Nowadays, sustainability is no longer just a trend but an imperative. Climate change, the scarcity of natural resources and growing awareness of environmental and social issues are forcing companies and investors to rethink their strategies. In this context, Sustainable Asset Management is emerging as a crucial approach to aligning investments with environmental, social and governance (ESG) values.  

Let's explore what sustainable asset management is, its advantages and how it can be implemented effectively.

What is Sustainable Asset Management?

Sustainable Asset Management can be defined as the strategy and practice of considering ESG factors in the management and investment of an organization's physical assets and facilities (including buildings, factories and machinery).  

This involves integrating criteria that mainly assess the environmental impact of companies with regard to the management of their assets and heritage. The idea is not only to seek financial returns, but also to contribute, in the first instance, to the long-term sustainable development of the organization, as well as the community and the world.

Why is it important?

1. Reduced Risk: Companies with strong ESG practices tend to be more resilient and less susceptible to risks such as environmental disasters, social scandals and governance problems. This can result in lower volatility.

2. Sustainable Returns: Studies show that sustainable companies often outperform their less sustainable competitors over the long term, offering robust financial returns to investors.

3. Positive Impact: Investing sustainably promotes responsible business practices, encouraging positive changes throughout the economy.

4. Alignment with Values: For many investors, especially the younger generations, aligning investments with personal and ethical values is a growing priority.  

No Sustainability Without Asset Management

Sustainability and physical asset management are deeply intertwined, and achieving one cannot happen without the other

As can be seen in the table below, the energy used in industry, transport, buildings, agriculture and fishing (among others) is responsible for 73.2% of the world's CO2 emissions. It is therefore imperative that all organizations and governments start to manage their Physical Assets and Facilities in a sustainable way, which includes proper energy management, otherwise we will never truly be on the road to sustainability.

More Reasons to Implement Sustainable Asset Management:  

• Efficient Use of Resources

Effective physical asset management ensures that resources are used optimally, minimizing waste and maximizing efficiency. This is crucial for sustainability, as the rational use of natural resources is one of the pillars for reducing the ecological footprint and ensuring that these resources are available for future generations. Associated with efficiency is, of course, the reduction of financial costs for organizations.

• Preservation of Infrastructure and Assets

Physical asset management involves the maintenance (preventive and predictive) and preservation of infrastructure and goods. Without proper management, assets can deteriorate rapidly, leading to the need for frequent replacement and, consequently, increased demand for new resources and energy. Preventive maintenance and efficient management extend the useful life of assets, and reduce the environmental impact and costs associated with the production and purchase of new materials.

• Informed decision-making

Using cutting-edge technology to manage physical assets enables the collection of valuable data and insights that are essential for making informed strategic decisions. Well-informed decisions are fundamental to sustainability, as they allow companies and governments to assess the environmental and social impacts of their actions and choose paths that promote sustainable development. Without efficient management, a lack of data can lead to decisions that compromise sustainability.

• Responsible Investment

Nowadays, investments are directed towards initiatives and companies that follow sustainable practices, which also means managing their assets in a sustainable way. More and more governments and institutions are choosing to invest in responsible businesses. Without such decisions/options, investments could continue to flow towards activities that harm the environment and society.

• Risk reduction

Incorporating ESG factors into physical asset management helps to identify and mitigate risks. Companies that neglect these factors face significant risks, including environmental disasters, credibility problems, loss of funds or financing, among others. By choosing to have a sustainable business, organizations are protecting themselves and promoting long-term stability.

• Contribution to Global Objectives

Physical asset management aligned with sustainability indicators contributes directly to achieving the United Nations' Sustainable Development Goals (SDGs). The SDGs include targets such as affordable and clean energy, decent work and economic growth, climate action, among others.  

How to implement Sustainable Asset Management?

1. Define ESG Criteria: Establish clear and measurable criteria for evaluating your company's environmental, social and governance aspects.

2. Choosing a Physical Asset Management Platform: Be careful when choosing. Opt for a comprehensive platform that allows 360º management of all types of physical assets and is accessible on desktop and mobile.

3. Digitize all Assets: Together with the project team, it is necessary to register all buildings (floor plans...) and physical assets within the platform, so that they have a digital presence and can be managed centrally.

4. SensorizationThe next step is to sensor all the organization's facilities and assets using IoT technology in order to obtain real-time data. It is important to sensor all assets that use electricity or water (or any other type of energy), as well as meters. Only in this way is it possible to obtain real-time data that allows you to trace patterns, notice deviations and suggest improvements and optimizations.

5. Training: After registration and sensorization, it is necessary to invest in training internal and external teams (suppliers) in the correct use of the platform.

6. Continuous monitoring: Physical asset management is an ongoing process. Once the project has been implemented, it is very important to regularly monitor the performance of indicators (such as compliance with SLAs, energy consumption, CO2 emissions, among others) and adjust your strategies as necessary.

7. Reporting and Transparency: Sustainability reporting for your organization or company is no longer an option, but an obligation. Use the data from the Sustainable Asset Management platform to comply with regulations and complete your sustainability report more quickly using reliable and auditable data. Keep your investors informed about your ESG performance. This brings confidence and demonstrates your commitment to sustainability.

Conclusion

Physical asset management is not just a passing trend, but a necessary evolution in the way we do business and invest. By integrating ESG criteria into management and investment decisions, we can not only achieve positive financial results, but also contribute to a more sustainable and balanced future.  

Investing responsibly is not just an ethical choice, but a smart strategy to ensure that we, as an organization, contribute to a better world. In doing so, we will be building a path to a future where sustainability and prosperity go hand in hand.

When you're evaluating a Sustainable Asset Management platform, talk to Nextbitt and we'll be happy to show you our solution in a personalized demo.

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