Digital twin technology and the built environment

A digital twin is a contextual, data-driven model of a physical object. It is a system of systems (SoS) built on the Internet of Things (IoT) and AI technology. While traditionally used in manufacturing, digital twins are now used in many other contexts, particularly in buildings.

Built environments are gaining unprecedented operational efficiencies from digitalization. A digital twin enables users to manage their assets proactively by simulating conditional changes and quickly surfacing inefficiencies. In doing so all building stakeholders can work in sync to extend its lifespan while providing a more comfortable and ecologically sound environment for occupants.

What is a digital twin?

Simply put, a digital twin is a 1:1 virtualized version (or “twin”) of a physical object in time and space. A digital twin can be described superficially as a highly complex digital model of an object. If that object is an engine, the twin incorporates every single component from screws to chassis and entirely replicates its functions. If that object is a building, it does the same for every component of every asset, all its systems, processes and environmental data (temperature, humidity, AQI).

A critical point to note is that a digital twin is not just a 3D snapshot from one point in time. The 3D model is only the top layer, a visual interface for a much deeper and more powerful system that actively monitors, structures, and transmits rich, real-time data occurring in the physical space. Whatever the object does, and any changes which occur, are quantified and precisely represented in the digital twin, which continually feeds data into AI applications and machine learning.

A short history of digital twin technology

Although digital twins are considered an emerging technology and have only recently begun to gain attention among the general public, their history is much longer than might be expected. NASA implemented the first rudimentary digital twin during the 1970 Apollo 13 mission. In the early 1980s, Dassault Aviation pioneered some of the first commercial applications of digital modeling for product design and testing, subsequently expanding these early endeavors to a widening range of uses.

Since then, digital twins have continued to evolve, becoming vastly more powerful and sophisticated. Today, a digital twin can be created with an almost limitless number of applications and scopes. For instance, the entirety of Singapore now exists in parallel as a virtual Singapore.

Virtual twin Singapore

Virtual Singapore, made using Dassault Systèmes Catia

Digitalizing built environments

Digitalizing the built environment in some ways is more complex than a digital twin of a rocket ship. That’s because a digital twin of a building is more than just a model of the structure itself. It integrates every system, object and process occurring within it. Asset monitoring, operational management, energy use – all systems within the building feed data into the digital twin. The digital twin building is a system of systems, which takes all siloed data into a central platform powering an interactive, scalable, and actionable single source of truth.

Digital twin application in the built environment is the logical culmination of previous developments in smart buildings and PropTech. The functional capacities of the built environment are exposed and digitalized, enabling a wide variety of use cases. With this powerful tool, building management is no longer limited by what is readily apparent but regulated by a single source of truth, fed by real-time data. And the market is noticing. Digital twin usage in the built environment is exploding in growth currently and is predicted to reach nearly $36 billion in value by 2025, an increase of nearly 1000% since 2019.

Building a digital twin building: BIM, BAM, BOOM

Architects and contractors have been using 3D technology to design and construct buildings and other structures for decades. Today, around 2/3rds of all architecture, engineering and construction firms in developed markets are working digitally using BIM (building information modeling) software. When integrated with Information and Communication Technology (ICT), this is the beginning of the single source of truth.

Dassault Systemes Catia platform

Dassault Systèmes CATIA

BIM is the 3D blueprint of the structure created during the design phase. It is a complete mapping of all physical aspects and functional systems, such as lighting, HVAC, and mechanical, electrical and plumbing (MEP). A BIM is not only a powerful tool for architects; it also offers benefits to engineers, like the ability to share data and collaborate with building designers. Collaborating digitally with a single source of truth streamlines traditional mires such as compliance and compatibility checking.

After the design is complete, the construction stage also benefits from the data and technology handed over from the BIM. Many contractors rely on BIM data to help optimize construction processes, known as a Building Assembly Model. BAM continues to build on the BIM database created during design, bringing in new information related to budgeting, materials, timelines, inspection data and more.

Using the BAM as the single source of truth and collaboration platform significantly decreases construction costs and timelines with enormous gains in efficiencies and accuracy. For example, ARUP saw dramatic cost reductions in planning and executing Queensferry Crossing upgrades for Transport Scotland in 2016. In partnership with Jacobs Engineering UK, ARUP leveraged BAM and BIM systems to deliver an incredible cost reduction from 4.2 billion pounds to 1.4 billion in budgeting, with additional savings in project management.

Queensferry digital twin

Queensferry digital twin construction

A 67% reduction in costs is impressive, but when put in perspective of the total lifecycle cost of a building, construction accounts only for 1/3rd (Source). That still places the lion’s share of the financial burden in the operational phase. This is what led building and property managers to utilize BIM as a tool for operations. At this stage, the model is known as a Building Owner-Operator Model (BOOM).

BOOM offers more potential to increase operational efficiency in the built environment. After construction, the BIM can continue to serve as a single source of truth for processes such as asset management and maintenance. It can track the lifecycle of various parts, the installation dates, physical properties, servicing history and more. As a BOOM, the system acts as a record keeper, warranty manager and maintenance scheduler.

What is the difference between BOOM and a digital twin? Real-time data, simulation and actionable insights.

The difference between BOOM and a digital twin is the real-time virtualization of the building and all its systems and processes. To do so requires linking the entire building components, assets, systems and processes, with IoT. It also requires migrating the BIM into a platform capable of receiving and processing data.

Once linked, the digital twin aggregates data from all building processes and operations and replicates them visually on the BIM. All asset and systems performance data, maintenance records, environmental data – everything perpetually feeds into the twin. Digital twins also leverage the power of AI to help managers and owners optimize daily operations by simulating conditional changes and turning raw data into suggested actions.

Akila Asset platform

Akila Asset platform

The power of the digital twin rests in its dynamic data quality and its ability to fuel machine learning algorithms and control. These algorithms are capable, for example, of optimizing power use based on seasons. China Energy piloted a digital twin system for managing power plants and was able to realize annual cost savings of 4 million RMB per generator unit through algorithmic management based on BIM data—optimizing for power demand differences in summer and winter automatically.

Smart from the start…or better late than never

Every building has a lifecycle, moving from design, engineering, construction, use and eventually replacement. It is more convenient to create digital twins for buildings constructed using BIM (and BAM and BOOM), but they can still be made for existing buildings. IoT installation and retrofitting allow digital twins to be developed as part of a building upgrade plan. A BIM can also be created for existing and heritage structures using 3D scanning technology and original blueprints. Considering most of a building’s lifetime costs come from its operation, digital twins still serve their purpose for built structures.

Using digital twins in the built environment

Digital twins are an exciting technology because they enable dynamic and powerful building or facility management. The ultimate purpose of the digital twin is to manage costs via surfacing a contextual, data-driven model of the building. There are a variety of ways this model is used to enhance building operations.

Growing plateaued operational efficiency

Constant streams of data fed into a single source of truth model of operational intelligence enable actionable insights into business operations. Digital twins link operational data across building systems and processes such as energy use, maintenance and occupant health. It surfaces multifaceted insights that might look like this:

  • If you don’t fix this broken air purifier, it will lead to x amount of energy increase, x amount in risk of viral spread.
  • The air purifier is predicted to have a serious issue in x amount of time, leading to increased energy use and causing x amount of excess carbon

The digital twin is the visual symbiosis of all building systems and processes, unlocking unprecedented decision-making power. Which areas of operation are lagging? Which areas of operations are excelling? The built environment can speak to you via digital twin and offer compelling new information through simulation and advanced analytics.

Cutting carbon footprints

According to Ernst and Young, digital twins can realize up to a 50% increase in sustainability and resiliency for buildings by reducing emissions. It can do so by integrating energy management into every level of a building ecosystem, from assets to systems to processes, and leveraging AI algorithms to optimize energy use.

Improving occupant satisfaction

The human-centric goal of a digital twin building is to improve user wellbeing; in the case of a building, the occupant. Data surfaced in the digital twin, such as environmental data (air quality, cleanliness, etc.), building space and infrastructure use, and maintenance and asset management provide actionable intelligence that can improve the occupant experience in a building. A building backed by a digital twin is a visible, built manifestation of a commitment to occupant comfort and environmental responsibility.

Akila digital twin

Akila digital twin

Transitioning from reactive to proactive operations and maintenance

Building operators and facility managers commonly use Computerized Maintenance Management Software (CMMS) to manage and optimize maintenance processes. Digital twins go further by integrating the functions of a CMMS and then contextualizing asset information and maintenance history with wider building operations. This provides more insight into the why and how while surfacing more actionable insights than just a CMMS. It also opens up the realm of predictive maintenance by running all data through AI algorithms, which can identify at what point in the future a given asset would need repairs in regular use and offer the same for simulated alternative conditions.

Improving the efficiency of new construction

Implementing digital twin early in the lifecycle of a building allows for the simulation of new equipment and architectural changes at each stage to optimize the assembly of the building. Building Assembly Modelling is a key component of a digital twin approach used in sustainable construction and operations.

Full Business Digitalization

Transitioning to a modern model for business intelligence and operations requires, almost definitionally, the transition to a single-source-of-truth model which a digital twin provides. The SSoT model has innumerable benefits for business processes, but it requires a constant and steady input of data to be usable.

