The E in ESG – what care providers need to know about internal energy efficiencies and technology.

Rob Walton: So sustainability in social care, it’s basically focused on the needs of the current and future generations trying to minimise environmental impacts. So we’re looking at practices that promote ecological balance, efficient resource use and long term viability of care services.

Obviously we know what ESG is – the environmental, the social and governance because we’ve already talked about it – but in terms of looking at the relevance to social care sector I think there’s a few things here. They’re looking at policy alignment, that’s with the UK government looking to emphasise sustainability in social care and pushing for greener practices. You’ve got things like investment decisions where you’ve got your lenders are increasingly prioritising the ESG factors, then you’ve got community impact — social care providers focusing on ESG can enhance the community trust and one of the most important things, of course, is workforce wellbeing, so your employee welfare, making sure it’s aligned with ESG principles.

Rob: So as a starting point for a sustainability strategy you’re looking at a few things; you want to start with assessing your current practices, you want to look at your existing operations, your energy use, your waste management. Then you want to go and set your goals. These need to be clear and measurable targets for reducing energy consumption, minimising your waste and improving your social outcomes.

The implementation plan comes next so you develop your actionable steps to achieve those goals and then this is all wrapped up with monitoring and reporting so you’re reviewing your progress.

Now in terms of how this fits with the care home and their internal energy efficiency options, it can be structured in sort of ways like this. You have your energy audits where you conduct assessments to identify areas where energy use can be reduced, such as lighting or heating and your cooling, then you may want to have your renewable energy sources, which we’ve talked about in a previous podcast – things like solar panels or other renewable energy technologies. You’re upgrading your internal infrastructure with more energy efficiency appliances and insulation, then we’ve got smart technology such as smart meters and energy management systems.

Then we’ll have your staff training, so you’re educating your staff on the energy conservation practices and fostering a whole culture of sustainability and then the waste reduction so you want to align your sustainability strategy with an internal energy efficiency option and then what you’re aiming to do for a care home is to reduce their environmental impact and for them, lower their operational costs.

Carl Selby: There are loads of ways that people can use technology to reduce their energy usage, whether that’s looking at things like heating technology. You know, if you’re using a fairly standard fossil fuel burning tool to heat buildings to moving to heat pumps and other more energy efficient ways of doing that. Or even using things like the latest AI to look at energy usage and work out patterns of how best to keep places warm, but minimising the amount of energy through to, you know, there’s good old technology in insulation – you know, looking at more efficient ways of insulating buildings. That sort of gets forgotten about when people are talking about technology, they always think about it as being the nice shiny computery stuff in the corner as opposed to the sort of hard old physical technologies that come along.

But in addition to those sort of technologies, Rob’s already mentioned smart energy and metering, but there are also smart devices and other things nowadays that will reduce electricity consumption or indeed, looking at your supply chain and how you can reduce energy usage within the products and goods that you use within the home to service everyday needs and reducing the energy and carbon emissions that come from that supply chain. So there’s loads of different ways of doing it.

Carl: Yes, potentially. I suppose you could try and reduce the carbon emissions by reducing the amount of electricity that the technology that you’re using has or moving that technology to places where it can be more energy efficient to use it.

So, you know, if you’ve got computers’ servers, etc. plugged into your building, that might not be the most efficient way of storing them there and there’s an ever-greater move to the cloud – within that data centres that are looking at ever more sophisticated ways of bringing down carbon emissions and using renewable energies to power them. So there might well be several ways in which you can stop using technology or use technology in different ways to get benefits as well.

Carl: Yeah, sure. Well, Rob’s also mentioned at the outset that people like lenders and others are starting to look more and more at sustainability when they’re offering loans or, you know, other investments into businesses. So that might not quite sound like a legal issue, but ultimately it comes into the due diligence and other checks that people do when they’re entering into those type of transactions, so it then becomes a legal issue. So if you can get on top of them, you’re going to make your life much easier in terms of getting lending and investment in and but also when you are contracting with providers who are either consultants who are coming in to do energy audits or make recommendations on what you can do to become more energy efficient or you’re contracting with technology providers directly, you need to look at what contractual terms they’re offering, what responsibility are they taking for the solution they’re offering you and the energy savings that they say that will generate? What happens if that doesn’t quite go to plan? Who’s liable for what under the contract? What’s the supplier trying to limit their liability to if it doesn’t meet your expectations in terms of anticipated savings? And then there’s a few more sort of wider legal issues that come out of that.

Using any technology provider, certainly cloud based ones, whether that’s things like data protection, even if you are starting to look at clever technology that’s starting to look at how people do things or, you know, in the setting of, say, a care home and the movement of people between rooms or buildings or even movement of people outside of the home; what data are they actually processing? What do you need to think about in terms of making sure you’re compliant with data protection regulation and then through to, you know, how long is this contract going to be and what do I need to do to end it if it doesn’t come off?

