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RESPONSIBLE PROPERTY MANAGEMENT TOOLKIT

  • HOW TO USE THIS TOOLKIT
  • MANAGING ENVIRONMENTAL RISK
    • GN1.1: Collating and evaluating environmental risks
    • GN1.2: An environmental compliance register
    • GN1.3: Environmental aspects and impacts
    • GN1.4: The wider risk context
    • GN1.5: Environmental risk control and assurance
  • OPERATIONAL MANAGEMENT
  • RATINGS & CERTIFICATIONS
  • ENERGY
  • WATER
  • WASTE
  • TRANSPORT
  • SOCIAL VALUE
  • SUPPLY CHAIN MANAGEMENT
  • FIT-OUT & ALTERATIONS
  • OCCUPIER ENGAGEMENT
  • BIODIVERSITY
  • HEALTH & WELLBEING

GN 1.4: The wider risk context

Guidance Note purpose 

The purpose of this Guidance Note is to provide asset managers, property managers and facilities managers with information about understanding and defining the wider environmental risk context associated with a property of portfolio. 

Context 

The wider context of a company includes internal and external issues that have the potential to prevent or assist a company in achieving its intended business outcomes.  This includes environment related factors that may affect, or be affected by, the company. 

These factors are typically organised into the following categories: 

  • Political. 
  • Economic. 
  • Social. 
  • Technological. 
  • Legal. 
  • Environmental. 

The potential positive and negative effects of these factors provide a source for the identification of environmental risks. The wider context is usually considered at the level of the company and portfolio. 

Importance 

Understanding risks relating to a company’s wider context is an important part of property management. 

Commercial real estate involves the long-term investment in assets of significant value which have the potential to be affected by a wide range of factors in the short, medium and longer term.   

Identifying and evaluating risk relating to the wide context, including political, economic, social, technological, legal and environmental factors helps to prepare to mitigate the associated negative effects and realise the potential positive effects. 

Having a formal system for managing environmental risks is a requirement of various rating and certification schemes, for example ISO14001. 

Responsibilities & Interests

The table below summarises the key activities associated with understanding and defining the wider risk context, and highlights where asset managers, property managers and facilities managers are likely to have a responsibility or specific interest. 

  • AM - Asset Manager
  • PM - Property Manager
  • FM - Facilities Manager

Step 1: Understand a PESTLE analysis  

Stakeholder:

Step 2: Facilitate a horizon scanning workshop 

Stakeholder:

Step 3: Add wider-context outputs to environmental risk registers 

Stakrholder:

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How to

Intro

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Usually, the environmental risk framework adopted for a property or portfolio will be specified by an asset manager, in alignment to a wider corporate risk framework.  The process of understanding and defining the wider risk context is often co-ordinated by a property manager, with input from a facilities manager where required. 

Understanding and defining the wider risk context generally considers the following steps: 

Step 1: Understand a PESTLE analysis

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The risks associated with a company’s wider context is often undertaken through a PESTLE analysis.  A PESTLE analysis involves consideration of the following six internal and external factors: 

Political: Political related risks may relate to, for example: 

  • Trade restrictions impacting the movement and price of goods.  For example, BREXIT limiting the availability and price of certain construction materials. 
  • Wider political unrest affecting production and supply.  For example, regional instability affecting oil supply. 

Economic: Economic related risks may relate to, for example: 

  • Upturns or downturns in the economic cycle resulting in prices for environmental commodities such as oil or insulation materials increasing or falling. 
  • Economic pressures influence budget availability, which may, in turn, provide leverage for resource efficiency activities, or may de-prioritise environmental activities which are not legally or financial driven. 

Social: Social related risks may relate to, for example:  

  • Changes in social trends, education or consumer preferences.  For example: 
    • A reduction in office occupancy during the COVID-19 pandemic impacting utilities consumption. 
    • An increase in the number of engineering graduates with an interest in renewable technologies enabling more affordable progress towards low carbon energy take-up. 

Technological: Technology related risks may relate to, for example: 

  • A shift in technology supported by its increased availability through production increase and cost decrease.  For example: 
    • The reduction in cost associated with LED lighting systems. 
    • The transition to elective vehicles. 

Legal: Legal related risks may relate to, for example: 

  • Policy developments at the global, national or local level that may affect a company. For example: 
    • Development of government policy positions, globally, relating to net-zero. 
    • The emergence of increasingly stringent environmental criteria within building regulations. 

Environmental:  Environmental related risks may relate to, for example: 

  • Limitations in the natural environment’s ability to assimilate pollution or accommodate demand for natural resources.  For example: 
    • Ozone depletion resulting in constraints on the use of ozone depleting gases. 
    • Restrictions on the use of timber from non-sustainable certified sources. 

Step 2: Facilitate a horizon scanning workshop

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The process to undertake a PESTLE analysis usually involves a facilitated ‘horizon-scanning’ workshop which can be used to consider the influence of an organisation’s wider context. 

