Collaboration and education a pathway for public sector decarbonisation full

ISG brought together some of the key influencers responsible for driving the public sector’s approach to capital investment, upgrade and modernisation of public property assets.

ISG’s head of sustainability, Ross Wood, kicked off the debate underscoring the regional differences in carbon emissions and energy consumption of our property assets revealed by ISG’s Sustainable Buildings Monitor research. “There’s much work to be done on establishing consistent standards for the collection and measurement of data on consumption and emissions, but the real impetus, heightened by the urgency of global consensus from COP26, is the need to tackle this issue quicker than we have been doing, and collaboration to establish the right response has never been more important.”

Demystifying the whole debate around carbon is essential, according to Ross, as is a considered strategy to scale up decarbonisation activity across the public estate. This equally applies to supply chain partners and the support that can be given to accelerate their carbon journey. Concluding, Ross highlighted the growing number of innovative public sector net zero projects that are now reaching fruition and the need to join the public and private sector together to push smart new solutions forward quicker.

Acknowledging the challenge in Scotland, highlighted by its relative ranking in the Sustainable Buildings Monitor, Stephen Vere, programme director – net zero, for Scottish Futures Trust (SFT), highlighted the ambitious targets the country has for the built environment across both the public and private sectors, domestic and non-domestic settings – but recognised the struggle that came with such an all-encompassing pledge. Tackling the public sector first, which is a small element of the wider piece, can show leadership and act as an anchor to show what is possible. “With 23,000 public buildings in Scotland, this can’t be tackled on a property-by-property basis – it needs a systematic approach across estates. Rough estimates suggest decarbonisation could cost around £5-6 billion in Scotland alone. We don’t yet know where this money is coming from.”

Thinking must be about the actual buildings – the strategy shouldn’t all be about the technical side of carbon reduction, but questioning - do we need that building, is it in the right location? The common theme Stephen sees emerging is the lack of capability capacity and the need for new models for delivery to get private sector expertise in early to help shape the proposition through joint ventures and partnerships. “People say there's a lack of finance - it’s not a lack of finance, but a dearth of investable projects.”

In a hallmark of this wide-ranging discussion, Robert Bates, director of estates and facilities at Coleg Gwent, set out the statement that “none of us, if we’re honest, are really clear around the roadmap that we need to take here.” With a complex mix of build types in the education estate within Wales, existing assets form the biggest part of the estate and the country’s key challenge.

Initiatives from the Welsh Government are starting to bring funding to address this problem, but it's a small amount of money and nowhere near what is required. “What would help, is clarity over the time frame that we are working to and what is needed to be achieved by what dates and to make sure that everybody is very clear on these objectives.”

As City Hall relocation programme director for the Greater London Authority (GLA), Milly Kiely-Horn is responsible for transforming the Crystal Building in London’s docklands into the new City Hall – a venue that will be the most sustainable structure in London. This investment is a clear indicator to Milly that the public sector can drive the carbon transformation. With a background in private finance, before switching to the public sector, Milly recognises that finance directors are looking for a return on their investment. “It's always cyclical and you'll see it over a three to five, or eight year period and we have to be clear that many elements of decarbonisation are not going to provide any sense of return over that short term period.”

The influence of the public sector, and the role of the Mayor in London is a hugely significant element to how we engage the private sector and attract funding and financing. The new Ultra Low Emission Zone (ULEZ) announced just before COP26 will change the lives of around 800,000 people over the next few years – Transport for London sits under the mayor’s portfolio as do the wide-ranging property assets that the GLA own – so the ability to influence change is significant.

A financial analogy Milly uses is that “when building or retrofitting, the embodied carbon footprint is a mortgage - and how do you pay that back? It can’t be about offsetting, that’s not a long term sustainable solution, so does this mean that the public sector invests in more wind farms and starts to source that directly?”

Milly senses that the agenda from the public sector is changing from ‘what do I get for my money?’ towards a sustainability and cultural focus with community at the heart of driving development forward. Referencing some of the ways London is reviewing its power dependence, Milly expands on how the Economy 7 tariff is being revitalised in the Capital with a role to smooth out network demand for power and used to heat swimming pools overnight. Photovoltaics will increasingly connect to battery storage, as the rates for selling solar energy back to the market have been cut.

