Sustainability measures such as the introduction of renewable energy technologies, improving energy efficiency and reducing emissions are not only praiseworthy for a global organization; they are critical to the future of our planet. But as with any major transformation, greening carries risks that the company must understand, quantify and manage.
Due to the inherent benefits of sustainability measures, these risks can be overshadowed. These risks also go beyond the climate-related financial risks that regulators are already urging companies to disclose.
There are two major types of additional risks with financial implications: property damage and hidden greenhouse gas emissions. Hence, there is a two-part approach to avoiding these adverse unintended consequences. The first part weighs the risk of fire or extreme weather against the sustainability measures being considered for facilities and grounds. The second part is to look at the sustainability impact over an entire life cycle, not just in a good year.
Fire is still the main cause of property damage and business interruption in commercial and industrial operations. A fire caused by a problem with the wiring of a solar module, for example, is not only a financial and reputational burden; it will produce greenhouse gases and pollute the local environment. However, the effect goes far beyond the fire itself. The rebuilding process, from raw materials to recommissioning, requires the emission of additional greenhouse gases during manufacture, transportation and installation. These emissions are called embodied carbon – Emissions embedded in a company’s ownership. This concept can help ensure that new sustainability measures do not create new problems.
Ignored risks from fires and natural hazards actually increase the total greenhouse gas production over the life cycle of a plant. Inadequate fire protection increases CO2 emissions over the life of a standard office building by 1-2%, taking into account the likelihood of a fire, the need to dispose of damaged material and rebuild, according to this engineering study. For a facility that is exposed to extensive fire hazards, such as a heavy industry with extensive flammable materials, inadequate fire protection can increase carbon emissions by 14% over its life. Natural hazards such as extreme coastal winds can increase CO2 emissions by 1-2% over the life cycle of a typical industrial building.
As these results show, solid sustainability measures require assertive risk management. In some cases, the consensus codes and standards set as “minimums” to reduce these risks simply cannot keep up with the pace of innovation. Hence, businesses need to look for proven standards and well-qualified design bureaus and installers using the latest and greatest best-practice guidelines available to avoid any negative surprises. Increasing sustainability does not have to mean sacrificing resilience.