Precision Activism in Action in Europe’s Built Environment
Notes from the field: 18 months into our Systems Intervention Point Programme with ULI Europe.
It’s the middle of 2023 already and we are knee deep in industry programmes that we think it is time to start talking about. In this blog, we talk about a shared experience between 103 Ventures and the European arm of the Urban Land Institute over the last 18 months. We explore the development and management of ULI Europe’s C Change programme — delivered in partnership with Catella, Hines, Immobel, IPUT, Longevity, Pimco, Redevco, Schroders Capital, Sierra Sonae — and our experience in placing systems intervention points at the heart of the strategy.
Preparing a programme for successful implementation
When we met Lisette for the first time, she introduced us to the Fast Track to Decarbonisation programme. This was based on the insight that, despite pockets of leadership across the full value chain of the built environment, there was not as yet a universally agreed or majority supported practical path forward recognised among ULI members. The suggestion at the time was to build a roadmap, which could galvanise ULI’s ca. 46k members around a common path forward in this highly fragmented industry.
This was an interesting brief and not an uncommon one to receive, but what held us back was that the industry already had plenty of targets and roadmaps. What we felt it needed was a precise analysis of why the roadmaps weren’t working. In fact, when we looked at the pre-existing industry groups in the built environment, we found a real tangible need. A need to shine a laser-thin light on why exactly the current roadmaps weren’t working. It was in these insights, we thought, that practical, pragmatic, immediately actionable solutions could emerge.
The deep work involved in systems innovation is not yet common knowledge in industry, so a number of foundational enablers underpinned the success of this engagement. As an industry body with a vast network and substantial influence, ULI Europe afforded credibility in support of new approaches and deep industry insight and expertise. Where 103 could add value with its systems insight, we were also enabled by the openness of the ULI Europe team to learning and adopting new and unfamiliar ways of working. Being clear and confident on this division of expertise from the outset was key: ULI Europe brought industry knowledge, capabilities and an extensive network, while the 103 Ventures team brought systems thinking and know-how. Bringing these assets together meant that we were able to focus on designing and delivering a deeply contextualised programme, underpinned by systems thinking.
Integrating systems intervention logic into the built environment
Year 1 — Building the system insights
It’s not easy to paint a picture of an entire industry system. Most stakeholders within a system know their vertical very well, their up and down stream verticals reasonably well, the rest of the value chain sufficiently, and the wider system — somewhat less so. This poses an even greater challenge when multiple industrial sectors (which make up the built environment) meet fragmented ownership models with considerable representation of small and medium-sized enterprises.
For an industry as complex as the built environment, this whole-system viewpoint was critical. So together with a small team of researchers, we set about to first assess the current consensus on how change “should” happen, through the technical assessment of (i) the pre-existing industry, regional and national roadmaps, and (ii) the most commonly cited lever and barrier for change, European Policy.
We then interrogated these findings through an action-focused, stakeholder-led landscape scan.
This is a deep, methodical analysis into the issues associated with all critical stakeholder groups within the built environment. This allowed us to surface the most pertinent issues for the participating stakeholders to take effective action. To achieve this, we identified the top 100–150 stakeholders either impacting, or impacted by, the decarbonisation of the built environment in Europe and either researched or personally engaged them along 3 lines of inquiry:
- What has already been done
- What is happening right now
- What is happening in the next 12–36 months
With this insight, a more granular and insightful picture started to emerge. Clusters of popular but ineffective actions, blind spots, duplication, powerful personalities either enabling or blocking progress, deeply entrenched beliefs, and untapped energies or frustrations emerged. In short, the factors underpinning the system’s dynamics.
Year 1: Refining focus; delivering first results
Surfacing the most pertinent opportunities for action
Change of this nature does not happen of its own accord. More often than not, it is spearheaded by leaders from a range of stakeholder groups — be they private, public, or third-sector, or the general public. Which is why we think it is critically important when identifying systems interventions to do so armed with two things:
- A clear view on the USPs and change potential of the activated network of the commissioning organisation.
- Systems-based methods and supporting selection criteria to identify and prioritise interventions capable of delivering tangible, measurably impactful results in 12–36 months.