Optimizing building operations using digital twin simulation

The ability to simulate equipment, infrastructure and environment is one of the high-powered capabilities of a digital twin. The digital twin can use current data to forecast interoperability issues, energy use, airflow, foot traffic and many other aspects of building use data. It also enables the user to project the multitude of effects on operations arising from environmental, infrastructure, or equipment changes using simulation models. These models empower stakeholders to make accurate and informed predictions about operational efficiency and forecast and eliminate bottlenecks before they appear in the real world.

Doosan wind farm digital twin

Doosan wind farm digital twin

Businesses such as Doosan Heavy Industries are already doing so. At Doosan’s wind farms, physics-based simulation is used to minimize waste in planning and construction and machine-learning algorithms adjust operations to match ideal performance models. Through the digital twin, the lifetime performance of any building becomes a manageable and optimizable asset.

Scaling digital twins to manage property portfolios

Up until recently, PropTech has been thought of as a way for homeowners and real estate owners to manage their equity and unlock the value of their property (AirBnB, etc.). Now, the understanding of PropTech is expanding as digital twin technology is fundamentally a way to increase property value for owners and occupants—especially when applied across a portfolio of assets.

Because digital twin represents a platform and not just a single-purpose tool, it enables scalability, meaning the digital twin platform for one environment will be the same core system used to manage another. The benefit of scalability makes multi-property management efficient and rationalizes smart building investment. Because you invest in a platform, your smart building strategies are more future-proof Digital twin enables dynamic, real-time management of diverse property portfolios with ease and simplicity. Optimizing property use via these powerful platforms reduces costs, avoids unnecessary costs, and links the totality of the built environment to decision-makers in a comprehensible way.

The built environment becomes virtual

Digital twins are the penultimate transformation of modern building management software and tools into a holistic, full-environment platform, primed for the future. It represents a new approach to management that is oriented toward continuous optimization and growth. Digital twin technology in the built environments signals the entering of a new era of digitalization and a strategic shift towards data-backed decision making to improve costs, operational efficiency, environmental impact and the human experience.

 
 

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Serious about sustainability? Don’t overlook your supply chain.

Businesses that invest in sustainable supply chains are also investing in resilience, transparency, and efficiency. In the era of ESG, it is the key to survival. Supply chains contribute significantly to a business’s carbon footprint and social impact and speak directly to the priorities and efficacy of corporate governance. Furthermore, sustainable supply chains deliver value on several fronts, not just for your own business, but also for your clients and the environment.

What are sustainable supply chains?

Many of us first think of renewable energy or recycling when we hear “sustainability”—signifiers of responsibility and stewardship. Supply chains are often overlooked in this regard, even though they are responsible for up to 90% of an organization’s greenhouse gas emissions. However, sustainability in the supply chain is even more multi-faceted, incorporating factors such as social responsibility and corporate governance, aligning almost perfectly with ESG criteria.

A sustainable supply chain is composed of four key traits:

Low carbon

The cornerstone of a sustainable supply chain is decarbonization. Each stage along the chain offers an opportunity to reduce carbon impact, from raw materials, production, suppliers and distribution. This might mean opting for EVs over gas-burning vehicles, choosing energy-efficient appliances for the office, or using biodegradable/recycled products in the disposables category.

Supply chain managers who identify where and how to cut carbon are setting their business up to be more sustainable at every stage of operation that comes afterward – and ultimately preparing their company to improve compliance and ESG scoring.

Low waste
Similar to reducing carbon impact, supply chain or procurement managers play a direct role in reducing waste. Inventory and SKU management is key to reducing financial and material waste (as well as carbon impact from shipping!). A low-waste supply chain strategy will have more precise replenishing and rebalancing practices. It will also actively move towards digitalization as much as possible to reduce paper waste.

Socially responsible
Businesses who prioritize sustainability must consider all factors – including social and corporate governance – when choosing suppliers and ensure they engage in fair-labor practices and anti-corruption policies. Doing so contributes to overall sustainability by safeguarding the integrity of the supply chain when it comes to regulatory compliance and meeting the expectations of clients and customers. It is also an essential consideration for corporate or ESG policies that measure social impact.

Transparent
Most importantly, companies that engage in supply chain practices need to show all of the above clearly and transparently with data. If businesses used to get by on verbal claims alone in the past, that era is quickly ending. Governments, customers and investors alike are all demanding documented compliance to international sustainability and ESG standards.

Benefits of a sustainable supply chain

Moving to a sustainable supply chain will bring a measurable positive impact to the internal functioning of a business as well as its external perception by customers, investors and the public. Companies that push for a sustainable supply chain are creating value on three fronts: for their business, for their clients and for the planet.

Assembly line for solar panel supply chain

Down-chain sustainability cuts costs, drives brand value and reduces risk

Businesses that move towards a more sustainable supply chain can see a variety of benefits. These benefits extend to long-term cost controls, improved brand value and risk mitigation.

Costs are often the number one obstacle to businesses investing in more sustainable supply chains. Because sourcing more sustainably tends to raise costs, businesses are more hesitant to overhaul their procurement practices. However, according to the World Economic Forum, sourcing sustainably can cut costs by up to 16%.

The main ways that businesses can see cost reductions are through the reduction of energy use and waste. Choosing to procure more energy-efficient materials, from vehicles to appliances and lighting, saves much more in the long run. This is particularly relevant for buildings, as 85% of the lifecycle costs are operational. Investing in sustainable materials and construction, which may be more expensive upfront, can create long-lasting sustainable value.

Secondly, businesses that invest in sustainable supply chains will see value creation in improved brand reputation. Whether you are a retail or service business, B2C or B2B, consumers, clients and investors are demanding more and more that the places they choose to spend their money are operating sustainably.

Last, a sustainable supply chain is also a compliant one. Due to the nature of the globalized supply chain, choosing a supplier from regions with different regulations carries some risk. Partnering with a supplier without taking issues like labor rights, particularly around forced and child labor, into consideration can have extremely detrimental impacts on brand reputation and compliance, which can lead to financial consequences.

Making a sustainable supply chain creates value up-chain for your clients

Corporate procurement increasingly relies on internationally standardized business metrics to evaluate ESG criteria. These criteria extend to sourcing and procurement practices and can make or break a business relationship. Just as businesses will need to stay ahead of developments in regulations and ESG standards, suppliers will need to stay abreast of changing corporate vendor guidelines.

These standards are evolving rapidly, and top multinational firms are requiring more and more extensive compliance. Funds across Asia have adopted increasingly stringent ESG guidelines as their economies have matured and developed. The World Business Council for Sustainable Development has partnered with the Singapore Stock Exchange to report ESG criteria to investors.

Institutional weight is rapidly moving behind sustainable supply chain practice. The European Commission now requires sustainability reports for corporate vendors and registered procurement sources. UN groups such as the International Fund for Agricultural Development require sustainability assessments for procurement. Private firms are also ramping up their sustainability policies, with companies such as Daikin in Japan and P&G in the US making commitments for sustainable business practices.

Institutions are beginning to organize industry-level certification schema for different supply chains ranging from textiles to tea to rare earth metals. Consumer preference in repeated surveys from NielsenWeForum, and Ipsos shows that Asian consumers value sustainability. As incomes rise and certification standards become clearer, the market will move to back up these preferences.

The advantage is to the firms that move first and fastest to become truly sustainable—first-mover advantages will wash away under scrutiny if they try to greenwash.

Sustainable supply chains are good for the planet

Meeting ESG guidelines for your product and maintaining a fully functioning sustainable supply chain is a greater feat than just improving efficiency, reputation, and your bottom line. It means reducing carbon footprints and waste at every level of business.

Meeting sustainability requirements for business means less exploitative labor, more reliable and future-proofed suppliers, and a safer, more stable planet. The migration of your business to an ecologically friendly practice means downstream cost reduction and risk avoidance.

Not only does your company benefit from improved efficiency, but the improvements to your carbon footprint and sustainability profile also become direct benefits to your ESG rating.

Steps to a sustainable supply chain

Implementing a sustainable supply chain strategy requires optimizing across multiple aspects of the supply chain using a diverse array of practices. Developing and maintaining a strategy will require a strategic, whole-business approach. Depending on the industry, this can manifest as local sourcing, data-driven procurement, circular economy of recycling, or digitalization.

While demanding transparency, data, and communication from contractors and suppliers is essential, it only kicks the can down the road. Long-term sustainability for any business has to begin at home.

Logistics truck working in supply chain

Step 1: Audit

The most direct and impactful method is to audit your business’ supply chains and to begin looking directly at the teams that comprise your business, from facilities management to client-facing work.
This process will bring unsustainable practices to light and necessitate change. Yet, it has the benefit of identifying which of your practices are currently sustainable—you may have solutions and sustainable practices you didn’t even know about!

Sustainability doesn’t just begin at home—it may well have already begun. Your business may well have high-quality sustainable practices now that are worthy of promotion and emulating. The goal of an audit is ultimately to find and implement sustainable practices as well as eliminate unsustainable ones.

