Key impact of CSR on marketing strategy

The built environment and the natural world have never been easy bedfellows, but Swedish construction group Skanska is trying to change that. Just ask the bees that live on the roof of its new headquarters in Stockholm. The office, which opened in January and features Skanska’s ‘deep green’ cooling system – provided by boreholes under the building – is the latest expression of a commitment to sustainable development, both as contractor and, in this case, developer. ‘There we can let rip a bit,’ says Noel Morrin, head of sustainability. ‘We are the investor, we are the designer, we are the engineer, we have bought the land – so we can be held 100 per cent accountable for the performance of the product.’ Skanska has, for more than a decade, aimed to raise its environmental performance in its work as builder, refurbisher and project manager on high-profile developments and public-private partnerships – from the M25 motorway around London to the MetLife stadium in New York. That is not always easy for a company with as big a global footprint as Skanska. For each of its 57,000 employees across three continents, it has between four and five subcontractors – making for a total workforce of about a quarter of a million people, working on 10,000 projects annually. It has 100,000 suppliers. ‘We have a constant challenge to make sure those people understand and live our values,’ says Morrin. ‘Any one of those companies or subcontractors can destroy our ambition.’ Skanska is not short on ambition. It wants to be the greenest contractor in the world. It lives by what it calls the five zeros: zero accidents, zero ethical breaches, zero defects, zero lossmaking projects and zero environmental incidents. One former employee says: ‘Every day there were conversations and reminders of the importance of this ethos.’ The Swedish group is not alone in its green mission. Sustainable construction is becoming an increasingly crowded field in an industry where margins are thin and competition for contracts is fierce. It is a sector with more to do than most. According to Action Sustainability, a consultancy, about half of global emissions come from buildings and half of all landfill comes from construction. ‘The construction sector in general is starting to get the idea that there is a competitive advantage in sustainability,’ says Shaun McCarthy, director of the consultancy. That shift is not just coming from within building companies themselves. Investors, such as the large Canadian and German pension funds Skanska works with, want assets that will attract good tenants, produce high rental yield and offer a healthy return when they decide to sell. Commercial tenants, too, have policies that mean they can ‘only sit in properties that are good for the environment’, says Albin Sandberg, analyst at Handelsbanken Capital Markets. ‘That can win or lose you a contract.’ Regulation is increasing the pressure. New legislation in the UK could make less energy-efficient properties unlettable from 2017 – which is thought to affect about a fifth of Britain’s commercial building stock, worth about £100bn. Meanwhile, the EU’s energy efficiency directive, which member states must implement by June, is expected to lead to a far-reaching revamp of Europe’s building stock. As the policy debate on green construction intensifies, Skanska is becoming increasingly active. In July, its US arm – which contributes almost one-third of the group’s Skr136bn ($21bn) revenues – withdrew from the country’s chamber of commerce in protest at its stance on green building codes. Reforms of the US LEED (Leadership in Energy and Environmental Design) programme – a set of standards for sustainable buildings – were being opposed by chemicals groups backed by the chamber. ‘It was very un-Swedish to stand out from the crowd in that way,’ says Morrin. ‘But this was a line that could not be crossed.’ Skanska’s sustainability chief chairs a UN Environment Programme body looking at who is accountable for a building’s emissions over its lifetime. Of total carbon emissions from a typical building over 50 years, about 80 per cent come from operating that building, he says. ‘The construction industry provides the construction service. It is architects, engineers and investors who determine the carbon intensity of that product.’ ‘We are not saying Skanska or the construction industry is not responsible for part of the carbon emissions from the built environment. But our proportion is significantly less than the people who designed it, financed it, own it and operate it. At the moment there is a misunderstanding about how each of those pieces is allocated.’ Yet the construction process can reduce its impact in concrete ways, as Skanska showed in its work as main contractor on the redevelopment of two London hospitals, St Bartholomew’s and The Royal London. The company uses a 3D simulation technique, known as building information modelling, which allows it to identify exact quantities of materials required. Through its use of BIM, Skanska was able to halve waste plasterboard on the first phase of the Barts project, which is thought to have saved thousands of pounds in disposal costs and reduced truck deliveries. It also worked with suppliers to come up with a system of collapsible, reusable plastic packaging for mechanical and electrical products. Along with eradicating waste to landfill, the measure eliminated breakages and reduced injuries from broken glass, for instance. Skanska’s focus on sustainability can be traced back to one project: in 1996, it was commissioned to blast and seal rock for a rail tunnel at Hallandsås Ridge, near Helsingborg, southwest Sweden. The company used an industrial sealant that contaminated a nearby stream, harming fish and livestock. ‘It was quite a scandal – locally at least,’ says Sandberg at Handelsbanken. ‘Since then, Skanska has worked quite hard to see it is not repeated.’ Skanska calls Hallandsås Ridge its ‘environmental wake-up call’. It has worked to phase out hazardous substances and introduced a chemical database to control the use of chemicals. It points to a number of milestones since the scandal. It was the first company to globally implement ISO 14000 standards on environmental management. It was the first company in Scandinavia to set up a global whistleblowing hotline, fully independent of the company. It has been a constituent of the FTSE4Good index, the ethical investment benchmark, for more than a decade. The Skanska-built Brent Civic Centre, which opened last year near Wembley Stadium in London, was the first public building in the UK to achieve an ‘outstanding’ environmental assessment rating from the Building Research Establishment. Its Väla Gård office, in Helsingborg, last year received the highest LEED rating for a new building in Europe. Skanska has more to do. Critics argue its message has yet fully to permeate to all its subcontractors and suppliers, though tougher rules on procurement and initiatives such as the UK’s Supply Chain Sustainability School – an online education resource operated in partnership with several rivals – have helped. Morrin says Skanska’s two biggest sustainability challenges are site safety, of employees and the public, and business ethics. ‘Today we will open or close 40 or 50 contracts,’ he says. ‘Anywhere on one of those projects could be a bad apple. That is a worry, and we would be fools to think otherwise. We would be liars if we said otherwise.’ Innovation begins at home: Group puts its slant on sustainable housing Skanska might be best known for its work on flagship commercial and institutional buildings, such as the UN headquarters in New York, but it is also putting its mark on residential developments. In December, the company began to erect what will be the largest modular apartment block in the world – 32 storeys in Brooklyn made up of containers put together in a nearby hangar. The apartments will go up at a rate of up to five a week. Off-site production means Skanska and its partner and client, Forest City Ratner, can cut by more than half the waste created on site. ‘Anybody can build small stuff,’ says Noel Morrin, Skanska’s head of sustainability. ‘But how do we scale this so there is a societal impact? That’s what we’re trying to do.’ The container project builds on Skanska’s experience in making prefabricated – or ‘flat-pack’ – homes through BoKlok, its joint venture with Ikea, the furniture retailer. The schemes are intended to be low cost and high volume, with a block of four apartments able to be erected in an afternoon. The latest iteration of the design is almost 30 per cent more energy-efficient than standard Swedish housing requirements. In 2010, Skanska even made a high-profile, if brief, entrance into UK housebuilding, as one of the first foreign entrants to break into the tight-knit industry. In its Seven Acres development near Cambridge Skanska went beyond triple-glazing, hyperinsulation and solar panelling. ‘One of its overarching ambitions from the outset was to build a community,’ says Toby Greenhow, a director at Savills, the estate agent. That included lots of open space, allotments and benches in front of houses. Skanska said recently it had no more plans for UK residential schemes, since other building projects were more profitable – much to the disappointment of 400 Cambridge residents who had inquired about the next Skanska village.

1 What is the key impact of CSR on marketing strategy?

2 How does Skanska express its sustainability ambitions?

3 What could be drivers of CSR initiatives for construction companies such as Skanska?


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