So there’s a lot to think about whenever you’re contracting with anyone! I probably would say that as a commercial lawyer, but you know, you need to be comfortable that you are getting what you have been promised and that if something didn’t quite go to plan, you’ve got a sensible remedy which you can rely on to make sure that you’re not losing too much out of the relationship.

Rob: Yes, there can be quite a few challenges in this. I mean, the first one would be your initial cost. There can be quite an investment requirement if you’re going to upgrade your equipment, improve your insulation, have more energy efficient systems and that can be a barrier so that may have to be phased over a period of time.

The next thing you’re looking up is your staff. I mean there can be some cultural resistance. Many staff are resistant to change, especially if they’re accustomed to using certain technologies and processes. You need to foster a culture of sustainability at the start and provide the correct training for people to enable them to get them on board. You need to balance your care quality and efficiency so whilst you’re carrying out these energy reduction efforts, you don’t want to compromise the quality of care provided to residents. That can be a delicate balance when it comes in. Moving on from this, you’ve got regulatory compliance.

Now the CQC, which I think actually Anna Fee has talked about in a podcast, have now got the sustainability requirement. It doesn’t come into effect for care homes until March 2025, but that’s another factor to go and look at. But with energy reduction methods you’ve also got health and safety regulations and that can be in place when you’re making physical modifications to a facility.

We’re looking at things like technical expertise as well – the staff may not have the technical expertise to identify the most effective energy saving measures so that comes down to training. How you get your monitoring and measurement in place, how you’re going to track your progress, establishing those metrics to measure this energy consumption otherwise you’re not really sure if you’re achieving anything for the steps you’re coming in. There’s behavioural change as well actually, which is the ingrained habits that people have and they can be simply things like in terms of windows and doors and walkways and just how things are done. You may have to put things like reminders and incentives to go and foster these new behaviours.

One problem is going to be your existing building. If you’ve got something brand new, it’s easier to go and build these things into it. But if you’ve got an older building, you’ve got structural limitations. It could be a listed building, there could be anything in place which makes these energy efficient upgrades a bit more complicated.

Let’s not forget the stakeholders, so you’ve got the management staff and you’ve also got your residents and their families, so again you’ve got to make sure everyone’s on board with the efforts that you’re putting into place and probably the overall one is going to be the long term commitment. Everyone gets very enthusiastic at the start of a project, but as time goes on that enthusiasm can wear a little bit thin so you need to have something that keeps going and keep that long term investment worthwhile.

Rob: So you’ve got several systematic approaches really.

So your first one would be to establish your clear metrics and your KPIs, your key performance indicators. So that’s with things like your energy consumption you’re going to be tracking your energy usage across different areas of the facility, things like lighting and heating and cooling. You want to go and look at your cost savings, monitor your reductions and energy costs resulting from those efficiency measures. Look at your carbon footprint. You can calculate your greenhouse gas emissions related to energy use to assess your environmental impact and also your compliance metrics, so your measures, your adherence to relevant regulations, sustainability standards.

Then the next one we have is data collection and management. This is where, as we talked about before, your smart meters and your monitoring systems – having these things in place gives you real time data on your energy consumption, and you can identify trends or any anomalies, anything which is going wrong in certain areas and then you want some perhaps some energy efficient management software. This can aggregate the data and analyse patterns. Carl’s already mentioned AI – something that can be brought in to go and look at exactly what is happening and offer maybe solutions or recommendations. You’d want some regular audits and assessments in place. You can get external people to come in to go and do this as well, evaluating the effectiveness of the efficiency measures you’ve got in and seeing if there’s any new opportunities, and then you want your performance review as well to go and see what your progress is towards the goals and then you can adjust your strategy as required.

The next one would be your engagement and training, having your staff training program in place, making sure your staff are on board, understanding energy efficiency goals and the roles in achieving them and then some form of feedback mechanism to that so they can put their own personal input in terms of what’s happening, what works, what doesn’t, just because something’s a good idea on paper in practice, how is it actually going to work and is it something that can be used or is it going to actually get in the way of of caring for the residents.

You also need to have a regular report developing your energy use and savings and then communication with your stakeholders regarding these reports to see what is happening. Align it all together with your overall ESG policy because you’ve got your environmental monitoring, you’re looking at your, as we said, the energy reduction efforts. Combine it with your social considerations, how it’s impacting the quality of care and staff well-being. Make sure it doesn’t compromise your care standards and then connect it to your governance framework, which is the structures to oversee those energy efficient initiatives.