Step 2: Connect

Every team has to be held accountable in this process, your profit centers, as well as your lagging teams, must identify what their sustainability profile is.
They must align with corporate ESG strategy, and define their goals, values, KPIs, and processes to meet the strategy. What are their vulnerabilities? Are there structural changes to be expected in the coming years due to climate change? What are the impacts of sustainable practices on these teams?

A sustainable supply chain connects the impacts and purposes of your business between suppliers, you, the client, and the community at large. Your business has to have a prosocial, pro-community impact on the world. The first purpose is to ensure an enduring system of return in your business. Your migration to a new paradigm of sourcing is meant to have enduring impacts.
Your business has to develop a new paradigm for sourcing that is resilient, renewable, and low-carbon. Managing these transition costs can be achieved through a whole-operation digital transformation.

Step 3: Digitalize

Any modern sustainability strategy must align with ESG reporting standards. This often means that a full-scale digital transformation is necessary to capture and report the relevant data. This transformation must also extend outside of the home office and incorporate suppliers. Without total feedback from all aspects of the business, the strategy will fail.

A single source of truth is the fixed star of sustainability, around which all practices turn. The purpose of the single source of truth is quite simple. You must maintain stable, centralized business knowledge that evolves. Without this, there is no connection between strategy, action, and result. Without this, business growth is impossible.

Sustainably sustainable

Modern business demands a clear vision—knowledge of the total business environment and a strategy that takes reality in plain light and builds a continuous cycle of improvement. Transitioning to a sustainable supply chain means real corporate responsibility. Your business will become sustainable, and grow more sustainable through this transformation.

 
 

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ESG is changing how businesses approach sustainability

ESG or Environmental, Social and Corporate Governance is quickly becoming the global standard for investors seeking responsible investment opportunities. This framework requires companies to provide deep transparency and rigorous data, sparking a revolution in how corporate value is assessed. ESG will force companies to put digitalization and traceability at the center of their operations, requiring a reassessment of each layer of business—from facilities to executive decision-making.

ESG – a market revolution against an era of “greenwashing”

Sustainability. Corporate Responsibility. Impact. These terms have been part of the corporate vocabulary for years, dating back to the 1960s. In the modern era, the idea that corporations must be responsible citizens—tangibly giving back and remaining visibly accountable for negative externalities is now central to corporate strategy.

While sustainability and corporate responsibility are now seen as competitive advantages, “greenwashing” has unfortunately become a widespread problem. When faced with the hard and challenging work of overhauling legacy unsustainable practices, many companies have found it convenient to give the impression of commitment through big talk and misleading publicity.

Ironically, greenwashing is itself proving unsustainable. Consumers and investors are aware of greenwashing and pushing back against companies that only “talk the talk.” At the governmental level, standards are being written into law and strictly enforced. Today there are laws pushing back against greenwashing from the EU to Australia, and governments like China’s now require strict corporate data reporting on CO2 emissions, waste management, and other metrics.

But the biggest driver of change may be coming from the market and the world of responsible investment – the root of the ESG revolution fomenting worldwide. Investors are aligning behind ESG frameworks demanding tangible, clear-cut roadmaps for action and transparent reporting of corporate impact on a wide range of metrics.

Green sustainable environment

ESG is a guideline to reduce risk and protect profits

Sustainable investing will drastically reshape the market. According to Simfund, 2020 saw institutional investors invest $288 billion in sustainable assets globally. That is a 96% increase YoY.

Some investors once viewed sustainability targets as secondary to the overall financial health of a business. Yet recent data suggests that companies actively pursuing ESG outperform companies that don’t in terms of value – both overall and relative to their industries.

According to Ioannis Ioannou of London Business School “[The] scholarly body of evidence suggests a positive causal link between truly integrating social responsibility into the way that you do business and financial performance in both the short and long term.”

ESG-oriented approaches reveal risks and blind spots that other, more traditional strategies miss. For example, climate change impact is traditionally given a headline measure—the carbon footprint of a company. Today, standards bureaus like SASB look at the impacts of climate change holistically and assess how these risks apply directly to different industries. The SASB will assess a company based on its preparedness for damage to assets, disruptions to supply chains, increased regulation and many more direct risks of climate change.

The standards bureaus’ deep material analysis offers insight into the long-term value of a company by exposing risk in an actionable way. Lowering risk is crucial for the longevity and performance of a company.

What is ESG, exactly?

ESG is a standard for companies to use when seeking to demonstrate their commitment to sustainability and to generate interest from socially responsible investment funds. Compared to traditional methods of demonstrating responsible corporate citizenship like CSR, ESG is far more data-driven, with a strong focus on transparency and reporting according to well-defined guidelines.

Today, there are a number of different frameworks in use, established by different stock exchanges and institutions. The frameworks rate companies based on the organization’s actions on climate and environment, how pro-social and human-centric the company is, and how effective corporate strategy is. This can be assessed across 3 pillars using multiple variables.

Environmental:
Energy efficiencies, carbon footprints, greenhouse gas emissions, deforestation, biodiversity, climate change and pollution mitigation, waste management, water usage

Social: 
Labor standards, wages and benefits, workplace and board diversity, racial justice, human rights, talent management, community relations, privacy and data protection, health and safety, supply-chain management, other human capital, social justice issues

Governance:
Corporate board composition and structure, strategic sustainability oversight and compliance, executive compensation, political contributions and lobbying, bribery and corruption

ESG ratings agencies comparison

Starting on a corporate ESG strategy

While today’s ESG frameworks are both more comprehensive and tougher than past standards, they are also pragmatic systems – the people who designed them want as many companies as possible to become ESG compliant. Put simply—ESG frameworks are set up to encourage entry.

For this reason, companies in the early stages of their ESG strategy are not expected to be at an optimum level of sustainability in all categories. What matters is that they show a demonstrable commitment to transparency and that the company has established a roadmap to sustainability covering the three ESG pillars. Following this, the company’s progress, whether rapid or incremental, must be dutifully tracked and disclosed on a fixed schedule, supported by third-party validation.

The success of a company’s ESG strategy relies on foundations that are laid at the beginning, and what tools are in place to ensure subsequent consistency in data collection and reporting. Successful ESG implementation should start with close coordination between all relevant parties inside the company, establishing what data each department is able to provide towards target metrics and looking to identify and remove any double reporting or misaligned reporting.

The guiding concept must be to establish a single source of truth—it is the sine qua non of pursuing a viable ESG strategy. Creating and managing a single platform centralizing and aligning data is a cutting-edge field in corporate management, comprising not just tracking across all three pillars of ESG, but a holistic understanding of the company’s business.

Keeping at the bleeding edge of this complex data problem and providing a holistic understanding of the company for management requires the proper digital and social tools and systems to collect and report data. This task’s complexity is one of the main reasons that many companies now prefer to find a sustainability partner to oversee this process rather than trying to manage everything internally.

The race to adopt ESG standards

The past year saw a massive interest in ESG—there was a 363% increase in companies adopting SASB standards in 2020. Many firms pledged to integrate ESG goals as a core strategy going into 2021. Some firms that are heading enjoying the benefits:

Microsoft & BNB Paribas ESG goals

ESG is the modern business revolution

ESG shows no signs of slowing down. All signals suggest this is an enduring trend with huge growth potential in the future. A number of principal factors are driving this.

Funding flows to sustainable investment funds surpassed $1 trillion by the end of 2020. Deloitte has forecast that ESG-backed assets could grow by as much as three times the pace of non-ESG assets and comprise half of all professionally-managed assets in the US as soon as 2025.

In BlackRock’s 2021 letter to CEOs, it announced that all of its almost $7 trillion assets under management would be directed by ESG metrics. This led to the establishment of the Net Zero Asset Managers Initiative, a group of 30 of the world’s biggest asset managers pledging to achieve net-zero carbon emissions across their portfolios by 2050.

Policymakers are making ambitious changes globally. China has pledged to achieve carbon neutrality by 2060 – with forecasts suggesting it will clear this hurdle easily. The Korean stock exchange (KRX) has announced new rules that require companies over $1.8 billion in value to provide ESG disclosures by 2025 to remain listed. This requirement will apply to all companies by 2030 on a ‘comply or explain’ basis. This is also in line with the Hong Kong Stock Exchange’s plans.

ESG starts at work

To begin an ESG strategy, both the work and the workplace must be considered from a new perspective. Are your dining services sustainably sourced? How are you improving corporate dining satisfaction? How are you reducing your facility’s energy use, while minimizing waste? Are your workers satisfied with their workplace experience? How are you tracking these targets? These questions aren’t for management’s idle musing—each answer is actionable—a tactic to meet an ESG strategy.

Data-driven approaches are holistic approaches, deeper than simple headline targets like carbon neutrality. These can only truly be effective with a bottom-up approach, born from a constant virtuous cycle of observation, iteration, and improvement.

Today, with IoT and smart building technology, the workplace can be seen as a solvable problem. Positive changes made to the work environment will produce a positive cultural benefit—workers will believe what they see, and practice accordingly.

The upward spiral of observation, iteration, and improvement is built on the constant generation of and action on data, including energy use via energy management contracts, digital twin, sustainable corporate dining, worker housing, and data-driven management.

