SECURING SUSTAINABILITY IS RISK MANAGEMENT

This text has been published in November 2010 on the website of SITRA The Finnish Innovation Fund [www.sitra.fi/en] and also in Finnish and Swedish translations.

The concept of Sustainable Development was not invented yesterday. The Brundtland Report, Our Common Future, was published in 1987 and the intergovernmental UN Conference on Environment and Development signed a roadmap for the 21st century, the Agenda 21, in Rio in 1992. In the past 20 years we’ve learned how to use the web and the mobile phone, but many of us continue to pretend that sustainability is nothing for beefeaters. Was the message wrong, or the messenger?

Today, the writing on the wall couldn’t be clearer: Construction Counts for Climate. No country is going to achieve its targets in greenhouse gas emission reductions unless it tackles the energy challenge of buildings. This message is now gradually getting heard for the simple reason that climate change mitigation translates to energy efficiency, which translates to saved Euros and new business opportunities. Carbon credits can be bought and sold. Money talks louder than any vision of a safer world for our children. However, energy efficiency is not the whole story of sustainable development with its mutually supporting social, societal, economic and environmental dimensions.

Let me suggest another way to interpret the imperative of sustainability in the built environment: risk management. It is no coincidence that big multinational insurance companies were the first private stakeholders to take climate change seriously many years ago. They know how to calculate risks. The giant Munich Re has set the industry benchmark. Some other sustainability risks are more obvious than the seemingly invisible global warming. For example, would it be worth bribing the building inspector in an area prone to earthquakes in order to save money by using less steel for reinforcing? Would a financing institution risk its reputation by funding a developer, which is infamous for poor construction site management and causing pollution? Would investors want to include in their portfolios real estate, where tenants change all the time because of high maintenance costs and lack of public transport? Quite the opposite, a growing number of people want to see an external expert's assessment of the corporate culture of a shareholder company before investing in it.

But how to monitor the implementation of sustainability targets and benchmark them? The trendy go shopping for the cheapest certificate - which is quite expensive. It is also trendy to complain about the strictness of building regulations. However, fulfilling the legal requirements ensures a building permit, which is at least as comprehensive a document! However, no piece of paper is going to ensure a sustainable performance of the building throughout its entire life cycle. Hence, why invest in the ephemeral glory of a logo instead of investing in ambitious performance targets, integrated planning, quality of the processes, and corporate culture of the stakeholders? Why not invest in risk management?