The Scottish Low Carbon Investment Conference

Were UK businesses slow to understand the potential business benefits of sustainability?

Yes, in a way, largely because the business case was not made. There was this inherent risk in the background but it seemed very distant. When businesses thought about waste, they just thought about putting it in the ground, but then it started getting expensive and subject to tax.

European colleagues were ahead of the game, and invested in waste to energy plants. Here, it was not seen as a big problem, early enough We spent a lot of time in UK dealing with the subject as a nice-to-have reputational add-on.

Did government and business organisations do enough to drive the agenda in its early stages?

There was a tendency to react to specific problems, shown in part by the fact that different departments dealt with different parts of the same issue - DECC, DEFRA, DLGC etc.

The approach was not joined up and there was no true understanding of what the wider problems were collectively for the UK.

In the late 90s, we started to see a more rounded understanding, but it tended to be driven by a desire for quality, cost control and to ensure legal compliance. It wasn't really referred to as sustainability, but in the late 90s and early 00s, people started talking about the triple bottom line more and taking a more joined-up approach including a focus on the environmental value.

What are the key areas of a business that can benefit from following the sustainability agenda from your experience?

It is a great business opportunity. Governments and private sector clients are increasingly asking for energy efficient solutions, reduction in the carbon footprint of their projects, reduction in waste and more efficient use of water. This has been reinforced by key customer feedback obtained in 2009.

Skanska started off by making the decision that 100 per cent of its business would operate to an accredited Environmental Management System. That set a benchmark and it was a statement that we took things seriously, that everything would be scrutinised. More recently, we have seen the benefits in terms of business opportunities. Customers who want to order environmentally responsible buildings and infrastructure feel that the natural choice is Skanska. Being named The Sunday Times' best green company in 2011 was an acknowledgement of all our efforts in this area.

We now have 'green' services to offer from across our business, helping our clients to build renewable energy facilities, make their water and energy networks more efficient, or upgrade their buildings – among other things.

How big a part does retrofit play?

Governments legislate for new buildings to be low carbon and energy efficient but 80-90 per cent of the problem is what is already built. We have seen the technology and believe in it and we have started to do it ourselves.

We have a very nice portfolio of offices around the world and we are investing in improving them. We make a business case - this is how much it will cost to refurbish a building to make it functional and this is the extra cost to do it in a genuinely green way. We have to show there is a payback and a business case for it.

At our Skanska Rashleigh Weatherfoil HQ in Hollywood House, Woking, we entered into the first green lease with our landlord, Prupim. We provided a business case and undertook a thirty two-week retrofit, to LEED Platinum standards, funding some of the 40 green interventions ourselves and signed the green lease. Prupim will get their investment back through rent and we will save on our energy costs. We have also begun work on our UK HQ in Rickmansworth and have a fantastic case study from the Empire State Building in New York

If businesses are looking to make significant changes to green their business, what advice would you give them?

You need to work with a skilled and experienced organisation and one that shares the same values as you. That is very important.

Having a clear idea of what you want to achieve from the exercise is also key, whether that's cost savings, an improved environment for the people in the building or meeting wider green objectives and having the right resources in place to deliver these aspirations.

What are the key areas a business needs to consider when greening a building?

There are some key questions...How much waste will they generate? How sustainable are the materials they will use? How rapidly recyclable are those materials? How water-efficient and energy-efficient the building will be? Are there embedded carbon savings?

We are benchmarking these things and can use this to demonstrate improvement over standard design. What building does a client want, how can we deliver it and what are the benefits to you?

Cost modelling is important - letting a client know how long the payback time will be. It has got to be realistic. At Skanska's building in Doncaster, we are working to a 20-year Life Cycle Cost model but 25 years is normal. For PVs alone as an example, panels can pay back within about nine years.

Is it possible to reduce business risk as well as cost by pursuing a sustainability agenda?

Cost is part of the risk, but it is also about compliance and making sure you have not done anything illegal - and creating a broader legitimacy to operate. It is about doing the right things for the right reasons. If you are seen as a safe pair of hands, there are potential spin-offs that can reduce risk - more confidence among investors, benefits in terms of insurance, greater clarity on the lifespan of assets within the building, and so on.

How has Skanska benefited from its approach to sustainability?

We're proud to have been named the greenest company in the UK across all industry sectors by The Sunday Times and we have used that a lot. It really helps if you are talking to a green customer but it really gains credence if you have the leadership and the belief throughout your organisation - the attitude and values have to come from the top. If you can show that, and communicate it in a coherent way, it certainly helps in a business sense.

What about the less tangible benefits? Is there a spin-off in terms of attracting and retaining talent?

Yes, it is a factor. I joined Skansa three years ago because I knew what the company stood for, and what its values were. People will still look at the financial package, the benefits and the pension, but the sustainability culture and values are a factor and do attract people. It is a big question area at careers events.

What percentage of businesses "gets it" and understand the full range of potential benefits from the sustainability agenda?

I think just about everyone gets it, but they call it different things rather than sustainability. They might achieve positive 'green' results but start out from a different place - it might be cost-cutting or marketing, Fairtrade or ethical investment. But I think everyone understands the link between business and its impact on the environment and the term sustainability.

Are particular sectors ahead of the game? Is understanding weaker in SMEs?

The service sector is strong in the sense that businesses can say 'We will build this for you or operate this for you and we will make it work '.

The size of the firm is not a factor per se. Big firms will clearly find it easier to deliver big complicated projects if they have the right people with the right range of skills, supported by the financial capital. On the other hand, small specialist organisations can engage more and get easier buy-in from all staff. This can be difficult across large companies. We are constantly improving how we engage with staff and stakeholders and see the value in this.

How can the sustainability agenda help to sell your business offer to clients and potential clients? Does it still help a business to stand out or is it just expected?

Yes, it can help you to stand out - but only if you are doing it for the right reasons. People can tell if you are just giving it lip service. Sustainability is not embedded in some businesses, it is just used in a couple of projects to satisfy the customer rather than permeating the whole organisation. That isn't necessarily a bad thing if those businesses truly start to see the value in offering sustainable solutions in future projects.

Are there downsides and risks to business buying in to the sustainability agenda?

Not inherently, however there are some risks around credibility, particularly talking green but not really understanding what it is that is being asked of you. You need to understand your audience: who am I talking to and what are their drivers? Some people don't do that and often, when this is the case, the message just isn't received as intended.

Are you optimistic about the sustainability agenda in general?

Yes but I think we need a lot more certainty especially in England about where we are heading in terms of the incentives and taxes. We will still have carrots and sticks, but we need consistency.