Corporate boardroom ESG meeting

ESG As a Future-Oriented Strategy

The task ahead for businesses adapting to ESG standards is daunting—but it is a profit and investment driver for any business aiming toward the future. Partnerships are the most common option for a business looking to avoid the extreme costs and learning curve of bootstrapping an ESG initiative.

Partnerships in facilities management and offer immediate cost reductions and contribute heavily to the development of a single source of truth—the unified data repository around which the best and most viable ESG strategies are built. Cutting-edge partners offer services like digital twin, IoT-based facility management, and gourmet corporate dining. Developing human capital and reducing costs are critical tactics in ESG strategy.

Meeting ESG standards will make the difference between success and failure in an environment racing to change how business is done best.

 
 

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It’s time to make workplace experience part of your business strategy

It’s the age of experience—UX for web and mobile users, CX for customer experience…now here comes WX—workplace experience. Let’s take a look at how this holistic and employee-centric approach is reshaping facility management and adding value to companies that make wellness and comfort a priority.

Workplace experience (WX) is a way of describing the complex web of business and cultural outcomes that result when companies take a holistic approach to the management of the built environment. Great WX comes when businesses invest in spaces where the physical facility, its environment and digital infrastructure are linked and optimized to work as a single-engine for greater comfort, collaboration, wellness and overall productivity for employees.

What contributes to workplace experience?

WX is a holistic system, starting from what the facility management industry traditionally calls “soft services”. But WX is fed by many other areas, all components of a typical workplace.

  • Soft services: food, hygiene & cleaning, front desk, security.
  • Hard services & environmental services: energy management, indoor air quality, asset maintenance, waste management.
  • Workspace design: floor layout and furniture, greenery, interior design, acoustics, lighting.
  • Community engagement: events, collaborative spaces, PD & training, fitness & health programs, service apps, feedback apps, etc.

And on top of all these:

  • Digital infrastructure: any and all systems inside the building collecting data from occupancy to energy consumption to AQI.

Data informs better workplace decisions

Another important element of workplace experience is data transparency and data communication. In other words, how well is your workplace standardizing and centralizing its data (often referred to as a single source of truth), and how well is your organization organizing and conveying this information once it has been collected?

What does this mean in practical terms? Imagine, for example, a worksite that has reduced its energy consumption, increased its recycling rate, or achieved a measurably better level of indoor air quality. Any of these by themselves can be counted as wins, but to make the optimal contribution to workplace experience, the company needs not only to quantify this achievement but also make it visible and well-known among employees. This is an area where the digital twin is quickly emerging as a high-value asset.

Aden HQ digital twin workplace

Simply put, perception counts and transparency pays – nearly 70% of Millennials say that corporate sustainability is a key concern and factor in whether they would stay with an employer, but phenomena like greenwashing have caused optimism about climate action to decrease. By committing to measurable sustainability plus transparency, companies can enjoy a free boost to their buildings’ WX.

The new workplaces must compete on environment, comfort and human-centricity

Greater focus and investment in WX is a trend that will only intensify as Gen Z and Millennials become an overwhelming majority of the workforce. It is also a trend that has picked up with the rise of co-working spaces that compete hard on their strengths: comfort, “coolness,” and flexibility. After COVID-19, a large percentage of the workforce returned to their old offices asking new questions, including: “if we were able to carry on work from the comfort of our homes during COVID, why shouldn’t we continue doing the same now?”

So, in the aftermath of COVID and other long-term shifts in the workforce, will the office simply disappear? Actually, it doesn’t seem that companies or employees want to eliminate the office altogether. Rather, it seems both sides are reassessing how they use the workspace and what they would like to take away from time spent there.

It is notable that while over half of employees report wanting more flexibility around work location increased collaboration and socialization are the #1 reasons employees are looking forward to a return to the officeThe difference is, as work culture evolves, talented employees are “voting with their feet”, choosing workplaces that deliver better experiences, flexibility sustainability, and environment. In a recent survey by McKinsey, 4 out of 10 respondents said that they would set workplace experience as a high priority in deciding whether or not to seek new employment.

Meanwhile, companies that have gone through the COVID crisis now have direct experience managing a large share of their workforce remotely. Moving out of the peak teleworking phase, certain questions emerge: do our offices need such a large physical footprint? Are there are ways to reallocate our facilities to accommodate new functions and mixed-use spaces that are open to all and encourage cross-team interaction?

However these modifications are delivered, one thing is clear when workplaces invest in a better environment, it’s not just morale that improves – there are measurable productivity gains. The World Green Building Council, for example, studied how user-centric building design can impact productivity. Among their findings were these productivity boosts:

  • +23% productivity from better lighting.
  • +18% productivity from regular access to a natural environment.
  • +11% productivity from improved ventilation.

Good workplace experience grows from three pillars

The best WX strategy takes a holistic approach and needs to be built on a comprehensive infrastructure with three interconnected pillars: spatial/environmental, digital, and human experience.

Pleasant workplace environment

Spatial/Environmental:

This pillar is about optimizing use and layout for the physical site, taking into account factors like floorspace and floorplan, ceiling heights and patterns of movement throughout the facility. But this pillar also factors in more subtle but highly impactful environmental categories like light, acoustics, ventilation and smell, as well as the overall tone and identity that your space sets via greenery, interior design and on-site amenities. One of the key measures here is your space’s flexibility, with the long-term trend moving strongly away from departmental silos towards shared, mixed-use spaces which can easily transition between work, training and social functions.

Flexible workplace environment

Digital:

Best practice for this pillar is an integrated approach:

  • Mobile-based tools – used by employees for everything from ordering food to making room reservations to reporting maintenance needs. Used by solution providers for task management and KPI tracking.
  • IoT sensors measure everything in real-time from space occupancy to air quality to on-site safety.
  • A digital platform that links, optimizes and visualizes the resultant data in a way that empowers better decision-making and cost savings.

While this pillar is necessarily complex, its key objectives can be summarized in fairly simple terms. One, it makes the experience of being at work more convenient and responsive to the needs of building users. Two, it gives companies and building managers much richer situational awareness of what actually happens in their buildings, from how effectively services are being delivered to preferences and patterns of behavior that employees show while at work. From this deepened understanding comes faster and better decision-making about how to optimize the workspace.

Human Experience:

While coming last on this list, human experience is necessarily both the main measurement unit of WX and its start and endpoint. This must be measured at several levels – how well does the space enhance individual employees’ ability to work productively? But also, how well does the design, flexibility and overall management of the facility orient different departments towards more interaction and a greater sense of community and purpose?

Optimizing workplace experience is a cycle, not a one-time fix

Some decisions made in a WX project will be fairly obvious at the outset. Maybe employees have been dissatisfied with workspace dining options for a long time – so, you upgrade to a higher level of corporate dining solutions; maybe you face reliability issues with your security provider – so, you find a partner that is capable of integrating more smart technologies into their security solutions.

This class of fixes (such as poor lighting, inefficient air-conditioning, leaky ceilings, and outdated décor) represents surface-level bad WX, the “low-hanging fruit” that is easily identifiable through daily working experience. Without question, addressing these issues quickly and thoroughly is a clear value-add for the morale and productivity of building users.

But great WX comes when companies and facility managers harmonize the three pillars so that each reinforces the next in a cycle of optimization. The idea is to balance direct feedback from building users with rich data from IoT and other digital tools to reveal deeper insights into how your facility and your people are interacting.

Stage 1 – Human experience level:

Start by listening to your people. How do they feel about the workspace? What are their pain points? What would they change? What do they prize most about the space? Start with these questions and continually track reactions as you unroll your WX changes in the next steps.

Stage 2 – Physical/environmental level:

Assessing the feedback from phase 1, determine what can/should be changed about the physical space and environment. Make the changes, getting buy-in from building users by communicating clearly about your intention to create better WX and responsivity.

Stage 3 – Digital level:

As much as possible, install systems and technologies to measure the impact of your changes over time. Do the IoT sensors for occupancy indicate that people are changing their behavior, gravitating towards the upgraded space? If you’ve upgraded your food service, does the data show changes in purchase patterns?

Stage 4 – Human experience level:

Now, assess the impact of change – balance the quantitative data from your sensors and other internal data with the qualitative data of feedback from employees and team leaders.

Stage 5 – Adapt, test, adapt, test:

Utilize the same practices perfected by UX specialists and web developers. One of the main reasons top apps and websites generate such high traffic and conversion rates is that they are regularly optimized based on data from A/B testing and analytics that show user behavior. This same approach can and should be adapted for better WX and business outcomes in the long term.

Stronger together: IFM partners are your best workplace experience asset

As should be clear from the article above, the best WX outcomes result from a complex interplay of teams, systems, and digital and physical infrastructure. This complexity is one reason why an integrated facility management (IFM) partner brings distinct benefits to a WX project.

First, there is a question of definitions– what do we mean by IFM vs. traditional FM? Let’s start by looking at the traditional models:

  • Single service: One company provides one type of service at your facility. For instance, food service. This team may be excellent, but it functionally operates in a silo of its own.
  • Multi-service: One company provides several teams at your facility, but they are managed separately, pursuing their own KPIs.

