The firm’s commitment to sustainability has helped it to secure a new building for the price of refurbishing an old one.
CFO 01 April 2004.
Property is important for any company in the services sector. Appear too cheap and the right type of client would not be attracted; lay on the marble too thick and clients will complain about fees.
These were the issues faced by accounting firm KPMG when it consolidated 1500 staff from its Parramatta and Wynyard offices in New South Wales to 26,000 square metres of space at King Street Wharf in Sydney, in January this year.
According to KPMG NSW chairman, Chris Jordan, there was a balance between being seen as modern and corporate, while choosing a building that communicated the firm’s commitment to sustainability.
As a private company, KPMG has no obligation to report on its corporate and social responsibility, but it made a nationwide decision to launch its green policy on World Environment Day last year. As well as following a commitment to green issues, the firm also put a lot of thought into the financials.
KPMG national CFO, Tony Young, says: “We did a lot of net present value (NPV) modelling over the life of the lease [as to] whether or not to be in this new building. In fact, over the life, the NPV is slightly better than in the old building, which effectively means we’re getting a new building for the price of refurbishing an old one.”
He says the decision was not only driven by the bottom line. “Probably one of the most difficult things of all is to link the qualitative with the quantitative. Like all things quantitative, you come to a mathematical answer. We made a fairly good fist of putting those two together.”
The firm’s top two costs are salary and rent. The key is to try and minimise property costs while using the property to maximise staff performance and help in employee retention. The firm has succeeded in cutting energy consumption and running costs, while upgrading its space. Young says the difficulty is looking ahead 10 years when lease costs are not a variable expense. “We put a fair bit of effort into ensuring the decision is right, because we are committing 10 or 12 years into the future in a particular city,” he says.
While the firm has kept some offices, seniority no longer guarantees the corner space with the view. Jordan, who allocated offices, put himself in the low-rise section of the building. Most staff are in an open-plan area, and the approach to views and sunlight is egalitarian. The best views have been reserved for the kitchen and communal areas, where staff can work from laptops on a wireless network.
As well as improving environmental performance, KPMG hopes to improve the productivity of its staff and cut staff turnover, a problem for all accountancy firms once trainees qualify. It is too early yet to measure improvements in staff morale. “We are going to take that [turnover figures] as a baseline and see if our retention rate increases,” Jordan explains, “because only a small increase in our retention rate would be quite valuable in terms of decreasing training costs and just utilising the expertise of experienced people.”
The commitment to green issues goes beyond the building itself. In its Wynyard building each year, KPMG used 175,000 polystyrene cups – 115 for each person every year Ã100,000 wooden stirrers, 150,000 plastic knives and forks and 40,000 plastic plates.
Polystyrene has been banned and crockery introduced, together with dishwashers in each kitchen. According to Jordan, the payback on this investment will be in six to 12 months. Moreover, all printers have been set double-sided by default, cutting paper use by one-third – or two million sheets a year.
“Our commitment is absolutely consistent in application,” says Young. “We are doing it on the paper front. We are doing it on the built environment. We are being very careful that the message is clear and consistent to the community at large, and also to our staff.”
Young says the firm has tenancies coming up for renewal regularly and will use this as a benchmark for each office move.