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Interserve merges finance and sustainability posts to prove it pays to go green

Interserve is unique among major contractors in that its head of sustainability is also its finance director. This dual role sees the FD carefully balancing sustainability with business imperatives – leading to some ambitious targets to change the company by 2020.

In construction, there is still a widely held perception that sustainability costs money. Many believe that to build something to high environmental standards will always cost more.

Sometimes this is true; often it is not. But Interserve is uniquely placed among the major contractors to weigh up the cost-benefit calculation when it comes to sustainability. That’s because its head of sustainability, Tim Haywood, is also its finance director.

“There’s a misconception that the finance director cares only about the business and not value, and vice-versa for sustainability,” he says. “Hopefully we can prove that sustainable business can mean good business by melding them together.”

Long-term strategy takes first steps

In 2013 Interserve launched SustainAbilities: a business-wide strategy that sets out targets for the company to achieve by 2020.

The first year of the strategy has seen some solid progress made, although measurements are thin on the ground due to 2013 acting as the baseline year against which future performance will be measured.

There have been a number of achievements, however, including a 5.5 per cent reduction in CO2 emissions in the UK from 2012. This included 2,269 tonnes of CO2 emissions from business travel saved thanks to smart travel plans and the use of electric cars.

“Not every sustainability target is appropriate for the whole business, but there is something in there for everyone”

Tim Haywood, Interserve

“We’ve made great strides in the past year, particularly in getting the goals embedded into our organisation,” Mr Haywood says.

“The plan is designed to reflect our desires for the future and to pull them together into a practical framework. You can’t stick lipstick on a pig, so we first have to reflect on who we are and then take that further.”

The strategy is very wide-ranging, with five broad outcomes achieved by completing 15 ‘goals’, which in turn are made up of 48 specific targets.

As well as environmental impact, the targets cover local community engagement, diversity, skills, materials and future resilience to climate change.

Targets are staggered, with deadlines of 2014, 2016, 2018 and 2020 depending on the objective. By the end of this year, for example, the company is aiming to use only sustainable forest products on projects and to increase the re-use of construction waste by 15 per cent.

“SustainAbilities is multi-dimensional, multi-year and really complex – the same as our organisation,” Mr Haywood says.

“Not every target is appropriate for the whole business, but there is something in there for everyone.”

Progress with clients

A number of the company’s clients are also beginning to switch on to the benefits sustainability can offer.

“I think it has been instrumental in winning certain contracts, particularly around social value on our Ministry of Defence contracts,” Mr Haywood says.

“I don’t say directly that we won a project just because of sustainability, but it helps”

Tim Haywood, Interserve

“We’ve made progress in getting some of our key customers to see how important we think it is – particularly government.”

The Social Values Act, introduced in early 2013, makes sure local authorities have to consider how facilities can benefit a community beyond just designing and providing them.

“This means it’s hardwired into that public procurement process – but the understanding and implementation can be patchy,” he continues. “This plays to our strengths. I don’t say directly that we won a project just because of sustainability, but it helps.”

Policing sustainability

One such project is the delivery of two new divisional headquarters, custody suites and a specialist operational training facility for West Yorkshire Police.

The £100m facilities are located in Leeds and Normaton, and Interserve will also be responsible for facilities management – including energy management – once the buildings are complete.

“We showed a very deep and detailed commitment to sustainability on this project, and it was well received by the client,” Mr Haywood explains.

“For example, we had a target of 65 per cent local spend; we achieved 85 per cent. It makes sense for us – and part of the strategy is to use SMEs and local labour whenever possible.

“We don’t just let them sink or swim when awarding work; we try to nurture and help them, as it’s important for our business, too”

Tim Haywood, Interserve

“We’re very pleased to be top of the league table of government suppliers for use of SMEs and we don’t just let them sink or swim when awarding work; we try to nurture and help them, as it’s important for our business, too.”

Building information modelling was also used extensively, with FM and construction integrated into the model right from the start to ensure maximum efficiency.

Importance of data

The use of BIM is, of course, closely related to the accurate collection and monitoring of data. Interserve has designed, built and implemented an entirely new IT system, called Insight, to improve this aspect of the business.

“We are collecting stuff that normally hadn’t been collected,” Mr Haywood says. “We’ve designed templates for data collection in a huge variety of areas.”

Interpreting this vast amount of data and using it to make business decisions is crucial.

“One potential pitfall is that we chase perfection too far and end up chasing diminishing returns. Once you’ve reached a certain level, going that bit further may not make business sense”

Tim Haywood, Interserve

“This will remain an ongoing challenge for us,” Mr Haywood says. “One potential pitfall is that we chase perfection too far and end up chasing diminishing returns.

“Once you’ve reached a certain level, going that bit further to achieve perfection may not make business sense.”

This is where Mr Haywood’s dual roles in finance and sustainability come in useful, as every action taken on sustainability has to be justifiable in business terms.

“I acknowledge that there’s more to life than the bottom line in order to get a rounded outcome,” Mr Haywood says.

“And I think securing top-level sponsorship for sustainability from the board is helped by having the FD, usually the arch-sceptic, on board.”

Big, hairy and audacious

Board-level support is shown by the fact that the company’s own new regional office in Leicester was built to Passivhaus standards – the first UK commercial office designed and built to this specification in the UK.

In fact, the building’s solar PV system ensures it goes beyond Passivhaus, achieving a carbon-negative EPC asset rating.

The building is also expected to achieve a 60 per cent reduction in CO2 footprint, net energy savings of £28,000 per annum compared with the old office, an airtightness of 0.6; and a space heating/cooling demand of less than 15,000 kWh per sq m per annum.

Not many companies can boast a Passivhaus-certified office – and this feeds into the company-wide commitment to halve absolute carbon emissions by 2020 – something Mr Haywood terms a ‘Big, Hairy, Audacious Goal’.

“These BHAGs come in at the tail end of our 2020 strategy,” he says. “To achieve a 50 per cent reduction in carbon emissions you can’t just tweak business as usual; you require some fundamental changes.

“Some of these changes you can’t even see at the moment – they will require innovation. The biggest challenge is to get 75,000 people all treating sustainability as ‘business as usual’ – then we will start to see some real change.”

2020 goals

Some of the 48 targets detailed by Interserve in its SustainAbilities report are described by Mr Haywood as “big, hairy and audacious”.

These include the seven targets with the longest deadlines – those the company hopes to achieve by 2020 and will require the biggest changes to the business:

  • 50 per cent reduction in absolute carbon emissions.
  • Introduce closed-loop systems along the value chain.
  • Double the number of apprenticeships, traineeships and graduate training opportunities.
  • Develop three partnerships dedicated to innovation in sustainability.
  • Double opportunities for disadvantaged groups each year up to 2020.
  • All public sector work to offer ‘open book’ accounting.
  • Work with largest suppliers to report against the ‘4 capitals’: social, knowledge, natural and financial.

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