many low carbon materials we want to trial and be part of their journey, but putting uncertified materials in buildings scares insurers, for good reason. It just makes for a tough process.
It also take a long time for the installation to take place, and for the data to come through to establish if it’s worked. It’s a massive shame, as embodied carbon makes up such a large proportion of our emissions as a sector. We’ve got to get better at this. From experience, identifying what the blockers are to quick adoption and devising ways round them in advance is a very worthwhile exercise.
We have had some success. Holbein Gardens, our first net zero development, had some fantastic innovative products in it. We used low carbon plaster from Adaptavate, low carbon concrete from CemFree and Thermalite aircrete blockwork. It’s just not at the scale that we need.
What else are you doing to support innovation?
Where we found solutions that have really positive impacts for us, we wanted to support their adoption across the sector and help the businesses grow. So last year, we commenced venture investing in early stage businesses. We believe that by creating relationships as both investor and customer, we can really support businesses in developing their solutions, their markets and positioning in the sector.
We only invest in solutions we have used and adopted in the portfolio, but this is how we are de-risking our investments, the logic being that if it’s good for us, it will be good for others. From the perspective of delivering transformation in the business, this has been hugely worthwhile.
Our portfolio is dominated by heritage assets, so solutions that support retrofit and energy efficiency are a key focus. We have a £90m retrofit fund that is set aside purely to decarbonise our standing portfolio, and we’re always looking for more efficient ways to deploy this.
So far, we’ve made four venture investments, and we’re also looking at other non-real estate investment opportunities that will help us deliver on our sustainability strategies. These include renewable energy, where we think there is a strong case for acquiring our own generating assets, and carbon credits, as we have committed to being carbon neutral across all activity from 2025.
What other potential solutions are you excited about?
Retrofit is a big one for us, so we’re looking for solutions that either enhance results or make the process of identifying actions easier. Similarly, we’re trying to move minimise reactive and maximise planned maintenance.
There’s a company called H3 Dynamic, based in Singapore, that has a fascinating AI engine that scans drone surveys and automatically identifies defects and recommends remedial actions. At a portfolio level, this sort of solution will have a massive impact on pipeline management, optimising when works need to be done and reducing wasted time, cost and materials.
Accessibility is another area we’re looking at. Occupier wellbeing is another key focus. There’s increasing evidence that workers who are happier in their surroundings are more productive, and there are great tools to measure and improve air quality and support other wellbeing drivers that we’re exploring.
What’s your advice to businesses that are at the beginning of this journey?
Be clear on your goals and be ambitious. We all need everyone to strive to do better if we’re going to have a chance of getting out of the mess we’re in.
Set your vision in partnership with your teams – make them a core part of the process. Empower individual responsibility, but be accepting of something not working out.
Thirdly, get the data. You can’t demonstrate success without being able to measure it. Get help. Four to five years ago, when we started this, there wasn’t much guidance. Now there’s loads. Organisations like UKGBC and Better Buildings Partnership offer fantastic advice.
Avoid tech for the sake of it. Work with teams to identify problems and pain points, and deploy solutions focused on these.
Ultimately, it’s about delivering a change in mindset within the business. Four years ago, I doubt anyone would have put a bet on someone from Grosvenor opening an event on innovation, technology adoption and sustainability leadership. It shows it’s completely achievable.
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