Tackling the Climate Impact of Commercial Property
How can IoT help commercial building owners and insurers understand and manage their carbon footprint?
There's a growing opinion about the transformative power of IoT data in commercial properties and industrial sites - not only to help mitigate risk but also to drive real change toward sustainable behaviours in the built environment.
Not only is it vital to understand how to use the data from IoT sensors in multiple ways, but real action is needed now to drive change. This cannot be done alone by any single organisation. Collaborating across a range of stakeholders and actors is critical. The insurance industry plays a pivotal role. But how do we bring all the key stakeholders together? Is the pace of change fast enough?
Our recent Sense webinar explored this hugely relevant topic with a fantastic line-up of panellists.
Q1. Why are we talking about this topic in commercial property? Why is it important?
"Climate change, sustainability and ESG are each complex and interconnected aspects that are relevant to the conversation on Iot data. The built environment accounts for 34% of UK emissions, so it's key that the insurance industry focuses on this area. It’s also important to be mindful that not only do buildings need to be fit for purpose they also need to be resilient throughout their lifespan. They must be built to last and be adaptable to future needs, so it's important to have a holistic approach, and not just look at the narrow targets."
"We're bringing together public policy and science along with the change that is needed to evolve. There are very high expectations of sustainability that management teams and boards need to deal with. We’re also at the point of moving from corporate social responsibility to ESG – and whilst those two are companions, we're seeing the requirements becoming increasingly sophisticated."
"I think when you look at the drivers behind the insurance industry and what we do as a sector, it's all about identifying risk. What we've seen in both our work with clients but also on a wider basis, is that those risk events lend themselves to waste - either from an energy perspective or in the way in which the building is run and operated. If you're identifying risk (and risk mitigation) at the front end as insurers, and helping clients to deliver on that perspective, you can use that data to deliver on the ESG drivers. IoT data and information is readily available within a lot of the buildings, even in the older ones in the various estates that we are operating. So, even though the work we do is from an insurance perspective, we see the opportunity to use the data for multiple benefits, based around a wider sense of drivers, such as climate, sustainability and ESG."
"We're in the middle of a transition right now - from an unjust, extractive economy to an equitable, regenerative economy, and it can be hard for us to see that because we're right in the middle of it. The insurance and capital markets have up until now operated on an historical context - they like consistency and predictability of historical data. We’re now increasingly entering a world of complexity where we need to be predictive and make real time decisions. That's why this conversation on data is so important."
Q2. The UK was the first major economy to pass a net zero emissions law. What does this mean for commercial property owners and the risk management community?
“There is increasing pressure to move from voluntary disclosure to mandatory reporting driven through law and regulation. This brings the need to capture, measure and report on the use of all forms of energy carbon, and everything around the way in which buildings are managed, whether it's the people and the operations around that, or other factors. Ironically enough, the building industry is leading a lot of the reporting. I think a lot of grassroots awareness has been in existence in organisations in the tactical facilities management, but it hasn't, until relatively recently, had visibility at a strategic level. Certainly, when you're looking at regulatory reporting that is going to be a key area.”
Q3. How can you link IoT and other such sensor data to using it to solve for other drivers such as sustainability, climate and ESG. Is it a big leap?
"There is data in the building management systems for a lot of the buildings (even buildings that are 25-30 years old) that is available to use for better decision making. There is a huge opportunity to capture that data and use it, possibly also combining with other data where there are gaps, to feed both the insurance risk agenda as well as the broader agenda on climate and decarbonisation. This could be mitigating losses and understanding in real time the risk events from an insurance perspective, but also using that same data to report against the various drivers on sustainability, climate and ESG."
"I really appreciate the focus on the insurance industry in this discussion, but far too often, we focus only using the data for risk reduction or risk mitigation. Using the data for ESG is important in this conversation – and certainly in my role as an architect and a planner - because it's going to be the language between the insurance companies, the investment industry and developers. We can design systems that are going to help us in how we plan for and design the built environment. We can then ask and answer the questions on: Are we accomplishing our goals on ESG? What is it that we can measure and manage in this data to understand how we are achieving the goals toward societal benefits - Rather than only reduce risk and aggregate wealth in the insurance complex?"
"Once people have IoT data in a format which is easy to digest, this leads to greater transparency which facilitates the whole sustainability discussion and enables effective and better informed decision-making. It provides more meaningful data rather than just looking at what we would traditionally assess within insurance, which in turn means we can be more innovative and provide that wider value into the industry."
Q4. Will measures coming from regulators have an impact and drive genuine change?
"I think they will set the direction. On some of the boards I sit on, the conversation is far advanced. What we really need to talk about is climate resiliency. We tend to default to power when we talk about this topic but we also need to separate out other aspects such as indoor air quality and safety using sensors, water detection in terms of usage and leakage, material use and recycling etc. If you roll all these up you can develop a common resiliency or common footprint, that we need to deal with in real time, using data."
"We’re at a point in addressing climate change where we are starting to rely on regulation and policy. We need to ask if that is what we want? I would just question our reliance or our belief that regulation and policy are going to save us. There are other drivers that will drive the change such as the economy and changes in the economy."
Q5. What does this mean for employees coming back to work in offices as part of Covid 19 return to the office plans?
"Understanding the indoor environment from air quality, water and resources is very important in our practice. We do a lot of work with Google and in our own space that we designed for ourselves. We've incorporated the RESET standard, which is the international benchmark for understanding indoor air quality as it compares to outdoor air quality. Covid is requiring us to rethink that in the ability to reduce our exposure to viral loading."
Q6. Can the same sensor data be used for both risk mitigation and reduction, as well as better management of properties in terms of environmental impact?