Demonstrating the multi-faceted nature of the issues at play, Milly was mindful of the role that the insurance industry is playing in the use of materials in buildings post-Grenfell. Timber is increasingly under threat from a blanket move by insurers on combustible materials. She questioned how we can change this conversation so we don’t exclude materials that have a role to play in our zero carbon future.

Faye Burnett, associate director at Mace, stressed the importance and availability of asset data. Many organisations and local authorities do not have that central database, which makes next steps around energy information and the carbon value piece – and crucially preparation for funding more difficult. Faye suggests that funding isn’t really the key issue – funding like the Public Sector Decarbonisation Scheme (PSDS) encourages public sector organisations to apply for funding when it becomes available, without always understanding the broader impacts on their existing maintenance budgets.

The other real issue on the ground right now is in terms of resources. There is a pressure on internal resource within the organisations themselves. They are struggling, but so are supply chain partners. “There is a lot of people movement within the industry at the moment and individuals are taking all of the knowledge and expertise with them.”

Faye flags that 90% of all public and private sector buildings in UK cities were built before 1990. That equates to around 30 million buildings, of which around 28 million of these will need to be retrofitted by 2050 in order to meet the government/UK Green Building Council target. “How we get there efficiently is where the construction playbook really comes into its own.”

ISG’s strategic advisor for education, Jane O'Leary, has a foot in both camps having spent 25 years in the public sector before moving to ISG earlier this year. In South Wales, the public sector has in many ways been ahead of the curve, recognising that in building for education, but more broadly across the entire public estate, that it’s not just about transacting to ‘buy’ a building – it’s so much more than that.

According to Jane, “Wales recognised the importance of social value – the community benefits and how it’s about stakeholders.” This is completely consistent with the debate around carbon

Jane is confident that new build is the easy part – “shortly we’ll be unveiling the first net carbon school in Wales at Llancarfan Primary School.” The real challenge comes from existing property assets and how the retrofit agenda needs to address those issues around cost, logistics and supply chain preparedness. “We can only do this together and must work collaboratively to come up with those solutions and that's why these forums are so essential to knowledge sharing and developing ideas that are about doing something different.”

James Foley is Alliance Leisure’s commercial director and was keen to stress a trio of challenges and opportunities – “How do you consider the sustainability agenda, with the priorities of asset regeneration alongside the considerations of societal change in relation to wellness and health?”

Using public sector leisure as a specific example, swimming pools are incredibly carbon hungry and can take up to 30% of a council's entire carbon emissions – especially as many facilities can be beyond end of usable life. James stresses that a plan is needed that recognises the differential impact of facilities across the board and starting constructive dialogue on upgrade and mitigation. “As we emerge from the COVID-19 pandemic there is a wellbeing shift, and we have a responsibility and a unique opportunity to pull all three elements together to make our portfolio of facilities fit for purpose and fit for the future.”

It’s also really important to look at how carbon literate we actually are. “How carbon literate and passionate are organisations? How do we collectively make sure that the partners we work with adopt the same principles?” Carbon literacy training is a key component and something that Alliance Leisure is embracing with its whole team.

On the issue of whether funding should be led by the public or private sector, Stephen Vere was clear that the scale of the challenge meant this agenda cannot be delivered by the public sector alone. “The opportunity is there to use the demand from the public sector and the grants that are available to leverage private sector expertise and finance to deliver at scale. Providing visibility of subsidy to create a robust and investable business case. Funders are desperate to find investable projects – the challenge is to make projects attractive enough to secure that investment.”

Jane O'Leary definitely sees a clear role for funding from both sides, but what is needed is a different response from the private sector, and that's what she has been the catalyst for creating in the Vale of Glamorgan. The Llancarfan Primary School will pioneer carbon soft landings and ISG has committed to involvement with the building for five years post completion to ensure the school performs exactly to the designed specification. “We will be monitoring the building intensely during this period and this is what the private sector can bring to the table – but there needs to be a recognition that funding must evolve to support the transforming role of the contractor in optimising property assets for efficiency and therefore carbon reduction.”