Then, we have integrated facility management

  • IFM: Several teams are managed by a single provider, with a central point of contact and management for all of these teams. This might be a combined food, maintenance, security and hygiene contract in one workplace, or it might be a series of teams spread across multiple client sites (and even borders for multinational clients)

In IFM, the focus shifts from simple service delivery to a partnership model in which the IFM provider helps the client pursue goals at the macro level. By adding a level of control above classic service teams, IFM providers are able to coordinate across services, pursuing macro goals that support better WX and finding efficiencies through careful, data-driven analysis of worksite performance.

 
 

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Smart security: an essential part of modern facility management

Scanning the current state of play for security

Smart security, in practical terms, is the integration of digital and technological elements into a traditional human security force. Technologies such as sensors, robotics and IoT networks are enhancing the efficiency and effectiveness of building and facility security teams. This technology allows for more resilient systems that can be steered by smaller operator teams, with greater awareness and transparency for personnel, management and other stakeholders.

Looking at the latest concepts in security and the newest technologies available should help stakeholders discover the best way to invest in their properties – a way that meets and enhances a site’s security needs.

What are the primary security needs for buildings and facilities?

Building security needs can be broken down into several primary concepts:

  • Access control: who can enter a building, where they can go and what they can use
  • Emergency planning: making precautionary measures against disasters and threats, either natural or human
  • Crisis management: responding to unforeseen and unique high-danger situations in which people’s safety is under threat
  • Staff & training: hiring the right people and making sure they are up to speed in using the latest technology and tools
  • Cyberdefense: the protection of sensitive company data that flows throughout networks inside or between sites

Smart security at its core is the digital transformation of all of these needs. It is as much a question of software as it is hardware. For example, even if the most high-tech cameras are installed on a property, it requires a robust network infrastructure to support data transfers and integration into a central management platform. Bringing three elements together—humans, devices and networks—is what makes a security system smart.

New tools of the trade

Every site is different; therefore, each will have its own specific needs. The question of which components, in what combination, should be a matter of cautious decision-making. Every situation is different and can be audited across several dimensions. Generally speaking, however, three major high-tech devices are making waves in security systems due to their ability to enhance the abilities and response times of security personnel.

Smart camera security

Smart cameras

Upgrading camera surveillance with the newest security software – especially facial and object recognition (such as vehicles) – helps improve baseline security needs. Smart cameras assist in identity confirmation, access control and communication throughout a building or network. Their flexibility allows them to be installed the same way as traditional CCTVs or attached to drones and robots.

Robotic security on patrol

Robots

The security industry is moving quickly to build robots that can move, gather data and autonomously respond to threats. They are equipped to record 24/7 visual and audio feeds. As with drones, the scale and targeted capabilities keep evolving, but typically part of a security robot’s attraction is the heavier, grounded presence, much as a human security guard offers when they are at a post or on patrol. Inventory checks, threat recognition and instant alerts are all typical elements of a robot’s defensive appeal.

Smart drone security at industrial facility

Drones

Drones can integrate visual surveillance with aerial mobility. Businesses, paramilitary and military organizations deploy drones to prevent and respond to a variety of security and safety threats—from intruders to fires to chemical leaks. Drones can, like robots, follow pre-planned paths through interiors, while large-scale units can survey or surveil an entire structure of almost any scale. With an ever-diversifying range of sizes and abilities, drones need consideration in their operation (requiring targeted training and experience) and how their presence will support other elements in the system.

Drones in the hands of an offensive actor also represent a significant emerging threat, such as industrial espionage, so security providers are investing heavily in anti-drone R&D.

All of these devices, advanced as they may be, still depend on the proper operation by the security team. They also need to be properly linked and configured to a site’s security network to be managed from a centralized security platform.

Centralized control

The center of all building security is the control room. It is where the human, devices and networks all intersect. It is where problems are identified teams are dispatched. The control room is the brain of a site or building’s security network nervous system. As teams have smaller amounts of humans and become more tech-heavy, this brain is more important than ever.

Smart security control rooms take in all information gathered by humans and IoT devices—all sights, sounds and even smells which are cause for alarm. Sensors and data must be configured properly, and all automated or digitalized security operations must be able to follow and be checked against proper protocol to meet a site’s standards. That’s why all IoT linked smart security systems must follow three guiding principles:

Linking the ‘T’ in IoT: increasing availability of monitoring encourages adoption. For example, following an incident (whether an accident of natural origin or negligence or a deliberate attack), stakeholders may ask why, if it wasn’t, a given key asset was not connected to the network in the first place. Sensor surveillance of essential assets increasingly looks like an inevitable part of responsible design.

Network protection: exposing so many connected devices to a local network and the internet means immediate obvious dangers and the need to insulate assets from dynamic cyber threats – data theft, ransomware, cyber-attacks to stop systems functioning – and to do so remembering that the digital side must support the physical thoroughly and vice versa, as the two are ever more intertwined.

Semantic robustness: as this data flows into the network from the sensors of a smart structure, the need to organize it at each point and direct it to secure points of access is essential. Here, the resilience question comes to the fore. In an emergency affecting many parts of the building’s system, will data processing and command centers still move smoothly, for as long as possible?

It makes sense that security systems should evolve to follow the threats and risks present for anyone involved in a given project and how risks and threats will likely move in the future.

Overall we can see how:

  • Human teams will naturally become smaller, more trained in the use of digital tools and more capable of operating multiple levels of a smart security system together
  • Digital systems require deep planning ahead of time, dynamic maintenance of physical and cybersecurity, careful assessment of new types of risk, and resilience that may be tested in constantly changing ways.

A new digital frontier brings unique threats

With increasingly digitalized business operations, and especially with greater adoption of IoT / smart systems, there is a new realm of safety and security that needs to be considered in facility security: cyber defense. While many companies are already aware of one of the largest threats to their trade secrets—corporate espionage and hacking—many do not consider their network-connected physical assets.

However, the threat is very real.

Cyberattacks can immediately impact valuable physical assets, such as on the US Colonial Pipeline in May 2021. Physical devices such as rogue WiFi routers, cameras, card data skimmers, or USB data drives with hidden malware may be used within physical structures to compromise IT systems. Estimates put the global cost of ransomware attacks in 2020 at $20 billion, up from $11 billion in 2019. As profits for malicious actors grow, so do the incentives to create new tools and techniques to compromise a system via any weak elements in it.

To be prepared, businesses can take measures to protect their IoT assets through the following methods:

  1. Assess the security of the central digital platform that oversees the building security system
  2. Consistently direct and train a well-defined team
  3. Monitor points of regular access to the system – physical or digital
  4. Ensure fluent communication between IT security coordinators and building operators

Smart security: a more efficient, effective and comprehensive offer

Security for buildings and facilities is changing in multi-dimensional ways. Technology, in the form of both hardware and software, is augmenting the abilities of security personnel, which in turn is leading to the creation of smaller and more specialized teams. The new security system puts even greater importance on the control room and a centralized digital management platform to carry out protocols and respond to threats.

However, the human element is still very important. New technology can make safety and security operations more efficient and effective, but it also has its weak points. That is why a well-trained staff is critical for smart security systems to function properly. A truly smart security system integrates three elements—personnel, devices and networks—in a way where they work together in harmony, not in place of one another.

 
 

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Workplace dining is a worthy investment to upgrade employee experiences

At a glance:

  • Corporate food service is a powerful value-add for employees
  • Strategic partnerships with food service providers can bring more variety, better services and higher quality food
  • Innovative techniques can lower costs and improve ESG scores
  • Corporate dining enhances employee productivity and corporate culture
  • Businesses can attract higher-level talent with the right food service offer

Growing investment in workplace dining experiences

Corporate food service is undergoing rapid change globally. In the next three to four years, the market is expected to grow by 187 billion USD. Asia will account for 38% of that growth. The old model of a coffee room, pantry, or cafeteria is changing to meet the needs of a multigenerational, diverse and demanding set of high-talent workers. The modern workforce is putting a higher value on workplace experience, and businesses are responding. According to the Great Place to Work Instituteevery one of the top-100 companies they track is investing heavily in corporate food service. These companies are providing their employees with a higher level of workplace dining that emphasizes quality, variety, health and sustainability.

After making this investment, businesses are seeing higher employee satisfaction, worker retention and access to a higher-level talent pool than those that do not. At the same time, metrics like employee satisfaction and sustainability are more important than ever as ESG becomes a defining guideline for company stakeholders.

The new baseline for corporate catering: restaurant-level experiences

Corporate catering standards are rising to meet their biggest competition: restaurants. As younger generations in cities around Asia enter the workforce, they are bringing with them a new sense of taste and higher dining standards. They crave quality and variety in their food. Up until now, this was something they could only find in restaurants. Adding to this competition is easier-than-ever access to restaurants with the explosion of food delivery and courier services (Meituan, Eleme, GrabFood, Foodpanda). However, there are still ways that corporate food service is rising to this challenge.

