Suppose I want to find out how many red cars are being driven along a particular motorway on any given day: here’s what I might do. I’ll go to a stretch of the motorway in question, set up a trestle table, then sit patiently, eagle-eyed, pencil and notepad at the ready, waiting for something meaningful to happen. And within an hour ten red cars have gone past…hurrah, so obviously the answer is ten. Well, not quite… In fact my finding of ten red cars is statistically useless because, amongst other things, it doesn’t have a relevant timeline (why an hour, rather than a more meaningful month, or even a year?). And neither is there a meaningful data set, because I haven’t bothered to record the total number of cars (red or otherwise) barreling past my table during that one-hour wait. So who, you might be inclined to ask, would be fool enough to make such fundamental statistical mistakes out in the real world?
Well…you’d be surprised, particularly when it comes to the mountain of statistical studies currently being undertaken in and around the emerging discipline of ESG compliance. Taken as a whole, this slippery tidal wave of statistics now embraces everything from the most thoughtful sustainability project right through to slack-jawed stabs in the dark that make our hypothetical red car study (see above) look like a contender for the Nobel Prize in Mathematics.
So far so familiar perhaps, but that expanding universe of ESG statistics increasingly also demonstrates the emergence of serious tension between (a) the importance virtually all regulators now place on “policeable” ESG compliance standards (especially in the European Union: see, for example, www.finance.ec.europa.eu), and (b) a welcome demise of the sort of ‘greenwashing’ routinely engaged in by companies in the past, in a world where investor and consumer engagement progressively required those same companies (and many more) to take a public position on sustainability and the environment generally. And that was precisely where those slack-jawed, old-fashioned statistical studies came into their own. Take Coca Cola for example…
Greenwashing wasn’t “It”
Coca-Cola delivered a greenwash double whammy when it claimed, more or less at the same time, that its new “low sugar” drink was “a green, healthy alternative” (it wasn’t), and that the company was passionate about reducing plastic waste levels across the globe (it’s not): slack-jawed statistical studies were pushed out by the company to support each of their marketing drives, but the inevitable outcome was a simultaneous removal of Coca Cola Life from supermarket shelves (after nutritionists pointed out it was far from being any sort of healthy alternative (www. energytracker.asia/greenwashing)), followed, in short order, by the company being snagged on a multibillion-dollar lawsuit claiming Coca Cola (along with PepsiCo and Nestle) were responsible for a staggering 14% of plastic pollution worldwide (www.earthisland.org). You couldn’t make it up…
It’s not hard to spot the moral of that sorry tale either, but let me spell it out to be on the safe side…You can prove a lot of things with statistics, but statistics alone can’t turn black into white…or green for that matter.
That’s the unwholesome side of our statistical coin (happily fading into memory): on the flip side, however, we have the extremely appetising prospect of a much more resilient system for ESG regulation…and, unlike some of its performative variants rolled out over the past twenty years, this one has the distinction of actually meaning something.
ESG Regulation: a more secure future
Take, for example, the relatively recent Corporate Sustainability Directive (CSRD), introduced by the European Union last January: this requires designated companies (basically large and listed corporates) to disclose any information likely to be material to their operating risks (and opportunities) as a result of what the Commission broadly describes as “social and environmental issues”. And because this information has to be disclosed publicly, it means consumers and social stakeholders, as well as (not unimportantly) potential investors in the companies and funds concerned, will be able to assess relative sustainability performance. The Directive has since become a central plank in what the EU has inevitably started calling its European Green Deal (www.commission.europa.eu).
And that, of course, is a wide world away from the sort of former greenwashing culture where weasel words and statistics were all too easily enlisted to prove virtually anything in a (then) broadly underregulated sector, still struggling to stand on its own two feet.
Carbon Emissions…Whole Life Variant
Still the ESG story is constantly evolving, and the next statistical nut to be tightened, so to speak, involves taking a harder and closer look at the way carbon emissions are reported in the first place. Whole Life Carbon Emission calibrations (or “WLC”) calculate the total volume of carbon generated over the entire life of an asset, and this seemingly simple (but actually highly complex and important) methodology takes on special significance when it comes to construction and the built environment.
Every vital aspect of the construction (and demolition) cycle has a potential carbon impact on ESG compliance for the project as a whole. And, statistically speaking, the actual carbon footprint of a newly built or refurbished hotel, office block, or major airport, cannot be sensibly deduced simply by reference to the short period of initial construction: any more than the number of red cars on a motorway can be deduced from an isolated one hour slice of time on a single day: you have to look at the whole life cycle.
And when it comes to complex buildings (like hotels) that means anticipating future operational and embodied emissions, so as to gain a full understanding of the project’s likely overall impact: WLC assessment will then play a central part in the initial design process, going on to underpin day to day occupancy and use requirements over the building’s commercial life, and then ending with optimal recycling and material use outcomes following demolition (which, for a typical building, can now be as little as twenty years from construction).
Its this kind of sensitive, long term analysis that has positioned WLC at the forefront of any intelligent analysis of an asset’s realistic climate impact: and that’s why regulators, investors, and consumers also favour it, going forward, as a crucial ESG tool.
Red Ribbon Phoenix Green Hotel Fund (www.redribbon.gi/phoenix-green-hotel)
The Red Ribbon Phoenix Green Hotel Fund was created to respond proactively to rapidly changing market and regulatory conditions in the hotel and hospitality sector: helping to ensure robust design and supply chain specifications to ensure greener and more sustainable relationships. And yes, the Red Ribbon Phoenix Green Hotel Fund is also fully committed to Whole Life Carbon targeting, as part of its mission to reach far beyond the build stage and inform ESG compliance over the project’s full lifetime.
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