Failure

New company initiatives must also undergo experimentation to succeed, especially regarding environmental, social and governance (ESG) programs. Trial and error are critical to uncovering an organization's best implementation strategies. Yet, a stigma around failure generally persists in FM and the supply chain industries. The fear of failure often wins out over experimentation’s potential benefits, and FMs are caught in a sticky situation: stay to what they know and lag behind industry leaders or try a new approach which could potentially fail and experience negative consequences.

Successful ESG initiatives need space to fail safely so FMs and company leaders can learn crucial lessons and try again with more data. In time, teams that embrace failure as a teacher will realize numerous benefits and position themselves as leading organizations in the ESG space.

Learning to fail with plastic bricks

What does failure mean in the context of FM ESG programs? At its most basic level, a failure is a programmatic intervention deployed within a company that does not meet expected success metrics, such as relevant KPIs.

In practice, failure often reflects well-intentioned goals that simply fall short. For instance, over the past two years, Lego has attempted to reduce its carbon emissions by re-sourcing the plastic used in its bricks. The company developed prototype bricks from polyethylene terephthalate (PET) sourced chiefly from recycled water bottles. While the PET bricks proved to be as sturdy and safe as regular bricks, Lego failed to meaningfully reduce carbon emissions from this new strategy.

This setback has not discouraged Lego from continuing its sustainability investments. It has already invested more than a billion dollars to reduce its carbon footprint by 37 percent by 2032. The company’s continued commitment demonstrates that one failure should not derail an entire ESG initiative. Only through experimentation and inevitable failures can companies discover sustainable and profitable programs.

Over time, these programs have proved profitable. Companies that manage ESG issues realize 1-3 percent higher profit margins and stock market premiums above 10 percent, according to research from the Boston Consulting Group. Financial, environmental and social benefits compound through ESG programming as well, giving organizations ample reasons to push past implementation failures and gather valuable information to adjust initiatives toward success.

Lessons from facility waste management initiatives

One of the most critical material impacts in facilities is waste management. Goals for improving waste management align with the circular economy model, which aims to eliminate waste and pollution, recirculate products and materials and regenerate natural systems.

For organizations, aligning with the circular economy involves minimizing waste through diversion initiatives. These initiatives focus on reducing landfill waste by separating and redirecting waste streams toward recycling and composting to reuse, repurpose or recycle them.

Despite a significant initial push for waste diversion in residential and commercial buildings, the complexities of waste management meant these efforts only sometimes resulted in the desired reduction of landfill waste. Without a deep understanding of the waste management process and the vendors involved, separated waste was often re-combined and sent to landfills anyway.

A cottage industry has emerged from this failure, proposing new solutions for waste repurposing. For example, a new process embeds recycled glass into asphalt to produce energy-efficient roofing shingles that improve heating and cooling expenses. Glass, copper, and other materials once destined for landfills are now entering the circular economy in ways beyond traditional recycling.

FMs can contribute to better waste management by establishing more local waste diversion options. Through contracts focusing on innovative waste management solutions, FMs can encourage waste vendors to adopt new practices or expand their services, leading to less waste going to landfills.

This approach offers environmental benefits by reducing greenhouse gas emissions and financial advantages. Weight dictates waste management costs, and waste disposal in landfills tends to be more expensive than recycling or composting. Companies that reduce the weight of waste materials going into expensive landfills can significantly save on waste management costs.

Lessons from energy efficiency initiatives

Another essential material impact on facilities is energy management. Energy-efficient facilities are often a primary ESG goal, as reducing energy use is both good for the environment and can lower costs. However, managing energy efficiency is challenging, especially in a modern work environment.

A lasting effect of the 2020 pandemic was a shift in where people worked. Most businesses went from in-office five days a week to a hybrid format. Before COVID-19, FMs could establish predictable schedules and implement technology to save energy based on regularly timed people inflows and outflows. Once the hybrid format took over, routines changed and energy management became unpredictable. Many facilities have abandoned their past energy-saving routines in favor of a steady-state approach to handle immediate needs.