USP and change potential
Working with Urban Land Institute Europe and its network provided substantial potential for change. When assessing how to activate that potential, we noticed two things:
- They had — hitherto this moment — focused their expertise on supporting their members through connection, inspiration and leadership. Furthermore, they had sought to do that from within the current context of the system, and not yet focused their attention on supporting their members to change it. This was an opportunity.
- Their diverse network of members had good coverage through most of the real estate value chain, but what was really interesting was their real stronghold in real estate investment. With 17 of the 20 biggest real estate investors in Europe positively engaged, we recognised the opportunity of being able to harness that trust to support positive shifts in industry.
Systems methods and guiding criteria
The actual process of identifying the specific interventions was an intuitive and iterative one. It required a change-within-systems skill set, multiple team, client and stakeholder workshops, the energy for repeated sense-breaking and sense-making, the perseverance to keep engaging stakeholders, and the persistence to continuously refine a high-level problem area until an actionable pain point (what we call an ‘intervention’) was identified.
By the time we completed this phase of our work we had identified 43 high level problem areas (what we call ‘cross-cutting barriers to change’), created a long list of 18 interventions and further worked with a guiding criteria (mentioned above) to select 4 priority interventions, chosen for their synergistic effects.
NB. For a deep dive into any of these interventions, please check out our online tool here.
Refining and delivering an intervention
Deep, action-focused research was the bedrock of this work. For many, this sort of investigation would stop at the landscape-level scan. But for us, that was just the beginning. While at first we sought to understand the system as a whole and its broad opportunity areas by going wide and listening deeply, here we followed the same method again to dig deeper and identify specific actions within a single intervention point to enable change.
It was in this stage that we dove into one of the most pertinent barriers to the rapid roll out of retrofit for the built environment in Europe — the integration (including monetary quantification) of transition risks into everyday investment decision making.
We knew that risks were changing behaviour, we knew that quantified risks could tangibly change value perceptions, but we also knew that all except the most leading and well resourced firms were under-resourced and under-informed of the specifics. This resulted in the management of properties repeatedly externalising the cost of decarbonisation, thereby misrepresenting it’s value upon management and sale, perpetuating the case for business-as-usual activities. Until we could unequivocally show the impact and opportunity on asset values as a result of the transition, we knew the overall retrofit rate would remain painfully slow.
To tackle this head on, we devised two solutions:
- A set of industry best practice guidelines. Modelled after INREV’s industry shaping guidelines, these were designed to provide a means to standardise the treatment of transition risks up and down the value chain of real estate investment and, crucially, to disclose them.
- An automated tool so that any stakeholder, large or small, could have the same level of access to insights as the majors and quickly adopt transition risks into their investment value assessments.
Both the guidelines and the tool deliverables were developed in the lead up to the launch of the C Change Summit in October 2022. A first draft of the guidelines moved into public consultation and the tool reached the stage of a technical specification, suitable for briefing to a technology company to deliver.
YEAR 2: Removing barriers to scale, kick starting other interventions
Removing the barriers to scale
If one thing is for sure in our lives, it is that the only constant is change — and yet our resistance to it is relentless. Which is why we intuitively knew that, despite all of this work, it still wouldn’t be enough.
In a time of ever greater uncertainty and threats to corporate resources, it is unfortunately often easier to wait until a change is considered absolutely necessary, rather than stepping up to take a leadership position. This is why we next focus on levers for change. For us, levers for change are about recognising change doesn’t happen of its own accord, so once a smart response to a particular intervention has been developed, we must then turn our focus onto how to remove the barriers to scale and accelerate its adoption.
In the context of transition risks, we knew certain barriers would hold back the successful adoption of these new industry best practices:
- Friction — For smaller firms, the depth of analysis required could be seen to be prohibitive. This is why the tool specification was developed — to make it as easy as possible to adopt.
- Data sharing — Previously considered commercially sensitive, we knew this information would release quantified comparables into the industry and responsibly deflate the property carbon bubble.
- Carbon pricing — Without a common agreement on carbon pricing methods and disclosure, industry actors would be at risk of disadvantaging themselves in the more mainstream deals, management and investor relations, if they took the lead.
