Reporting isn't enough

Hey friends,

There are five weeks left in 2021! For the last six Nexus Newsletters, we’re exploring my top trends, lessons learned, and lightbulb moments of the year.

Here’s where we headed between now and 2022:

1. Last week: “Green” → ESG (and the carbon flywheel)
2. Today: Reporting → Retrofits
3. “You can’t build the app store before you build the iPhone”
4. Moving interoperability up the stack and the true value of the Independent Data Layer
5. Advanced Supervisory Control for small buildings and the emergence of the grid integration platform primer
6. Look around: workforce issues are everywhere

Let’s jump into our #2 trend of the year, which is also the #1 thing I’ve been nerding out on lately.

2021 Trend #2: Reporting → Retrofits

Last week (link), we unpacked the carbon flywheel and how it has successfully tied reducing carbon emissions to a real estate organization’s core business. And how that’s driving organizations to set ambitious climate targets.

Let’s call that Step 1: Setting a carbon target. Carbon Neutral, Net Zero, 24/7 Carbon Free, etc. You pick one and you get your target verified by a third party to make sure it’s reasonable. If we look at all the sexy press releases, we’ve been making a ton of progress on Step 1.

Here’s the thing: that’s the easy part. The next step, measurement and reporting, is more difficult.

Let’s use an analogy here: Target setting is like setting a new year’s resolution to have a healthy body mass index (BMI) of between 18.5 and 24.9 so you can get a hot date. Measurement and reporting is like buying a scale, weighing yourself, having your BMI verified by a third party professional, and then putting your verified BMI on your dating app profile for all to see.

You might feel good about getting this far, but you haven’t actually done anything yet. You’re still overweight (and single).

The measurement and reporting stage for buildings is the same. You might answer questions like:

• Where are we relative to that target?
• Which buildings are high?
• What is the target needed from each building that will get us to our organizational/portfolio target?
• Does the data look right or are we missing some?
• How much potential savings are there?
• What independent variables are we going to track over time to help us determine how much savings we’ve achieved?

And to make this extra fun, target expectations and reporting standards continue to change. So if you’ve made it this far, you might pat yourself on the back.

But at the end of all that hard work pulling the data together, you still burn a sh*tload of fossil fuels. Congrats.

The final step is actually doing something to reduce carbon. And it’s 10x harder than all the steps that came before it.

When you’re ready for taking action on your New Year’s resolution, you might hire a trainer, make a training plan, and then start hitting the gym every day at 6am. And it’s not just the gym: you have to integrate your goal into your entire lifestyle. You have to sacrifice sleeping in and stop eating sh*tty food.

Buildings are the same: The first action step is planning how you’re doing to get to your target. The next step is actual execution that requires sacrifice. And because it requires so many stakeholders working together, it needs to be integrated into all parts of the organization.

So here’s the big bummer of 2021: Most organizations with big sexy carbon targets haven’t created a concrete plan for how to get there. According to a PwC study on the top 200 firms in Australia, 87% of firms undertook “meaningful ESG reporting” over the last year, but 62% of them failed to make details related to their “short, medium and long-term goals” publicly available.

“There is an important delineation between reporting ESG information and executing on an integrated ESG strategy.”

But we also have good news: We know how to do deep energy retrofits. We have most of the technology we need. It’s simply time to roll up our sleeves.

However, if we’re honest with ourselves, it would sure help to integrate technology into the way we do retrofits. Current best practices are too reliant on energy engineers and spreadsheets. Those don’t scale.

We need to digitize the entire retrofit process, so we can start automating and optimizing the full lifecycle of carbon improvements, from energy conservation measure development to energy modeling, managing the project, all the way to M&V.

And luckily, I’m seeing more companies stepping up to fill this void each week. 🙌

—James

P.S. I dove into those energy program management companies at the forefront of this trend in The Lens: Energy Program Management (Pro members only).

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