It’s all about continuous improvement. You want to be benchmarking things, your energy performance against industry standards or for similar facilities one of these things you can be doing if maybe you’re part of a care association or a wider group, it’s sharing knowledge to go and see what things work and what don’t and having a look at how people are getting best practice in place then you can adapt your strategies. So really you are monitoring these things, you need a comprehensive approach that’s integrated in the technology, assessment, engagement and alignment with your ESG policy.

Rob: Yeah, I just give an example of something you could do – let’s say we’ve got a care home and you want to enhance your environmental sustainability and improve your energy efficiency.

Your policy is going to support your ESG commitments and you want to minimise your carbon footprint so let’s say you have some objectives, first of all, you could have I want to reduce energy consumption. I want to achieve, let’s say, a 20% reduction in energy use over the next five years combined with decreasing your carbon emissions. Let’s say I want to lower my carbon emissions by 30% and implementing energy efficient practices and using renewable energy sources. Alongside that, I want to enhance my resident comfort. I want to improve the indoor environmental quality whilst maintaining a comfortable living space. So there’s your objectives.

Your next set is your action plan, so a sample action plan would be having energy audits and assessments. You’re going to conduct an initial energy audit to identify your current usage patterns and where you want to improve. Then you set up your regular audits, say annually to monitor that progress and then recalibrate what your strategies are.

Number two may be to look and upgrade your infrastructure. Let’s say we’re going to replace all existing lighting with LED fixtures to reduce energy consumption. We’re going to upgrade our systems to energy efficient models and implement smart thermostats for example to optimise heating and cooling.

Our next one would be maybe to look at what our renewable energy solutions are so whilst this would be a large cost we’re looking at an ideal policy, we’re going to install some solar panels on the roof and generate renewable energy, aiming for say 25% energy consumption from solar within three years but then to do that, if we’ve got limited funds, we’re going to explore partnerships with local renewable energy providers to source this green energy because as I’ve talked about in a previous podcast, sometimes they have a fund where they will put something in place, you’ll put a lease in place, they will buy back the excess energy and actually it can reduce the costs of putting it in.

Next step on your action plan would be your behavioural change initiatives so this is where we have our staff training programs focus on energy conservation practices such as turning off equipment when not in use, closing doors closing windows. Then we have a resident engagement program to encourage energy saving habits among the residents, such as using natural light and minimising appliance use.

Our next one will be waste management – recycling so a comprehensive recycling program and maybe, I don’t know, a composting system for organic waste in the kitchen, something in place there. I mean that obviously leads on to something nicely. Let’s say you did have sufficient green space, you’ve got a composting system, you grow your own vegetables outside – something also of benefit for the residents.

The final one would be your monitoring and reporting so that’s where you’re utilising your energy management software to track your energy consumption in real time so you can see the trends and then you’re going to produce your quarterly reports detailing this energy usage and your carbon emissions and your progress against those goals. The two other things that come along with it would be your governance and accountability, so you’d probably want to set up something like a sustainability committee comprising staff, residents and community members to oversee the implementation of the energy reduction policy and ensure your alignment with your ESG objectives and then stakeholder engagement would be to regularly communicate your progress to all your stakeholders, which is your residents, the families, the staff to make sure everyone’s on board.

We can also look finally at our social impact, which is where we’re providing training opportunities for staff in energy management and sustainability practices and then engaging with the community, with local organisations to promote sustainability initiatives and educate the community about energy conservation. I know that some care homes are doing this already at the moment, so that’s a few ideas for a policy.

Rob: Yeah, so we’re looking at a carbon reduction policy. You’ve got your initial investment through things like energy audits, conducting your energy assessments and your upgrades and then your retrofits. You’ve got that ongoing operational cost with your maintenance and the training. Then you have your monitoring reporting such as your data management systems and other things and then you could have external consultation, those fees and your compliance costs but I suppose the question is, is actually carbon reduction the best measure.

So the benefits of carbon reduction is it’s clear – it’s carbon reduction is a quantifiable goal that’s really easy to report and it aligns with global standards. Everyone’s talked about the pathway to Net Zero and we’re also looking a bit of a broader impact – to reduce those emissions can lead to energy efficiency improvements and cost savings.

Your problem with it is: it’s a really narrow focus. It just looks at carbon emissions and it can overlook other important aspects of sustainability such as waste management, water use, social equity and it can be difficult to measure as well. You need very good data collection and analysis.

One of the major problems – which is less of an issue for smaller social care providers, but it maybe for some larger ones – is the issue of greenwashing so if you emphasise your path to Net Zero without looking at a full review of sustainability, it can be just superficial efforts that don’t lead to actual meaningful change and it’s just another box that you’ve ticked rather than what your overall goal is.

Rob and Carl, thank you for your time.