The first step is meeting expectations of quality, variety and experience. High-level corporate caterers are doing this by bringing in food industry veterans and skilled chefs looking to escape the restaurant world for a position that gives them the freedom to be creative and closer contact with their diners without the same pressure of the restaurant world. These chefs are working with nutritionists to plan and design menus and help craft better operational workflows. They are also working with technical and architectural designers to create better food spaces.

Rethinking the canteen

The days of the cafeteria line are over, and they are being replaced with more comfortable spaces with a wider variety of options. Google famously developed its incredible series of Googler-only food services by changing from a cafeteria model to one with more diverse interaction points. Instead of a food line, employees can choose between multiple small cafes that serve a wide variety of gourmet dishes. Similarly, CitiGroup worked with Restaurant Associates in New York City to create a similar concept, transforming their cafeteria into a 15-concept dining hall. Companies like Google and CitiGroup are meeting the competition head-on by providing higher quality and more diverse food options. And they’re taking it a step further to beat restaurants in terms of convenience.

Workplace dining space employees working

Food service fuels productivity

The value of better corporate food service goes beyond the quality of food. Access to high-quality food on-site enhances employee productivity, welfare, and morale and increases time spent on campus. A better workplace food service experience leads to better work culture in general. The quality of the food is a motivator for coming into the office. Breakfast service encourages early attendance. Workers eating a great lunch on or near campus will find themselves back at their desks, ready to work sooner and faster. According to WorkTech, this manifests a productivity increase of as much as 20 minutes a day. High-quality meal dinner services, snacks, and events will keep workers enticed to stay late and produce more—especially when the kitchen is allowed to be innovative.

Playing to strengths: how workplace food service can get an edge on restaurants

There are several unique offers that corporate food services can provide that restaurants can’t: proximity, better pricing, personalization and community engagement. The right food services partner brings a comprehensive range of services including grab-and-go box-meals, point-of-service preparation, pop-up snack and grocery stores, themed cafes & espresso bars, online ordering, customized diet plans and online feedback delivered instantly to the kitchen. This service advantage empowers the worker through the experience of getting the food they want and being part of a community that shares in this food.

Dining: an indispensable part of life at work

Now, corporate food service encompasses much more than just lunch. The food service provider must cater to a range of corporate events such as catered holiday parties to important client meetings, executive lunches, and made-to-order, high-quality dining. For older generations, workplace food services or a dining benefit package was a nice add-on. Now, for Millennials and young Gen Z workers, it is listed among the top 15 benefits.

Even with such a strong desire for food service, only relatively few businesses are providing it. According to a 2018 study by SHRM, less than 1/3 of businesses offer free snacks and beverages, and only 29% offer an on-site dining service. However, the companies that do choose to provide food service can differentiate themselves from competitors and attract top-level talent.

Partnerships are the key to success

Building a workplace food service in-house to the standards of the modern workforce is challenging for even the wealthiest companies. Keeping the business lean and profitable simply isn’t compatible with the need for staffing up for food service—keeping up-to-date with regulations, managing insurance liability, and recruiting talent all pose significant challenges—and your competition has reach and scale. The key to success in offering high-quality food service is finding a reliable partner whose values in food service are aligned with the company’s values.

Sustainable table setting workplace dining space

Staying sustainable is more than marketing

The best practices used by food service contractors now are fully in line with ESG standards promulgated by agencies such as the Global Reporting Initiative or SASB. Today every business needs to be as green and sustainable as possible—and so do high-quality cuisine. Fresh food, sourced locally and ethically (or even grown on-site), always means better food—and this is the kind of food that supports your company’s ESG initiatives.

But meeting ESG goals goes beyond sourcing–innovative techniques to reduce food waste are now the industry standard. Overproduced items can be packaged and sold at discounts to employees as take-home items, produce boxes for fresh ingredients are sold directly to workers, and unused food is donated to local food banks and charities. Packaging is kept to a minimum when employees eat at the workplace rather than ordering delivery, and when it is used is made from biodegradable materials. The carbon intensity of food preparation is lowered when it is centralized and sourced locally. Corporate food service done right and delivered by a trustworthy partner has a high potential for a positive ESG impact.

Eat together, work together: building a community at work through food

Creating a positive meal environment on campus, and breaking away from the stress of eating at your desk gives workers a chance to meet each other, and feel like they belong to a community. Only communities can foster a positive culture, and the basis of a community since time immemorial has been the sharing of food. These intangible benefits have a material side as well—healthy food, balanced nutrition, and managed portion sizes will help positively influence employee health and energy levels. The Harvard Business Review, in a case study of Johnson & Johnson, saw a 600% ROI on investments in employee welfare through reduced costs for healthcare, missed workdays, and employee attrition and churn.

Workplace food service is worth the investment

The benefits to investing in a comprehensive benefit like high-quality corporate dining are many. This benefit is a key component of a holistic strategy improving ESG, wellness improvement, and talent acquisition, and morale will hang. The right corporate food service partner will help improve your company’s ESG rating by reducing food and packaging waste, lowering carbon intensity, supporting local agriculture, and improving employee health outcomes. Simply having high-quality corporate food service enhances the company’s image to prospective hires. Your company’s compensation package will be compared to those of high-growth, prestigious businesses.

‘The War for Talent’ characterizes modern hiring practice. The world has a demand for talent that far outstrips its current supply—and the gap is projected to widen. How can a business attract, retain and maintain talent? Amenities like food service to employees improve your existing employee’s morale and comfort. Beyond that, they will improve the reputation, quality, and consistency of business.

 
 

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What does China’s carbon trading market mean for your business?

On July 16, China’s national carbon emission trading market opened. More than 2,000 power sector enterprises—accounting for more than 40% of the country’s carbon emissions—entered the market as the first batch of trading entities. On the first day, the average transaction price was 51.23 RMB / ton, the turnover volume was 4.104 million tons and the business volume exceeded 210 million RMB.

So what is carbon trading? Why the need to establish a nationwide unified carbon-trading market? How will this market affect enterprises with carbon emission demands? Here is what you need to know.

What is carbon trading?

Carbon trading, also known as carbon emission allowance (CEA) trading is a market-based mechanism in which carbon dioxide emission allowances are traded as commodities. The carbon market does not actually buy and sell CO2. What it trades are quotas, or allowances, for energy enterprises, industrial plants or other buildings to emit a certain amount of CO2. If a site or building reaches its emissions cap, it must purchase more emissions allowances as a price per ton of CO2 (tCO2) from the carbon trading market. This is also known as a cap-and-trade system.

What is carbon cap and trade?

Before trading, the government will determine the required total amount of local emissions reduction and supply market entities such as enterprises with a quota of allowances based on that figure. If an enterprise emits more than its allowed quota, it has to buy allowances from the market. On the other hand, if a company’s actual carbon emissions total less than the quota, the remaining quota can be sold in the market. This way the enterprises which perform better in terms of greenhouse gas emissions generate a value.

Why the need to establish a nationwide unified carbon market?

China has already proposed the national initiative to reach peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. Both initiatives were reinforced at the Two Sessions earlier this year when the politburo announced the contents of the new five-year plan. Establishing and gradually improving the national carbon market is one of the core policy tools to achieve these goals.

China’s national carbon market breaks geographical and technology constraints and enables carbon abatement to be produced wherever it is more efficient and cheap, which is expected to significantly reduce the cost of reducing total emissions. The first batch of enterprises included in the national carbon market emits more than 4 billion tons of carbon dioxide, which means that China’s carbon trading market will become the largest carbon emissions trading market in the world.

Who can participate in carbon market trading?

At present, the market is in the initial stage, with 2,225 power generation enterprises taking the lead in trading. However, it is predicted that as the market improves and matures, more industries, industrial and commercial enterprises will enter into the emissions trading market.

The Ministry of Ecology and Environment of the People’s Republic of China has already carried out carbon emission data reporting and verification for enterprises in related industries. In addition to the power generation industry, the report also covers building materials, nonferrous metals, steel, petrochemical, chemical, papermaking, aviation, etc. In the future, with the expansion of the carbon market, enterprises’ demand for energy conservation and emission reduction will continue to increase, thus they will be more inclined to use clean energy and low-carbon energy.

Meanwhile, companies currently not involved in the carbon market can take steps to get their total emissions and carbon impact under control. There are a variety of energy management solutions that can relatively quickly shave off total greenhouse gas contributions such as HVAC optimization and compressed air leak management.

How can companies adapt to the new carbon market?

The best bet for companies who need a quick transition to low carbon operations is to find a strategic partner. A good energy partner can identify exactly where your operations have the highest carbon impact and help reduce it without affecting your bottom line. There are even options to do so with zero CAPEX needed. One of those methods is to collaborate with an ESCO or Energy Service Company that can take over energy management and retrofits, but there can be downsides especially when it comes to discrepancies over transparency. That’s one of the reasons Aden created Tera Energies, which uses Akila—an AI+IoT platform—to track those metrics for total transparency and use machine learning to optimize energy efficiency and reliability.

Moving towards a zero-carbon future

Total carbon emission controls benefit the whole society. However, some companies will face many challenges such as regulatory compliance, cost reduction and efficiency improvement. Nevertheless, businesses still need to keep up with the quick pace of change and respond positively. Finding a solid energy partner can help move your business in the right direction no matter which stages your business is at regarding energy efficiency management or sustainable development. With the opening of the carbon trading market and the national 2030 and 2060 initiatives, there is no better time to start than right now.

