Incorporating Sustainability Into Capital Investment Decision Making: An Interview With Francis Pamminger
Incorporating sustainability into capital investment decision making ensures informed decisions are made, but it is not problem free. Neither is the role of the sustainability leader. Francis Pamminger, an engineer with 30 years’ experience in the water industry, shared his views on these and other topics with me.
Francis has an extraordinary ability to bring people with a range of skills together from different functions. This was particularly important in his role of determining what sustainability meant for Yarra Valley Water, distilling this into an organisational policy, and then integrating it into day to day activities across the business. He is currently the Manager of Research and Innovation. A personal highlight was receiving the International Water Association’s runner-up Prize for Research Excellence in the Sustainability Specialist Group in 2008 and 2010.
What would be your advice to someone taking on a sustainability leadership role for the first time?
It is an exciting, fulfilling and intellectually stimulating opportunity. I would thoroughly recommend it to everyone. But be warned that it is also personally very challenging. With the highs, also came some pretty big lows. The lows come with a role with a remit that not everyone found logical for a business to follow. Not everyone support all of my efforts to introduce new projects.
A major part of a sustainability role is to introduce change. For this to be successful, your organisation has to be open to change. And that is a cultural characteristic. I am lucky to be in organisation where my Managing Director challenges us professionally, and personally, to improve our organisation and ourselves. We have a belief that an organisation of the future is one that is a learning organisation. This allows us to better handle the complexity of working with stakeholders and across functions. Working across functions is necessary because sustainability impacts are generally at a scale larger than that considered by organisations in the past.
When first facing the need for change, you need to be careful not to push too hard at changing others without being prepared to change yourself. I found it important to improve my listening skills. Simple as it may sound, you will improve your chance of success if you “listen” to more than the words. You need to listen to a person’s uncertainty, their intent and their silence. Just because a person doesn’t say anything does not automatically mean they agree.
In all likelihood the role will require you to work across an organisation. With that comes management complexity. What will you do if the person doesn’t do what you want? In the beginning I had to rely a lot on trust. Trust between the people I was working with and trust with their manager. In a sense this has to be earned. I had to be clear about what I wanted, why it was important and when I needed it.
You will have to put a lot of effort into the role. And you will have to learn resilience particularly if in the first instance you may not succeed. But I recommend persevering. When you do succeed it is rewarding. I always looked at it as like a see saw. It is only when you experience the lows that you appreciate how good the highs feel. You can instead choose a job that has no ups and downs and you will always be steady.
Which of your achievements at work have given you the most personal satisfaction?
You have probably figured out that my role of introducing sustainability into Yarra Valley Water has been a professional high. I was there in the beginning in 2002 when as an organisation we didn’t know what sustainability meant. I was instrumental in facilitating an education process for all employees. I developed a company policy and translated this into day to day activities across the business. And in 2009 Yarra Valley Water won the Premier’s Sustainability award.
What do you see as the biggest long term challenges facing the water industry in Australia and internationally?
The biggest challenge to the water industry is to maintain sufficient water to a growing population whilst maintaining or improving quality of life.
The population of Melbourne is growing and could increase by up to a 200% over the next 100 years. At a simplistic level we have to select the most appropriate water source to meet demand. At a deeper level, we also want to improve quality of life in our cities.
I think the technical aspects are easy. It is just about selecting the appropriate technology. The harder part is measuring the value that each option delivers and ensuring that we select the option that delivers the best value for the environment and our city. Is it stormwater harvesting, desalination, or recycling water for toilet flushing?
I don’t think this has ever been different over history. But at different times, we have found different options to meet that criterion. Two hundred years ago when our cities did not have access to water 24 hours a day, our priority was to provide reticulated water. One hundred years ago the priority was to build sewers. Fifty years ago it was to prevent stormwater from flooding new subdivisions by building drains and retarding basins. Today we expect more. We do not want to degrade the environment. But how do we measure the value of not doing so?
On a global scale there are around two billion people who still don’t have access to sewerage and one billion don’t have access to tap water. They also want the best value solutions. But what is it?
What are the barriers to these being addressed?
From an academic perspective determining the value of water options is a question of determining externalities. For example, what is the value of water to the environment and how much can we harvest before the impacts exceed the benefit to the city?
Without a methodology to identify all externalities and their value, the decision can be quite subjective. At its worst, it can be biased by those who have a self-interest. History has also shown that it can also become political, if coinciding with an election such as over the use of recycled water in Toowoomba, Queensland.
I must also highlight that it is a bit more than just developing a methodology to value the externalities associated with providing water. If I told you the environmental value of water was double what you presently pay you would probably want to see some justification. We also need a way of making resource selection decisions using such a value. Should we harvest stormwater or should we increase the size of our desalination plant? If someone selects a rainwater tank and this contributes to Melbourne saving money in not having to find another water source, should they be rewarded?
You led the development of a detailed approach to incorporating social and environmental issues into capital investment decision making. Why did you think that was important? What were the biggest challenges in developing and implementing it?
The questions we try to address are: How do we deliver the best community outcome? How do you measure it? How do we convince others that it is the best community decision? We need a robust methodology. One that not only convinces those with an environmental interest, but also those responsible for corporate risk, business viability and long term social well-being.
The biggest challenge has been translating theoretical concepts into practical methods that diverse stakeholders unanimously agree proves that we have selected the most sustainable option. I am proud of what we have already achieved, and I also recognise that it still needs to be refined and adapted for different circumstances. It is after all just a decision making process. And how do you ensure you make the best decision? You have to use the best available information. And the wider that you can cast your boundary when you make your decision, the better the decision will be for the whole community and the more sustainable it will be.
I am very proud of what we have achieved to date. I am also very optimistic for the future. I believe that those people and those companies that can master the concept of sustainability will be those that succeed into the future.
Image: Melburnian via Wikipedia