How do you crack open that tough nut of getting market transformation for energy efficiency in buildings? Especially at the sub-premium level. And what about in Asia with so many market opportunities beckoning now the Asian tiger has started to realise its fire breathing emissions need to be cleaner and greener?
According to Keith Gunaratne – whose Australian-based company EP&T Global has been working in the London, the Middle East and is now trying to prise open some opportunities in Asia – you need more than great technology and a sound financial proposition.
It helps to understand the market, sure, but you’ll also need a good handle on human nature, the political environment, including the onslaught of social media, and if you’re in Asia, some cultural history as well.
It’s tough enough to motivate owners of B and C grade buildings in Australia, Gunaratne says, but in Asia there are cultural barriers as well.
We recently caught up with Gunaratne, whose country of origin is Sri Lanka, to gauge what his take might be.
As with most places the biggest motivator for energy efficiency is money, he says, but in Asia you need to jump a few other hurdles as well.
For instance if you’re pitching an energy efficiency program in Singapore or Hong Kong, you’ll no doubt be dealing with the “head guy”, but that head guy might have a portfolio worth billions so it might be hard to capture his attention if the savings work out to a only a fragment of the yearly profits.
You’ll also struggle if you expect a better corporate image will be an inducement in Asia, since companies and people have no history of being penalised or vilified, he says.
Could government mandates work? Singapore has made a big splash with greening its environment in recent years, especially with its Green Mark certification, which has had big government backing.
According to Eco-Business, 2000 projects in Singapore have been Green Mark-certified, and another 200 or so overseas projects have also sought certification.
So why doesn’t the powerful Singaporean government simply mandate improvements for existing buildings?
That’s a bit trickier than it might seem to an outsider.
Governments in Asia tend to be very pro-business so you need to bring business on the journey for governments to respond, he says. And governments will tend not to mandate action by business unless the population is “dead behind the government”.
“So on the Asian stage, running things is very consensual; they do not like conflict; that’s why Asia has no wars. We’ve not seen many wars in Asia.
“They prefer to talk. If it’s a good thing to do they will talk about it and if business fights against it and the people don’t respond then there is no incentive for the government to do anything.
“That’s why you have to take the business community on the journey and if the business leaders do come along, you might say, ‘Okay, let’s put some rating schemes in then they will put in some rules to bring the laggards up.’”
Capacity and trust
As a company entering a foreign country you also need a lot of capacity to stay in a market and earn trust, he says.
“There are so many companies coming with a briefcase, taking a few orders and then they go.
“But if you stay there for years and years, then the trust factor builds up.
“They’ll always entertain you because they want to know what you are doing and what the rest of the world is doing but if they’re going to do anything about it then it’s about if they can trust you; can they believe in you. If that’s not the case then they won’t take the risk.”
Still, overall, the prospects are much improved on the scenario five years ago, Gunaratne says.
The Middle East, however, where the company has tried to establish a base, has fallen away in potential, Gunaratne says.
“The Middle East is not there for us. We’ve done some work there over the years and we’ll continue to have some presence there.”
Australia’s sub-premium market
In Australia the company is still going strong with 40 full-time staff. There has not been much growth in staff but he says that’s because advances in technology means the company can do “more with less”.
Most of the company’s clients are the industry’s biggest but Gunaratne says it’s tough to get property owners outside this space to take action.
It’s an area that could well do with some greater leadership from government, perhaps in a way that the green building fund led market transformation at the premium end.
“This is where the government should step in because big companies have provided serious savings so why wouldn’t they do what they did for the bigger companies to get market transformation?”
A mandatory only approach is not going to cut it, though, he says.
This is an era where if you only put out a stick everyone will back down, he says, pointing to recent political behaviour at the federal level.
“Today is different. The world has changed and the people’s voice is very powerful.”
In the UK he saw a major supermarket chain immediately change its work practices after a single critical article in the media.
The Arab Spring, he says, saw a minority of perhaps 200,000 people in a population of five million topple a government – something most unlikely to happen given a general election.
“So now, more than ever it’s important to talk.”
And given human nature, more carrot than stick is the best way to create the incentive for market transformation.
There is always a price, he says, but “humans will do something if there is something in it for them”.