 
 

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4 advantages of lithium-ion battery forklifts

Forklift fleet management means considering more than just upfront costs. Forklift servicing needs, lifespan and energy efficiency are all important factors for optimizing your industrial handling operations.

Optimizing a handling fleet is a significant project for any business. There are many different factors to consider, from financial to operational. All fleet managers would like to minimize downtime, reduce accidents, cut down on energy or fuel needs, and meet operational needs with the given machines.

Lithium-ion batteries are powering up

While gas-powered forklifts will remain in the rotation in fleets for years to come, there have been recent developments with electric forklifts. The two primary types of electric forklifts are lead-acid battery-powered and lithium-ion battery-powered. Battery selection can have a considerable impact when it comes to fleet optimization. More than many fleet managers may think.

For work sites in Asia, it is still common for handling equipment to run on traditional lead-acid batteries. There is one main factor driving this decision: lithium-ion batteries are considerably more expensive. However, lithium-ion batteries have greatly improved in terms of capacity, lifespan and efficiency, which is more than making up for the cost.

Now, lithium-ion battery-powered forklifts are gaining more traction with industrial and logistics clients. If your fleet has not yet given a chance to lithium-ion powered forklifts, here are four reasons to consider doing so in place of lead-acid battery trucks.

1. A bigger punch in a smaller package

Compared to lead-acid batteries, which often need to be swapped out at some point during the workday, lithium-ion batteries can keep going. That is because lithium-ion batteries have a higher density of energy storage. The benefits of this are immediately apparent: less downtime during operations. No need to switch batteries means that no man-hours are lost when they are needed most.

Lithium-ion batteries also take up much less physical space than their lead-acid counterparts. Fleets running mostly lead-acid forklifts will need a dedicated room to handle recharging tasks to account for the risk of spills and fumes. No such risk exists for lithium-ion batteries; therefore, they take up less valuable floor space.

2. Quick charging and easy maintenance

Lithium-ion batteries can charge up to 8 times more quickly than lead-acid batteries and have the advantage of not needing a cool-down period. A lithium-ion battery can be fully charged within as little as an hour, meaning less operational downtime. Without the need to spend time waiting for recharging, fewer batteries need to be purchased to keep your fleet running. With more work happening on the floor, dramatically fewer battery changes, and a smaller number of batteries for purchase, lithium-ion batteries more than offset the higher price per battery.

Another benefit to lithium-ion batteries is that they require little to no daily maintenance. Unlike lead-acid batteries, lithium-ion batteries require no ongoing maintenance and don’t have to be watered or monitored for acid spills and corrosion. This means more safety on-site and (yet again) more time on the floor freed up to focus on other tasks.

3. Much longer lifetimes, and no “memory effect”

The numbers speak for themselves. Lithium-ion batteries can deliver up to 6,000 charge cycles while traditional lead-acid batteries last, at the most, for 1,200 charge cycles.

However, the difference in value jumps out when you read the fine print – what counts as one charge cycle for the different battery types? For old-school lead-acid batteries, any charging, regardless of duration, counts as one charge. It doesn’t matter whether you’ve done an 8-hour overnight charge or a short charge during the lunchtime break. Each time you plug in is minus one for your company’s bottom line – the infamous “memory effect” of inefficient lead-acid batteries.

Lithium-ion batteries, on the other hand, have no memory effect. If your staff does a partial charge of 25%, you will lose only what you’ve taken – 25% of one charge cycle. A 50% charge takes half of a charge cycle, and so on. In other words, not only do lithium-ion batteries deliver many more charge cycles, but they also ensure you get the full use of your battery’s lifetime. That’s simply not true for the old lead-acid options.

4. Efficiency and ecology

While it is true that lithium-ion batteries are a higher upfront investment, their lifetime and efficiency pay for themselves, particularly in situations requiring 24/7 battery operation. As we’ve already described, you can expect about four times the extended life cycle on a lithium-ion battery compared to lead-acid batteries. Longer lifecycle = lower carbon footprint from production and disposal.

Moreover, lithium-ion batteries do not use rare metals and are non-toxic, so both their production and post-consumption ecological impacts are lower than other batteries. And their CO2-free and fumeless charging cycles are not only ecologically friendly but also 30% more energy-efficient, which means a lower footprint and a lower bill.

Should every forklift fleet use lithium-ion forklifts?

Any serious fleet manager needs to understand and think about lithium-ion batteries. The truth is, lithium-ion-powered forklifts are game-changers for some sites but less useful for others. It all depends on operational needs.

For fleet managers, warehouse managers, or anyone else curious about integrating lithium-ion forklifts into their fleet, it is important to get a proper audit and consultation. Developing a strategic plan for when, where and how you might integrate lithium-ion trucks ensures minimal disruption to your operations while optimizing for efficiency.

 
 

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Compressed air leaks: what you don’t see may be costing you millions

Compressed air is the invisible backbone of industry, critical to a huge number of tasks in industrial operations. But, as an asset that can literally float away, compressed air systems require careful monitoring and maintenance. The simple fact is leaks happen. Most utility system managers and technicians know this. The problem is that they lack the tools to understand the scope of the problem, find and fix leaks, and set up systematic monitoring and maintenance after repairs.

Compressed air leaks quickly add up

So, if you manage a site that uses compressed air, what might you be losing day-by-day, year-by-year? Even one tiny leak of 0.8mm causes losses of over 20,000 meters cubed per year, which translates to roughly 2,000 RMB (or 250 euro). This may sound small, but the scope of the problem is usually much bigger than one leak. Typically, sites that have never implemented a compressed air leak management program will find hundreds of leaks during the initial audit.

On average, sites without compressed air leak management can expect to lose 20-50% of their air per year. What happens when 50% of this valuable utility is floating away every minute? The system compensates, consuming even more energy to make up for the loss. Overproduction adds up fast and causes pain where businesses can least afford it: C02 production and energy costs.

What causes compressed air leaks?

Before looking at how to manage leakage, it is worth exploring why leaks develop in the first place. Leaks most often occur at joints, connection points and end-use applications for two main reasons.

Material factors

The quality of equipment and materials matters. Attempting to save money upfront by choosing cheaper components, such as joints, hoses and valves will lead to leaks later. Depending on the equipment and materials, deterioration may occur at a different rate of speed with different maintenance pain points. Without a leak management system, it is impossible to find every weak point.

Procedural factors

Many leaks also arise from improper installation, application and operational use. Equipment that is not in use, for example, can be a source of leaks if it is not isolated with a valve during non-operational hours. Misuse, over-pressurization and pressure drops can all also contribute to wasted energy in the air-compressor system. Proper use, monitoring and regulation of the system are integral to preventing compressed air leaks. As is one other major factor: maintenance.

Fixing compressed air leaks: fast turnaround, long-lasting value

One of the biggest advantages of compressed air leak management is a short initial setup time and a quick ROI (less than a year in most cases). Advances in software allow audits and retrofits to be implemented by a small team in a short period. Depending on the size and complexity of a compressed air system, assessments can be completed in as little as one day.

Once assessments are made, then technicians can get to work making repairs. Sometimes this may include replacing improper materials or re-installing certain equipment, addressing the material and procedural mistakes mentioned earlier. Once repairs are completed, site managers still need to ensure continuous improvement. Thankfully, leak management software can also be used to continuously optimize performance through monitoring and analysis. With the proper audit, retrofit and optimization, leaks should stay under 5-10%, the mark of a well-maintained compressed air system.

How much money and carbon do compressed air leaks generate?

If you have any doubts about the financial and environmental benefits of compressed air leak management, let the numbers speak for themselves. Imagine, for instance, you manage a factory without compressed air leak management. You might be seeing a leakage rate of 30%, the average rate for sites that are not managing leaks. Here is what that costs your business every year in terms of money and added CO2 production.

The impact of a 30% leakage rate on different compressor capacities
Compressor capacity Cost CO2 (tons)
250 KW 507,000 RMB 230
500 KW 10 million RMB 920
1000 KW 208 million RMB 4,600

So you’ve fixed your leaks – now what?

One thing to remember is that even the best fixes must be accompanied by a good follow-up plan. Ongoing maintenance and monitoring are critical to achieving the financial/environmental savings shown above. The best solution not only finds and plugs leaks, but it should also leave you better equipped to monitor and manage future leaks. There are various paths to achieving this, but you don’t have to go it alone.

Today in Asia, new energy management models are gaining in popularity. Solutions such as Energy as a Service (EaaS) contracts make it easier for companies to outsource energy management and maintenance to a trusted partner.

Depending on your company’s financial and environmental commitments, another question to consider after you’ve addressed initial leakage problems is your longer-term strategy for compressed air equipment at your site. There is no one-size-fits-all solution here, and depending on the precise situation at your facility, you may choose to:

  • Optimize the performance of your existing equipment through a blend of preventive and predictive maintenance, backed by leak-monitoring software.
  • Upgrade to higher-efficiency compressed-air management systems, possibly in combination with other high-efficiency industrial assets.