Tips to consider when preparing a PESTLE workshop include: 

  1. Investigate previous PESTLE projects. 
  2. Establish who in your organisation has relevant experience and knowledge. 
  3. Decide who will facilitate the analysis. 
  4. Arrange the workshop – who will attend? 
  5. Decide whether to have one large, single group or to break into smaller groups or pairs. 
  6. Provide a template – and give examples to get people started. 
  7. Don’t get bogged down in the detail – or the ‘so what?’ 
  8. Be comfortable that issues may fit into more than one heading. 
  9. Review the issues identified – and remove duplication. 
  10. Plan your risk rating method in advance - keep it simple, and consistent with the rating method used for rating environmental aspects and impacts. 

A horizon-scanning workshop would normally involve individuals from a range of functions, who are able to provide an insight into future trends including, for example: 

  • Human resources. 
  • Finance. 
  • Information Technology. 
  • Operations. 
  • Risk. 
  • Health, Safety, Environment and E.S.G. 

A horizon scanning workshop would typically involve participants: 

  • Contributing to a discussion to identify PESTLE issues. 
  • Considering the risk and opportunities associated with these issues. 
  • Proposing actions to control associated risks. 

A PESTLE workshop should also include the rating of the risks identified by the participants.  This rating should follow as established risk rating method. 

Examples of the discussion flow in a horizon-scanning workshop include: 

Step 3: Add wider-context outputs to environmental risk registers

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The significant risks identified during the PESTLE workshop should be fed into the relevant environmental risk register. 

Given the more strategic nature of risks associated with the wider context, the control of these risks is usually at the company or portfolio level. 

The ongoing review of PESTLE outputs should be undertaken by individuals with risk responsibility.  Outcomes should be considered for inclusion in the wider risk governance framework operated at a company or portfolio level. 

  • BBP How to guide: the wider risk context

    pdf | 100.6 KB

Related Guidance Notes 

The following Guidance Notes contain related information: 

  • GN1.2: An environmental compliance register
  • GN1.3: Environmental aspects and impacts 
  • GN1.4: The wider risk context 
  • GN1.5: Environmental risk control and assurance
  • GN2.3: Sustainability reporting initiatives 

Additional Resources

  • BSI Group

RESPONSIBLE PROPERTY MANAGEMENT TOOLKIT

  • HOW TO USE THIS TOOLKIT
  • MANAGING ENVIRONMENTAL RISK
    • GN1.1: Collating and evaluating environmental risks
    • GN1.2: An environmental compliance register
    • GN1.3: Environmental aspects and impacts
    • GN1.4: The wider risk context
    • GN1.5: Environmental risk control and assurance
  • OPERATIONAL MANAGEMENT
  • RATINGS & CERTIFICATIONS
  • ENERGY
  • WATER
  • WASTE
  • TRANSPORT
  • SOCIAL VALUE
  • SUPPLY CHAIN MANAGEMENT
  • FIT-OUT & ALTERATIONS
  • OCCUPIER ENGAGEMENT
  • BIODIVERSITY
  • HEALTH & WELLBEING

Solutions Scrapbook

TH Real Estate Commits to Science-Based Energy Target

TH Real Estate has made a public commitment to reduce the energy intensity of its entire global equity portfolio by 30% by the year 2030, based on a 2015 baseline. This responds to and supports the ambitious goals for sustainable real estate established at the 21st annual Conference of Parties (COP21) held in Paris in 2015. Read the case study here.

Aberdeen Standard Investments’ Airport Industrial Portfolio To Go Carbon Neutral

Aberdeen Standard Investments’ Airport Industrial Property Unit Trust (AIPUT) has established a strategic target to achieve carbon neutrality by 2025. AIPUT will work closely with teams across its business and supply chain to embed the objective in all decision making, as well as partnering with occupiers. Initiatives include enhanced warehouse design, solar PV installations and improving operational efficiency. Read the case study here.

CBRE Global Investors has rolled out a new modular framework for managing environmental, social and governance (ESG) issues across its investment portfolio in the UK. Developed in consultation with institutional investors, fund managers and asset managers, the ESG programme sets out a three-year plan to drive progress on key issues identified through an extensive materiality review. Its innovative framework provides structure whilst being adaptable to the ambitions of different investors and to different types of funds and assets, as well as to changes in portfolios, markets, regulations and external standards. Read the case study here.

Canary Wharf Becomes the World’s First Commercial Centre Awarded Plastic Free Communities Status

On World Environment Day 2019, Canary Wharf celebrated becoming the world’s first commercial centre to be awarded Plastic Free Communities status by marine conservation charity Surfers Against Sewage. This recognises the success of Canary Wharf Group’s collaborative ‘Breaking The Plastic Habit’ behavioural change campaign. Working together, occupiers, individuals and partners have helped eliminate avoidable single-use plastic through education, awareness raising and innovative solutions, including deposit return vending, reuse reward apps, coffee cup recycling and water bottle refill stations. Read the case study here.

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