- Slow adoption — Until a critical mass (ca 20%) of industry are actively endorsing and adopting this work, all this hard work could be at risk of fading away into insignificance.
Each of these barriers has become a major focus of the Year 2 work programme for ULI Europe. The intention is to work on each of these areas in turn (with the tool being developed by a third party technology company).
Kickstarting other interventions with synergistic effects
Once a priority intervention has moved into implementation, this is when other interventions can be activated to amplify each other’s effects. This is why, in year two of the C Change programme, three further interventions are kicking off that are directly informed by this transition risks work:
- Carbon pricing: This is a lever for change for transition risks, as discussed above, but due to its significance across the whole value chain it is also an intervention in its own right. This is why we plan to invest 5 months into a deep-dive on this carbon pricing this year.
- Owner and occupier engagement: One of the toughest transition risks to manage is in managing tenanted properties, with no owner control over energy usage or retrofit priorities. In this, we recognise historic relations, ownership and tenant fragmentation and a mismatch of priorities has held the sector back for too long. In year two, we plan to manage a community of practice where owners and occupiers can deepen their relationships and collective insights in order to drive more coherent and impactful change together.
- Financial solutions: The transition risk work to date has focused on asset-by-asset assessments. The resulting insights can be scaled up to help support the identification of risks and opportunities at a city scale, where at present there are worryingly few examples across Europe of large scale place-based retrofit programmes at the pace required for a 1.5oC world. This is why a 9 month programme, complete with two residential retreats, has been developed to work on this issue using Berlin as a case study.
Year 3: Looking ahead
We are, of course, not there yet, but we think it is worth a mention as it completes our three year cycle on the systems intervention point methodology. We’d also love to be held accountable to our goals.
If year 2 is about removing the barriers to scale, then year 3 for us is about consolidating our efforts and really focusing on reaching a critical mass of adoption. This is invariably not something that can be done alone — it takes deep intelligence regarding how the sector is structured and who the most critical influencers are to stimulate adoption. It also requires strategic partnerships with organisations with similarly large networks and common interests. The foundations for this intelligence and these partnerships are being developed already in year 2, and we will aim to bring things to fruition in year 3.
An important note: Interventions — A point in time analysis
When we deliver a systems intervention point programme, it is important for us to recognise that we are merely making a point-in-time analysis. When diving deep and listening intently to a system, the words we read and the stories we hear represent the current state of the system in that moment. From the very day that analysis is translated into paper, the system — formed of almost infinite moving parts and stakeholders — changes again.
As is the case with this analysis of the built environment. The first analysis was conducted in February 2022. Since then, significant shifts in the landscape of change have occurred. For example, progress has been made in transition risks through RICS, ULI Europe and INREV; the new EPBD has been published; the Inflation Reduction Act has come into play in America; SBTi has teamed up with CRREM to integrate pathways and published new built environment guidance and embodied carbon pathways. The buildings breakthrough born at COP-27 is mobilising country level built environment ministers into action, the “brown to green” market is beginning to get traction and liability risk is getting the due attention it deserves — opening up new worlds of opportunities. All of these shifts contribute to sometimes subtle, sometimes more sizable shifts in the context of the identified interventions for the industry to take action on.
This is why systems intervention point analyses should not be a one off activity. For anyone engaging with them or using them to make plans on how to intervene in an industry system, we recommend updating your perspective every 1–2 years. This will ensure that the targeted work remains precise, non-duplicative, and as impactful as possible.
Taking the systems intervention point logic to other industries
The built environment was our first systems intervention point programme, but in the process we took the time at every stage in the journey to look back, record what we have done, and think about how this can be applied to other industries. We now have a core methodology that we plan to take to other industries, adapt accordingly, then learn and refine it from our experiences in new contexts.
In the longer term, we would like to think strategically about the specific sectors we chose in line with clear and prioritised science-based needs. For now, we are building our knowledge and expertise from other industry-level case studies in action. Our compass right now is on high-impact, whole-sector/industry transitions, so if this is something that you are working on, please do get in touch.
As always thoughts and builds are welcome.
kate@103.ventures.
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