How do we hold public leaders to their commitments? – well Milly Kiely-Horn was firm that whilst individuals can hold transitory positions, the responsibility of government was to set the frameworks, the governance, the regulations.

James Foley stressed that the debate has moved quicker than the supporting infrastructure that underpins the procurement and design process. “It goes back again to that carbon literacy factor, at both client and contractor side, and the focus that both have on navigating a pathway to net zero from the outset of a project.”

Stephen Vere flagged that the creation of revenue streams will naturally attract private sector investment – put simply the creation of demand. “Investors want to know there is a long-term revenue stream to secure their investment to make a return, and one way to achieve this is through regulation. Do this across the board from public, domestic and commercial settings and you can create that demand assurance, so there is a future pipeline of projects and revenue streams.”

Regulation is happening in Scotland both at a UK, Scottish and local level, but there is a question over the pace and scale and whether it will be sufficient to drive the investment required.

In response to the question of how we best retrofit our estate in time, Ross Wood ventured that we need to make retrofit more attractive than new build – this could be achieved through regulation or legislative levers, but it needs to redress the current imbalance. “We need to ramp up those deep retrofit projects, like ISG’s ground-breaking scheme for the Cambridge Institute for Sustainability Leadership (CISL). Here there is a public/private partnership driving innovation and then looking to share that knowledge widely.”

The key is how we use that building as an open and transparent source of knowledge. Look at the successes but also where there have been challenges, so we can iteratively improve. “We need to be more open as an industry to collaborate and not just share our successes but learn from those elements that didn’t go to plan – this is how we can move forward through an open and honest reflection of our projects.”

Ross assesses that emphasis needs to be applied to responding to the changing landscape around the skills required to deliver the decarbonisation agenda. “Resourcing is a major issue across our industry – so how do we quickly ramp up the skills and training vital to deep retrofit schemes? It’s clear that we need support and investment to accelerate this process to match the demand we know is coming.”

Faye Burnett wants us to consider the social carbon value of an asset to reflect the true community social value of public buildings. “A library may have limited ‘financial value’ compared to a shopping centre, which has a much stronger case for energy saving investment, however a library’s community social value is considerable. We need to think differently about our assets. Further it is about widespread behavioural change and I’d echo the sentiment around openness, transparency and innovation as key to our sector’s transformation. An idea I heard recently was to reinvest the public sector carbon offsetting funds into innovation practices within the private sector – ideas like this won’t be considered until we have policy and systemic change.”

Returning to a point championed by all contributors, James Foley is convinced that education is key to how we shift the dial. 

James believes that it is up to us to educate on value, not cost. Otherwise, the focus will always be on the cost of the project, not on the benefit in the wider definition of value.

Expanding on the education theme, Jane O'Leary recognises the imperative for public sector partners to understand the construction playbook and actually use it. “The construction industry and supply chain is not only up for the challenge but recognises this is the future of our sector. We want to do things differently, but we need the public sector to embrace the principles on this journey. During the pandemic we did things differently and the fantastic achievement of the Nightingale Hospitals – operational in just 25 days, showed how we can step up to the challenge. We must not slip back into the old ways of doing things now we have demonstrated how things can and should be done differently.” 

Ross Wood added that the Ministry of Justice’s Alliancing programme is a shining light in radical procurement approach with collaboration and transparency at its heart. The whole premise being that four normally competitive Tier 1 contractors, alongside consultants and supply chain partners are sharing lessons learned and innovating together to deliver a major capital works programme. All looking to maximise value and benefit to the approach – Ross observed – “It’s been eye opening to see how willing we have all been to commit to transparency and knowledge sharing so we all improve together.”

In closing the session, there was clear consensus that the public sector can, and should take the lead to set targets to ensure the approach towards net zero is properly regulated and that data and knowledge is openly shared. But these goals will not be achieved without private sector investment and innovation. The roadmap must be developed through partnerships and the scalability of the approach can only be achieved at the speed necessary to hit our commitments through collaboration. Getting this formula correct provides the pathway to regenerate and enhance our public estate across the UK, but viewed at a wider scale, to make the step change needed to ensure a positive future for our people, communities and planet.