It’s funny how the term ‘sustainability’ means such different things to different people; if I asked you whether it was important for your organisation to have a ‘sustainable business model’, you’d say that it was essential. But for many people ‘sustainability’ is still a luxury, a nice-to-have, an extra or even an inconvenient chore. I think sustainability, in all its meanings, is about making sure that your organisation can sustain itself in the short-, medium- and long-terms. That includes using resources efficiently, maximising opportunities while minimising costs, managing risks properly and ensuring that your business is resilient and your supply chains aware. Environmental, social and economic sustainability are now becoming intertwined, so opportunities to manage each one in a better way must be seen as opportunities to do better business.
How are Australian construction companies embracing sustainability?
There are many Australian construction companies that are fully embracing sustainability, completing ‘World Leadership’ Green Star-certified (GBCA) buildings and communities, ‘Excellent’ Infrastructure Sustainability-rated (ISCA) projects, using Good Environmental Choice Australia (GECA) and Global GreenTag-certified products and services, and accessing the multiple free resources offered by the Supply Chain Sustainability School. These are the best in the industry, such as Stockland with its sustainable diversified property leadership or John Holland with innovative high-performance engineering, construction and services solutions; such commitments to completing sustainable projects in sustainable communities within a sustainable business model will leave a lasting legacy. However there remains many large and small construction companies across Australia for whom sustainability is only a very small part of what they do, and within which sustainability is not seen as relevant to procurement teams, project managers or principals. Those are the organisations who will not have a resilient business model in ten years’ time.
A sustainable organisation – one that is truly economically, environmentally and socially sustainable – is one that uses its supply chain as a catalyst for innovation. An informed organisation regularly looks along its entire supply chain for areas of opportunity (how can we be more efficient, more streamlined, more resilient?) and areas of risk (what could go wrong, harm us, damage our reputation, impact upon the environment, hurt us financially or, worst of all, injure our people?). So the desire to be more environmentally sustainable, using less resources for example, can become a driver for innovation; how can we achieve the same outcome using less materials with fewer touch points. The desire to be more socially sustainable, ensuring that modern slavery touches no link of your supply chain for example, can become a driver for innovation; how can we get the buy-in of every person, internal and external, to promise that levels of global slavery are reduced. Supply chains are becoming a point of strategic difference for organisations since they offer a change to reduce costs, risks, waste and environmental impact whilst increasing competitive advantage, knowledge and social benefit.
What can smaller construction product manufacturers/service providers do to ensure they don’t miss out on becoming part of a sustainable supply chain?
There are a few priorities here, centred around knowledge, control and time. To begin with, nobody is expecting smaller firms to be instant experts on sustainability themes, but they do need to demonstrate a basic awareness of the key issues. Since these basic building blocks of sustainability education are available for free on the Supply Chain Sustainability School website (www.supplychainschool.org.au) there are fewer and fewer excuses for not knowing what’s going on. There’s a wealth of free knowledge and diverse learning options available, with the school adding more every month. The school will help organisations find out what they know, what they don’t know, what they really should know, and how they can access more information. Secondly, small organisations often feel that while they have control over their own staff they have little sway over the multiple links through their supply chains. But as Sam Walton, founder of retail giant Walmart, said: “There is only one boss – the customer – and he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” Every small company has the ability to start asking questions; where things are made, and how; whether things are certified or verified, and if not why not; or whether companies around them have policies around vendor conduct, modern slavery or recycling of materials. So asking questions, and exercising as much control, influence and inspiration as possible to ensure supply chains become more sustainable is good. Ultimately, taking your business elsewhere may result in better triple bottom line outcomes. And finally, smaller businesses are not expected to be instant experts, but setting a target with a medium-term range will be a good way to encourage improvements over time. For example, committing to improve sustainability knowledge on set topics by the end of next year, with a few relevant metrics, would be a good starting point. Regular, frequent, small steps towards improved knowledge are so much easier, cheaper and less time-consuming than being forced to take large, sudden steps when government regulation or smarter markets catch up with you. And, of course, the Supply Chain Sustainability School can help with regular re-assessments of knowledge, and in turn recommend further sustainability learning options.