This shift in how employees use facilities may have altered previous energy-saving goals but has also created initiative opportunities. For example, small biodiversity projects focused on green roofing practices and green spaces are taking root. Additionally, as IoT devices make buildings smarter, FMs can collect more accurate data and closely monitor building energy usage. Integrating this information with current energy management systems can help anticipate needs for heating and cooling based on live occupancy and track performance over time.

Starting ESG initiatives and preparing for failures

Opportunities exist to use ESG to improve waste management, energy consumption and many other company aspects. However, when starting an initiative, FMs can feel apprehensive about the process. What if the goals are too audacious? What if it falls apart during implementation? Is there a job waiting for them should they fail?

If FMs want to build and lead successful ESG initiatives, they cannot totally avoid failure. Still, leaders can find ways to win organizational buy-in, create meaningful plans and absorb potential failure.

Creating ownership in ESG’s goals

ESG programs are often reactive exercises. Companies have evaluated a recently implemented regulation or a new critical compliance piece and they are using ESG as a vehicle to reverse-engineer their way into compliance. It is a start, but this type of planning often skips the vital step of understanding how a program’s goals align with overall business goals and on-the-ground operations.

FMs should investigate the finer details of ESG planning and implementation and tightly align concrete steps with the company’s current operations. Programs built like this can move forward with achievable yet fulfilling goals that flow from company culture into processes into materiality.

Establishing specific critical indicators

Companies launching their first ESG programs tend to set their focus too broadly. Too many goals, objectives, and indicators can cause challenges during implementation and frustrate attempts to expand ESG’s influence.

Instead, FMs should focus on one or two critical indicators to guide program implementation. A materiality study can help identify the best options; companies without a materiality study can explore tools like SASB’s Materiality Finder. With this study, companies can define the most critical operational aspects concerning sustainability and sharpen their program’s focus.

The key to creating an ultimately successful ESG program is ruthless prioritization and owning the internal narrative. FMs should customize goals to business needs, priorities and supply chains rather than copying others. They should also start small by concentrating on the most material issues in their companies.

Additionally, built-in feedback loops can capture data on implementation failures to uncover their root causes. While the goal is not to fail, each failure should educate program leaders on what works and what doesn’t and how they can apply those lessons to future iterations.

Data and transparency matter throughout the process

Failure is not merely a qualitative experience; what is not measured is not managed. Quantitative data and analysis help FMs determine ESG program failure points and identify areas for improvement.

For example, supply chain data helps investigate upstream and downstream failures, but more than 80 percent of companies still struggle to manage ESG supply chain data. Although managing data may sound onerous, companies have learned painful lessons about its value over the decades.

Notoriously, in the early 1990s, journalists alleged that Nike’s suppliers used child labor and created its products under sweatshop conditions. These allegations intensified and dogged Nike for the rest of the 1990s and 2000s. Amid declining global brand perception, Nike instituted several new policies, including being the first clothing company to publish a complete list of its subcontracted factories. While Nike has rehabilitated its image and brand position over the years, lackadaisical control over its suppliers has resulted in long-term challenges.

FMs should begin collecting and processing ESG supply chain data and apply insights to their supply chains. This data can help leaders identify suppliers with similar values and programmatic goals, posing a lower risk to a company’s overall ESG profile. FMs further benefit by diversifying their supply chains with high-quality, trustworthy suppliers.

Transparency along the supply chain helps FMs understand the origins of environmental impacts and achieve sustainability improvements. Scalable third-party resources exist to accurately evaluate risks, establish clear starting points, and set realistic yet high-reaching goals backed by data. A transparent, data-driven approach prepares leaders to demonstrate progress on ESG programs and is necessary for LEED certification and similar official endorsements.

Failure isn’t an indictment — It’s an opportunity

The future will only bring more opportunities to build within the circular economy and affect environmental and social outcomes. With safe spaces to fail, learn and iterate, FMs can seize these opportunities, driving internal innovation and enhancing their companies’ operational effectiveness.

It starts with clear ESG programmatic goals and outcomes. Companies should monitor implementation quantitatively and qualitatively to systematically integrate lessons from failure into decision-making and operational practices.

Those who encourage a culture that embraces, rather than punishes, failure during this process are better prepared to succeed overall. Properly equipped and supported facility managers can build and improve ESG programs that are resilient, dynamic, productive and aligned with company goals and broader business objectives.