The good news is that this is not an either/or choice. All equipment must be replaced eventually – the key is finding the best timing for an upgrade when the cost-benefit ratio for cost, efficiency and C02 emissions is optimal.

 
 

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HVAC energy efficiency optimization cuts costs & C02

HVAC is the whole system of space heating, cooling and ventilation, commonly known as air conditioning. HVAC has conquered the built environment since its invention at the turn of the 20th century. In Asia, space heating and cooling have seen most of its growth in just the past 20 years. Much of this is due to economic growth in the region. Workforces in China and Southeast Asia are becoming more educated and moving toward white-collar office work. These workers expect a certain level of comfort in their working environments, leading toward full-time space cooling in offices.

By the end of this decade, 95% of non-residential building space in China is projected to be cooled. The growing demand for air conditioning is creating enormous costs for businesses and taking a huge toll on the environment through emissions.

HVAC energy impact

Space cooling and heating have a significant carbon footprint, and the numbers are striking. Currently, buildings account for nearly 25% of all primary energy use and emissions in China and ASEAN. That number is projected to reach 35% by 2030. Of those emissions, over 40% are generated by commercial and industrial HVAC.

Historically, electricity costs in Asia have been comparatively low, and there have been fewer regulations regarding emissions. However, that is changing. At the same time, workers are now considering factors such as carbon footprints when they look for employers. In turn, many tenants are looking for more efficiently managed buildings.

Even if building owners weren’t motivated by sustainability (although many now are), there are pressures that they now cannot ignore. Governments in Asia are increasingly rolling out regulations that penalize companies for their carbon impact. For example, China’s recent 2030 and 2060 initiatives to reach peak emissions and carbon neutrality, respectively.

At the same time, building owners are facing a growing amount of pressure from tenants who demand energy and environmental plans. In a recent survey by the Building Owners and Managers Association (BOMA) China, 68% of companies consider energy and environment management as “very important,” while another 31% said it was “somewhat important.”

There is also pressure on businesses and buildings from investors demanding lower carbon operations. ESG investing is growing in popularity in Asia. To continue attracting investment, companies and building managers will need not only to reduce carbon footprints—they will need to do so in a documented and transparent way.

Despite the pressure from cost and growing regulation, many companies are currently struggling to find a path toward energy efficiency. Today, somewhere around 80% of industrial and commercial buildings aren’t doing anything to optimize HVAC usage and pay the price. Industrial and commercial buildings will need to take serious action to remain competitive and compliant in the future.

That is why companies are increasingly turning to technologically driven solutions for efficiency.

What causes HVAC inefficiency?

There are two primary causes of HVAC inefficiency: technical causes and human causes. Technical causes include:

  • Delayed response time between thermostats and sensors, leads to overproduction of chilled air.
  • Lack of technical setup to track factors such as room occupancy and external weather conditions.

Human causes can include:

  • Lack of understanding of how HVAC systems work and where they are wasteful.
  • Inattention – for instance, employees forget to turn off the AC after work or meetings, leading to energy wasted cooling an empty space.
  • Occupants changing the temperature, which puts added strain on the chillers and boilers.

Optimizing HVAC systems solves both of these problems. It gives building managers a way to maintain comfortable conditions for occupants while reducing both costs and environmental impact. The best part is the first phase only takes as little as one month without interfering with daily operations.

How does HVAC energy efficiency optimization work?

HVAC optimization is a solution that integrates AI, IoT and other technologies with human expertise to create smart and responsive environmental controls. The first step is to work with a team of experts who can audit your current system and set up a baseline by which to measure results. Then, the engineers get to work installing IoT sensors inside and outside the building. The sensors will collect data – such as room occupancy and weather conditions – and send it to a digitalized management platform in real-time. Finally, the platform uses AI logic (or machine learning) to take control of installed HVAC assets such as chillers and fans, automating some or most degrees of their functioning, based on real-time IoT data.

One critical point in HVAC optimization is knowing what to look for. Many companies have fallen into the trap of collecting too much data without a well-defined focus, resulting in an unusable data swamp. Knowing what to exclude is probably as important as knowing what to include. This is where it is critical to carefully set parameters and work closely with energy and data experts to ensure your system is properly set up to deliver actionable information.

At this stage, the full power of the smart HVAC system starts to show results. The system becomes even more intelligent through usage, adapting and optimizing from the growing pool of historical data it has collected. The system gathers information from day to day, month to month and across seasons. The electricity used over time is known as the load curve. With this data, the system can do more than just react more quickly; it can predict and preemptively optimize HVAC usage.

After this setup, businesses can expect to see an average of 17% in energy savings. However, companies and building managers looking for even higher savings and efficiency have a further opportunity to do so.

HVAC efficiency upgrades

One advantage of HVAC optimization (or a light retrofit) is that it can be performed quickly on existing equipment. But, after initial optimization, there may come a time when it becomes more cost-effective to upgrade. Using the load curve data generated from the smart HVAC system, engineers can put their expertise to work planning an HVAC upgrade (or a deep retrofit). They can recommend the ideal low carbon assets or equipment, such as chillers, air/ground source heat pumps, cooling storage and beyond.

Furthermore, the precise data gathered from the smart HVAC system removes all guesswork. Engineers use the data to see precisely how performance would change by replacing a piece of equipment. They can even use the data to plan the right moment to go in and replace equipment with minimal interference to building operations.

Businesses that upgrade HVAC systems this way can see extraordinary results. Compounded numbers between the smart system and asset upgrades can easily reach a 40% reduction in energy use from the baseline by integrating super low-carbon equipment.

If HVAC optimization is so great, why don’t more companies do it?

Recent research shows that while the industrial sector takes energy management seriously, buildings only accounted for 18% of energy management contracts (EMC) from 2011-2016. Part of the reason is that there are greater potential energy savings in the industrial sector, while another factor is budget. Many building or site managers may not have the up-front capital to pay for optimization or upgrades, even if it is costing them down the line.

However, that situation is likely to change soon. Recently, there has been higher support for subsidy policies favoring buildings. Secondly, financing methods such as EMCs or financing-plus-operation contracts such as Energy as a Service (EaaS) are becoming more familiar in the market. As China’s building owners become more educated about the value of these solutions, more and more will choose to optimize.

HVAC energy efficiency optimization in summary

Asia’s energy market is changing rapidly as economies develop. Buildings are using more and more energy to cool and heat their space, leading to growing emissions and costs. Simultaneously, there is pressure from the government and stakeholders in reducing carbon footprints and increasing energy efficiency. As heating and cooling account for nearly half of a building’s energy use, HVAC optimization is a great place to start cutting costs and carbon. Today that process can be done without any significant interruption of operations.

More than ever, there are a variety of ways to finance those projects and even include long-term operations inside a single contract. As the market becomes more aware of these solutions, HVAC optimization will only gain in popularity as an answer to growing financial and regulatory pressures.

 
 

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China’s five-year plan: new energy policies could affect your business

One of the big agendas at this year’s Two Sessions meetings (两会 lianghui), which laid out the economic development plan for the next five years, was green energy and CO2 emissions reduction. The two primary environmental goals for 2025 are reducing energy consumption by 13.5% and CO2 emissions by 18% per unit of GDP. According to Chinese experts, hitting these targets puts the country on track to reach peak emissions in 2030 and carbon-neutrality by 2060, both of which are major commitments made by the government last year.

Although the meeting did not outline specific policy implementation, there has already been some development earlier in the year with the launch of a national Emissions Trading Scheme (ETS) and carbon trading market. A long-expected emissions cap was notably absent from the plan, but that does not mean it won’t come sometime in the future. When it does, it will surely affect industrial and commercial businesses, which right now account for nearly 30% of all energy use.

All eyes on 2025: preparing for bottom-up policy roll-outs

The coming five years will most likely look similar to the last five, where provinces and cities in China were allowed to take different approaches to meet the national targets. Over the previous five-year period, this bottom-up arrangement resulted in some steadily implemented plans and other drastic actions taken by provinces to reach their goals. Businesses should prepare for similar plans and actions over the next five years. In fact, some major businesses, such as Ant Financial, are taking steps to prepare already.

Two meetings 14th five-year plan

Although there is still some level of the unknown, businesses and buildings are not without options to ready themselves. Facility managers and property owners can take action to prepare for whatever policies come down the pipeline.

Several ways they can do this are:

  • Using digital tools to better manage and monitor energy and utilities
  • Upgrading assets to more efficient models
  • Building on-site renewable power sources and storage batteries

Getting a head start to make industrial and commercial sites more sustainable is an investment even without policy pressure. ROIs typically come within the first few years of operations, and can even come within the first year with a CapEx-free Energy as a Service plan (EaaS).

Even if the Two Sessions concluded without a concrete policy rollout, the current trend in China is towards more ecologically conscious and sustainable economic development. Last year in particular made this trend obvious at the national level, and it is continuing to grow at the investor and consumer levels. Over the next five years, bottom-up pressure may prove an even more powerful force than top-down pressure. The overall message is clear: businesses that are not making plans to reduce their emissions and operate in more transparent and sustainable ways are doing so at their own risk.

This post originally appeared on Tera Energies

 
 

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