The biggest challenge is the prevalence of short-term thinking, rather than medium- or long-term thinking. I totally understand the pressures behind current project deadlines (and budgets), financial year accounting and modern electoral cycles, but these are all examples of short-term influences. When a building, community or infrastructure project is going to be around for 50-100 years (or hopefully more, depending on quality!), why would the deciding factor be whether a lower-performance product can be obtained $5,000 cheaper? Especially when the lifetime of environmental, social or economic benefits will probably far, far outweigh it. So many of the ‘arguments’ for sustainability, whether around solar panels, water tanks, better materials, energy- or water-saving initiatives, focus on medium-to-long-term paybacks. Which means we have a fundamental discord between decision-making priorities and lasting benefits. This isn’t something we can ‘fix’ immediately; it’s going to take multiple movements, and understanding around issues such as performance-based specifications, life cycle assessment (LCA) and whole-oflife analysis, social sustainability and non-political infrastructure delivery to really change how we design, construct, operate and recycle fit-outs, buildings, communities and infrastructure. It is rare that short-term fixes eventuate into long-term satisfaction, especially with low levels of supply chain knowledge. And this knowledge, or lack of it, is a growing risk. According to deloitte in its 2016 Chief Procurement Officer (CPO) survey, whilst ‘procurement risk is on the increase’, cost reduction remains the top priority for CPOs and ‘62 percent of CPOs do not believe their teams have the skills and capabilities to deliver their strategies’. These figures are echoed in this year’s Hackett CPO study, which shows that although ‘market risk is increasing’, the top priority for 2016 is still to ‘reduce and avoid procurement costs’.
How does the Australian approach to sustainability measure up to that of other countries?
There are wonderful, awe-inspiring, magnificent parts, and then there are shameful, embarrassing, cringe-worthy elements to Australian sustainability approaches. In some respects Australian cultures are very much aligned with sustainability; the essence of vast distances, scant resources, extremes of climate and relatively few people spread across the world’s driest inhabited continent seems to align with the core tenets of sustainability. I’ve seen many buildings and communities that play to these strengths; making best use of the water, energy, resources, biodiversity and environment, as well as the technologies developed to help overcome labour shortages and extremes of climate. But in other regards, the way in which Australians don’t recycle much (despite having to import so many things), don’t capture much rainfall (despite being the driest inhabited continent), don’t ride-share very much (despite the number of single-occupant car trips made) and don’t capture much solar or wind power (despite the numerous hours of sunshine and wind) is just humiliating.
And how does construction measure up compared to other industries?
I have been fortunate enough to travel extensively over the past decade, looking at other countries’ efforts in the built environment sustainability space. There are many countries doing extraordinary things through their building, infrastructure, supply chain and procurement sectors. Germany has made some amazing advances in energy efficiency and renewable energy production, with buildings that reflect this (see DGNB). Across Latin America there are some great examples of infrastructure being completed to best practice sustainability principles, such as the Mato Grosso do Sul State Road Transport Project in Brazil, in which application of more sustainable approaches to erosion control saved about US$46 million, or the roadbuilding project through a valuable biodiversity corridor in the Gran Chaco region of Argentina that included special wildlife crossing/ connectivity points with eight underground and three canopy wildlife crossings. The UK has been targeting more sustainable supply chains throughout construction and infrastructure, with the original Supply Chain Sustainability School launched in the UK in 2012 by Action Sustainability with the groundswell of activity around the London Olympics. And the procurement practices in the USA have shifted tremendously around the changes specified by the US department of defense, whose small and steady improvements in sustainability criteria send massive ripples through US and global procurement and supply chain networks. In fact, the US Department of Defense’s (DoD’s) Sustainable Product Purchasing program states that ‘the department’s vision of sustainability is to maintain the ability to operate into the future without decline either in the mission or in the natural and manufactured systems that support it. dod embraces sustainability as a means of improving mission accomplishment’. However Australia is definitely leading the way in ‘putting it all together’, especially within the construction sector. Maybe it’s that with a (relatively) small population it’s possible for innovation to spread quickly, maybe it’s that with eighteen different climate zones there’s no ‘one-size-fits-all’ approach and so project teams learn to adapt their own unique solutions. Overall I’ve seen Australian projects assembling the energy, water, materials, emissions, waste, transport, innovation, biodiversity, health and safety, education, workplace and social solutions in a way that creates truly world-leading developments.
Can you give a few examples of Australian companies you think are doing great work in this field?
Three good examples of organisations doing great work would be Mirvac, Laing O’Rourke and Sustainability Victoria, each of whom are Founding Partners of the School. Mirvac is one of the leaders with its ‘This Changes Everything’ strategy, engaging businesses with Vendor Codes of Conduct and Supplier Annual Reports, and engaging people with its ‘House with No Bills’ initiative and diverse community projects. Laing O’Rourke is investing heavily in innovation through its Engineering Excellence, digital Engineering, Product & Process Innovation, R&d and Skills & Education initiatives. And Sustainability Victoria, the Victorian statutory authority that facilitates and promotes environmental sustainability in the use of resources, has produced an amazing range of services and advice for households, schools, communities, businesses and local governments. These organisations are the ones writing the future of where and how we do business.
Article reprinted from http://www.supplychaindigital.com/magazine/sliderIssue?id=84