The Integrated Facility Management Industry in India has witnessed strong growth over the past few years, jolted by the improved focus on building resilience against COVID-19 pandemic. Moving forward, the facility management market is projected to grow at a CAGR rate of 23% from 2021 to 2026, according to IMARC Group. For this projection, the key growth drivers include customers’ focus on improved health and safety of building occupants and the sustainability measures being taken on a wide scale.
Today, sustainability is inextricably linked to business strategy, enabling businesses to address issues that the world is making a rallying cry for. These issues include climate change, income inequality, depletion of natural resources, human rights issues, fair working conditions, pollution, racial injustice, and gender inequality. Irrespective of how counterintuitive it may seem, the most sustainable business is often found the most profitable business.
The sustainable, moral, and ethical efforts of a business can be measured using Environment, Social, and Corporate Governance (ESG) metrics, which rank on top of the agenda of businesses today. Since 2005 when the term was first coined, ESG has emerged as an investment criterion where companies prefer to work with the partners that strive to make the world a better place. In other words, it makes the assessment of a company’s modus operandi in light of the following environmental performance, social impact, and governance aspects rather easy.
– Limits harmful pollutants and chemicals
– Seeks to lower greenhouse gas emissions
– Uses renewable energy sources
– Companies that operate an ethical supply chain
– Supports LGBTQ rights and encourages diversity
– Has policies to protect against sexual misconduct
– Pays fair wages
– Companies that embrace diversity on their board
– Embraces corporate transparency
– Employs a CEO independent of the board chair
Futurescape’s 2021 study of India’s Top Companies for Sustainability showed that around 80% of 100 top companies incorporate SDGs into their responsible business actions. IT and Telecom sectors lead the way where 75% and more companies have adopted the UN’s Sustainable Development Goals, laid out their specific ESG goals as per SDG practical framework, and embarked on their ESG journey.
How important is this journey for the facility management industry in India? Let’s take a closer look.
a. Pre-qualification requirement for FM suppliers:
As one of the leading FM services providers in India, Tenon FM has noticed a change in the prequalification assessment of FM services providers; organisations require FMs to provide additional information on:
a) Environmental issues such as their take on water management, waste and pollution, resource depletion, greenhouse gas (GHG) emissions, deforestation, and climate change
b) Social factors such as how a company treats people and focuses on employee relations and diversity, working conditions, local communities, health and safety, and;
c) Governance factors such as tax strategy, executive remuneration, donations, and political lobbying, corruption and bribery, and board diversity and structure.
b. Delivering on ESG requires FM’s commitment toward sustainability:
A McKinsey analysis of more than 2,000 studies found that ESG-focused companies drove positive equity returns 63 percent of the time and only experienced negative returns eight percent of the time. However, the ESG journey is not as easy as it seems prima facie. Now when BRSR reporting has been made mandatory by SEBI from FY 2022-23, businesses must ensure that fair ESG practices are being followed from top to bottom of the supply chain. For example, FM companies pursuing ESG initiatives must report to the customers on their fair labour practices, eco-friendly chemicals being used, waste management practices, and their carbon or plastic footprint with utmost transparency. Both the FM consumer and service provider should then acknowledge the scope of improvement and provide a roadmap for change.
c. FM Professionals adding value to the comprehensive ESG framework:
In the past, FM professionals were entrusted with non-core business activities such as office cleaning and maintenance, which in turn support core business strategies. However, this has started to change with businesses focusing and acting on ESG in a proactive way. As most of the business activities take place within the facilities, the responsibility of ensuring that the organisation’s sustainability credentials are manifested and reflected in the built environments lies with FM partners. This has presented them with a great opportunity to make their way to the board room, contributing to the organisation’s sustainability and ESG efforts both strategically and operationally.
d. Building cross-functional teams to achieve common goals:
The heightened social, governmental, and consumer attention to ESG has made it clear that a strong ESG proposition can ensure an organisation’s long-term success. Net-zero emissions, energy efficiency, carbon neutrality, and plastic-free culture are a few goals to name that businesses are eyeing at. To achieve them, there is a need of creating cross-functional teams beyond simply teaming up with employees or partners. The businesses must tap into a broader range of expertise that facility management professionals possess- creating, maintaining and optimising green, environmental-friendly, and durable buildings. They help to:
- Attract ESG funding
- Get LEED certification
- Maintain healthier indoor quality
- Minimise business impact on the environment
- Create more employment opportunities for talents in rural areas of India
- Reduce costs in terms of building development, operations, and maintenance
- Attract talent through greater social credibility
- Install new-age smart and intelligent technology
- Boost employee motivation by creating productive workplace
Why should FM Industry adapt to ESG-scenario?
It’s high time that FM industry incorporate environmental and social aspects into their core business. The FM consumers are growing socially and environmentally conscious and are two times more likely to trust service providers that operate in an ethical and environmental manner. They want FM businesses to invest in bringing sustainable solutions that make significant improvements to the environment and society rather than simply complying with regulations. The government authorities and investors are more inclined toward supporting responsible businesses with newer growth opportunities.
Besides, the FM industry is one of the largest employers of the rural population in India and has immense potential to make a life-changing impact on the environment, society, and community. Social upliftment and people empowerment, nonetheless, are an essential part of a people-business like Facility Management.
We, at Tenon FM, realised this a long time ago and have been pursuing these goals. But, now we have institutionalised ESG policy and are all set to follow them in letter and spirit.