Covid-19 has naturally focused its attention on the quality and safety of indoor spaces – but this has been a long time coming, with studies illuminating how the buildings we inhabit for work or residence and the air we breathe, can help or hinder our daily health and performance. And while the last 24 months have been a time of immense challenge, it has also been one of opportunity in this space. Today, retail has a unique opportunity to rethink the concept of retail space and experience, to design the blueprint for the future of retail.
Building new operational guides and planning for the built environment, the retail sector is creating a significant opportunity for building owners, managers, and occupants to create smart, digitally connected spaces with the well-being of people at its centre. It has also fast-tracked digital transformation and the commitment to creating truly safe, sustainable and smart spaces with resilience built into key fundamentals. Retail leaders must become architects of a new model for transformation to adapt then enliven more relevant and in-demand experiences to outperform peers.
As such, the retail property industry has a robust future, provided it has a clear operational strategy – one that successfully harnesses three change drivers: environmental sustainability, the social element which incorporates digital transformation, and technology as well as ethical business conduct through governance.
Driving ESG impact
The success of the retail business is its resilience, but resilience is only achieved when business underpins its commitment to ESG (Environmental, Social and Governance). Through such thinking, property owners can reduce exposure to commercial risk and asset obsolescence by ensuring that their assets are future ready as everything is inextricably linked. Gone are the days when business resilience and success was measured solely by its profitability.
The E in ESG was once upon a time downplayed.
The E in the ESG triad is equally the most important in achieving resilience, with growing studies showing that investors who are focused on companies with sustainable operations, an integral part of strategic thinking, often perform as well or even better than those who focus on conventional growth.
The commercial and retail property sector has made significant strides in its commitment to minimising its environmental impact, through its efforts to protect and preserve our natural resources. Liberty Two Degrees (L2D) is one such company that has made bold commitments to its sustainability targets to achieve; net-zero waste by 2021, net-zero water by 2025 and net-zero energy by 2030.
All the resources to achieve such targets exist
today for any company, dependant on whether they are willing to invest to achieve them. Part of what investors analyse in establishing the sustainability of companies, is the business’s ability to continually improve their environmental impacts, implementing sustainable and long-term cost savings and a reduced footprint.
As a business case, Eastgate Shopping Centre reduced its carbon footprint by over 16 000t of CO2 emissions annually through an investment in a solar plant, which will generate 1.8MW of energy. This will power the centre’s lighting, air-conditioning units, lifts and escalators.
Other initiatives available within the L2D portfolio include solar trees, which continue to provide an efficient option for energy generation, the implementation of rainwater harvesting systems, dual plumbing, condensation water harvesting and advanced low-flow toilets – which in total have saved 60-million litres of water throughout the L2D portfolio in a single year.
When it comes to environmental and climate protection, business both contributes and suffers. With targeted investments, business can actively help reduce harmful emissions and lower consumption of natural resources. It is to be keenly noted that climate change increasingly affects business-model development. The changes in consumer behaviour, the increasing changes in regulatory requirements and new climate-friendly technologies are changing the composition of global markets – placing much significance on the mantra of adapt or die.
Utilising tech to everyone’s benefit
And what about technology? Technology is rewriting operating models turning challenges into opportunities for improvement and innovation, which is likely to pave the way for years to come. Cloud computing is helping to reduce the amount of carbon dioxide emissions, potentially preventing more than 1-billion metric tons of CO2 from 2021 through 2024, according to a forecast from International Data Corporation (IDC).
Future smart spaces
From the use of AI technology to foot-counting systems to ticketless parking technologies and personalised experiences available in the retail space, consumers are well accustomed to these. It is therefore no doubt that the responsible capturing and collation of data is of utmost importance for consideration by businesses who use such technologies. Responsible practices should be ingrained in the culture of each business operation to avoid social harms.
While the industry offers diverse opportunities for the use of technology to drive efficient ESG practices, some retail players have yet to take advantage of such technology to analyse behaviour, get closer to customers and utilise technology for optimised performance and cost reduction. While every retail destination is unique, technology should be helping to build a complementary strategy for those managing the space, those occupying it and those enjoying it.
The influence of the other two factors in the ESG triad should not go unnoticed. Good corporate governance (G) and social engagement (S) often also influence and reinforce a company’s efforts to protect the natural environment. From an investor perspective, the S can also have a positive effect on the portfolio’s risk profile, while good corporate governance (G) can be an additional positive influence on performance.
A strategic and long-term focus on the social element provides a unique opportunity to help rediscover the role of our industry in society and our purpose as built environment owners and managers.
Understanding the G in ESG is critical, as governance risks and opportunities will likely increase as social, political, and cultural attitudes continue to evolve. Governance, as a license to trade, is vitally important for a sustainable future and should not be conducted in a tick-box exercise manner. Governance, which ensures ethical business conduct and balances the requirements of all stakeholders, plays a significant role in policymaking for sustainable practices in business conduct and achieving efficiencies.
When looking at the retail industry we are taken to an industry future that has never looked better – with Good, Smart, Inclusive and Safe Spaces at their core.