The Temperature is Rising

If we thought the construction industry was being squeezed before, leaders are now braced for rising inflation, recession, the war in Eastern Europe scaling up and a winter of discontent.

We call this the ‘pressure cooker effect’ – and it’s the people at the top who have the job of keeping the lid on.
Here, Granger Reis Founder & CEO, Richard Milsom argues that with the temperature rising across the globe, as well as in the boardroom, we must ensure business leaders stay committed to Net Zero ambitions.

So, we are entering the last quarter of another ‘unprecedented’ year. Another rollercoaster ride, having to process change at the speed of light and solve problems even quicker.

Looking back at the start of 2022 feels like a decade ago.

Remember when there were reasons to feel cautiously optimistic? We were leaving consecutive lockdowns, benchmarks and indexes were reporting upturns in good sentiment and workload growth through to the early part of 2023 was viewed as likely to remain strong.

But, as the year progressed the glass-half-full approach became increasingly less positive. War, economic upheaval and, in construction, steep hikes in building costs, labour and materials, concerns around tightening credit conditions and lack of resource began to hit – hard.

Now, as we enter a ‘winter of discontent’ and possible recession, business leaders will be faced with the kind of problems not seen since the 70s. People’s livelihoods are being squeezed beyond all expectation and Covid-19 has still not gone away.

Predictions for 2023 are now vastly different to the last forecasts even in June. The OECD has benchmarked global growth to 2.2% down from 2.8% – with the UK’s predictions plummeting to 0% growth next year from 3.4%.

The US, the world’s largest economy is forecast to slow to 0.5% next year and Germany, Europe’s biggest economy, is now expected to shrink into recession with a 2.4% drop to 0.7%.

So, temperatures are rising in more ways than one, creating a pressure cooker environment with what sometimes feels like no real-world knowledge of how to turn the dial back down.

One thing we can be sure about is that the current cohort of global business leaders will be responsible for not only keeping the lid on, but also ensuring the multi-lateral commitment to Net Zero emerges stronger than ever.

So, radical uncertainty abounds, business as usual is dead in the water and an exhausted group of C-Suite leaders are faced with the conundrum of a generation – how do we save jobs, business, the economy and, indeed, the very world at large?

And throughout the course of history are new ideas and innovations that can provide a map for the minefield we face.
The potential pinnacle of this has been recently reached by Patagonia, whose founder Yvon Chouinard revealed he and his family are ‘going purpose’ instead of ‘going public’ with the company by ensuring its $100m annual profits fund climate change and wilderness preservation.

This rightly caused shockwaves across the world as the brand lived its ultimate expression and eclipsed all others trying to be seen to make a difference.

But, let’s face it, this is not an adoptable model for most. Take construction, for example, the margins are already so squeezed even the very concept is unworkable.

What is potentially more interesting for infrastructure and real estate is the work being done by empowering and uplifting the various components in the supply chain, alongside core business, to think and act more sustainably.
After all, a recent survey by GlobalData showed 61% of leaders in construction are being tasked with finding more sustainable methods.

Consider for example, that 80% of industry emissions come from the supply chain and the fact the cement industry is responsible for up to 8% of global CO2 emissions alone and you start to understand the scale of what needs to be tackled - and the need for courageous action.

Degrees of change

However, even with the superhuman efforts that are taking place across many boardrooms, we must remain realistic about impact.

Yes, positive things are happening as years of proactive climate change action are now coming to fruition through the ESG agenda and this proves the understanding that interwoven elements – environment, society & governance – need to be addressed holistically, then nurtured and grown.

Globally we see most action on this in the UK, US and Australia, there are promising seeds starting to shoot – a major part of which is derived from a wider brand and business purpose perspective (and not just a little by the fact pressure groups are ever-more savvy in how they can reach shareholders).

But the manifestation of ESG in a business must come from the top, and its real power is in the dissemination of clear activities that have touchpoints and links throughout construction in general.

Speak to many business leaders today and you sense a growing feeling they are increasingly being asked to respond to social agendas personally – that their focus on business performance, undoubtedly of benefit to society, is now secondary to the wellbeing of their employees.

Many, sometimes justifiably, feel this is a step too far.

After all, major changes to the way the infrastructure sector operates has drained it of profit, created consistently squeezed finance models and requires the highest vigilance already on areas of wellbeing such as health and safety.
The pandemic has certainly created some beneficial changes and opportunity, but also delays in infrastructure planning, finance release and regulatory change. You could, in fact, write volumes on the challenges facing most infrastructure companies irrespective of location.

With all of this on the shoulders of industry executives, we find ourselves asking, not only what do you want to do within the infrastructure sector, but why are you still committed?

And, increasingly, the answer coming back is simple: they want to make the world a better place.

Unquestionably, we must try and harness this moment to ensure this is the legacy left for the generations that follow. For, while their actions today will set the path, present leaders will not be the ones to carry the next generation of businesses through to the final goal of NetZero.

So, the question is – are we up to the challenge?

At Granger Reis, it is our job to find these leaders, which puts responsibility and meaning into everything we do. We are aware of our own role in influencing the change needed.

This next generation of ‘superleaders’ are at a very specific point in their careers, can see the benefits of the past and understand what is needed for the future of infrastructure and beyond.

Central to this is the understanding that it is not one single person sitting at the top of an organisation that can change the world. Rather, it is the accumulative effect of individual empowerment and action that must be fostered to achieve these goals.

Our research and experience shows that ‘sustainable superleaders’ in particular will come from any, and all, backgrounds, bringing invaluable diversity and inclusive thinking into an industry often criticised for being closed.

We believe the following character traits must be present in leaders now and in the future if we are to reach Net Zero:

• Collaboration: the best leaders put collaborative learning at the heart of their business process
• Diversity: are from diverse backgrounds and/or bring in a variety of voices to ensure different solutions can be heard
• Perspective: is able to step away from the micro and see a longer term vision built on organisational resilience
• Innovation: does not over-rely on traditional methods and offers opportunity to ‘try and fail’ within obvious regulatory and safety boundaries
• Passion: alongside job creation and economic recovery, a focus on climate action at the heart of every part of the organisation
  

As part of honing our own skills we have put our values at the heart of everything we do through the creation of our four guiding principles and living our purpose to search every corner of the world to find the people that will change it.

These mean we collectively act as enablers, supporting businesses to make the right choices for their people and the world around them, now and for the future.

Part of our evolution is our goal to attain BCorp status and we are now well on our way to achieving this.
Because one thing IS for certain in this uncertain world – we can no longer look away or stand idly by.

This summer alone we witnessed temperatures of 42 degrees in London, dozens of countries hit by meteorological extremes, which saw millions of people being driven from their homes by flood, fire and drought. Food and energy shortages have become ever more acute and social and political unrest is rising as a result.

So, as we look ahead to 2023, I have made a commitment to speak to industry leaders, to innovators and to finding people with solutions that can help release this pressure cooker, to share, learn and, crucially to change.

I hope you will join me.