Welcome to the first blog in our series with Paul Lewis CEO of Carbon Credentials.
Paul will be conducting several interviews with leaders in this space to find out what their plans are to tackle climate change and carbon reporting. We spoke to John Garwood- Managing Director and Group Company Secretary of Canary Wharf Group.
In the context of Canary Wharf Group as a whole, what are the priorities are for the organisation?
We’ve been on a journey in terms of sustainability. The landscape of sustainability and the corporate landscape has changed quite dramatically over the last five or ten years. We have come from a place where sustainability was almost a bolt-on extra but is now something which people expect to be embedded into the corporate culture.
As we work with our clients to develop bespoke buildings we have noticed that they’ve become much more demanding about what they want from a sustainability perspective. A few years ago, we were suggesting things to clients, but now we find that they are coming to us and asking, ‘are we going to have this?’, ‘can we have that?’ So, I think what we do has changed and what we offer has had to change to reflect that, and that’s been a big cultural shift.
Could you add any specifics about what those clients are interested in?
It’s a question of being able to create the right environments. We give them options to improve their building. If you go back and tell them they can have an environment in which their staff will be even more productive, you can almost see their ears prick up. They are more interested in having an efficient environment in which people could work more rather than just trying to squeeze more people in.
The real expenses are people and head count and if you could make them perform more efficiently because they’re in an environment that is well controlled, they’re much more interested. Buildings themselves don’t need heating because they generate so much heat internally so it’s about cooling, getting it out really. But they are also interested in reusing that heat. So how can you reuse that heat can use it in other ways? We’re looking at different ways of providing systems which will allow heat to be reused.
I think that from the journey we’re on with you, we’ve come to understand a lot about your aspirations, your starting point and where you’re looking to get to. Could you summarise where you see Canary Wharf group going towards that sustainability level?
We’re moving to a point where we want to be seen to be in the vanguard of sustainability and I think in the past we have done a lot, but we hadn’t really communicated effectively. We are keen to be seen leading the way rather than just following the way, that is one of the reasons why we’re looking at science-based targets. We’ve really got to get on and become involved with science-based targets and there is also peer group pressure which is important. I wouldn’t underestimate that in a commercial environment. And it’s not just us as providers of the buildings. The tenants know that they want to be able to say they are in one of the most sustainable buildings in London. I think peer group pressure is a positive factor.
My hobbyhorse on this is valuations because valuations on buildings don’t really reflect sustainability. I think the big swing point would be if the valuation of the building directly considered sustainability issues. If sustainability impacted more directly on the gross asset value that would be a major impact on the real estate industry. Then you really could put pressure to incorporate sustainability features into buildings because it would be a direct feed through to the bottom line.
We’re seeing quite a lot of effort towards trying to create that mechanism where there is a direct relationship between sustainability and asset value. Have you had any thoughts as to how your personal view could manifest itself at Canary Wharf?
It would be difficult for us to be in the vanguard if it meant that our buildings were uneconomic. Somehow you must align the commerciality with sustainability and if there’s a dislocation between the two, either way then it won’t be right. I think that’s one of the most difficult things for developers now.
There is a very strong relationship between sustainability work and how you can improve your bottom line. Is that something that you were able to evidence linking back to work we have done with you on the science-based targets?
I prefer the phrase evidence-based targets rather than science-based targets. To me it’s a broader perspective than science. That is quite critical because we need to be able to show progress. As a group we thought we did quite a lot, but I think we struggled to prove it, that’s why I think evidence-based targets are important. If we have evidence, we can prove that to other people.
Are there any other ways evidence-based targets will benefit you as an organisation?
Employees feel pretty committed to Canary Wharf Group but what we create drives loyalty. Staff feel motivated knowing what we’re producing is a good thing. The sustainability and the nature of their environment is much more important to graduates than people of my generation. If you’re going to produce something that is attractive to the next generation of occupiers, you must try to show how your building is better than another building. And I think that’s part of the evidence-based process.
Do you feel you have a role to play in influencing your tenants in terms of their sustainability journey?
I do, we do try. We have a tenant’s forum and the idea is that we all meet to discuss environmental best practice and we get speakers to talk about that. We try and exchange ideas between ourselves. I think we should do more to try and attract more senior involvement and engagement with the process.
With leadership in mind, the target is nothing without the execution. How do you see your plans and foundations for execution and delivery of those sustainability aspirations that you are building?
We’ve made great strides. We still have a way to go and I think the crunch point comes in on implementation We can l all theorise as much as we like but when it comes to implementation there will be a cost to doing something and that is the moment when the commercial/sustainable balance has to be struck.
When I first engaged with the science-based targets, I was a sceptic. How can we have a target that stretches out 10- 30 years, but I do recognise that you must be able to show progress from where you were and that you have got a plan of where you want to get to.
I understand your point, our findings with you, and elsewhere have been very much around the data. And that the underlying data allows you to build that evidence base and create the business case and make those investment decisions. Do you see that data as part of that journey for you?
We must be able to build a business case around what we’re doing. Otherwise we won’t get it done, so that’s why the evidence basing is so important because we must have some sort of case we can present to make sure that it’s viable. We make presentations to prospective tenants and we are now using sustainability as one of the levers to get people interested in Canary Wharf. That didn’t happen a few years ago.
What are your key objectives? For sustainability and energy and environmental performance in general.
The number one target for me is to get fully on-board and implement evidence based targets. We’re at decision point and we’re now moving towards implementation. So, I think for us that’s going to be a big moment this year where we move from the theoretical to implementation.
“If we’re doing a tender for a big development in London, we absolutely have to prove our sustainability credentials to have any hope of being successful in that tender exercise. That is why the evidence basing is again, is so important because we can show our credentials externally. These tenders are important to the future of the company and the sustainability is becoming a core message as part of that exercise.” John Garwood- Managing Director and Group Company Secretary of Canary Wharf Group.