Dominic Morris: Gowling WLG advises businesses operating across the living sectors. The need to operate and deliver homes and new communities in a more sustainable way is universal. So we have developed this podcast series to explore how we live sustainably. Over the series we will be talking to our clients about their real world projects and showcasing the progress and innovation that happens in the sectors each and every day.
To kick off proceedings, today we are delighted to welcome Jamie Bunce, CEO of Inspired Villages Group. Welcome Jamie, great to have this opportunity to talk you about this important topic.
Jamie Bunce: Thank you Dominic. Looking forward to it.
Dominic: Great. Would you like to begin perhaps by telling us a little bit about yourself and the Inspired Villages business?
Jamie: Yes sure. I am Jamie Bunce. I am the CEO of Inspired Villages Group. We are an operator and developer of retirement communities. We have been working within the sector since 2008. We notably secured investment from Legal & General Capital in 2017. We then subsequently secured a current investment from NatWest Group Pensions and it gave us a total equity placement of £500 million allowing us to deliver 34 villages over a 15 year joint venture giving homes for up to 10,000 people.
Dominic: Fantastic. And I understand sustainability is one of the golden threads running through the business. Could you tell us a little bit about what sustainability means for Inspired Villages.
Jamie: Yes it is interesting isn't it. Because people think about sustainability and they immediately think about turning the heating down or doing something to bring the heating down or changing that and not a lot else. And what we look at when we look at sustainability is basically the fabric first.
So the first thing we look to do is, how can we build a building as efficiently in terms of its carbon and overall sustainability as we possibly can. So we look at how we lay a building out, what position it is to the sun, how does that work and get our fabric built first. Interestingly, both Legal & General and NatWest are true social impact investors. And one of the reasons why we secured investment from NatWest in particular recently was because we have pledged to deliver a net zero product.
Now the fabric first is the first stage of that but the investment came in looking at first regulated energy in net zero and that is using ground or air source heating and cooling and then photovoltaics to enable us to deliver the bulk of energy without having to use the grid or even feeding back into the grid. So that is the first port of what we do.
We are then targeting out to go operational net zero by 2025 against the Government target of 2030. So we are looking to sort of bring forward the ability for us to operate the village in a net zero basis. And with that, it means us looking at how we live in the village, how we operate in the village, how we get to our villages and how we bring our business forward. And in some of that we might need to offset and people talk about offsetting some carbon because whatever we do there will be some residual carbon, through embedded carbon, with materials being delivered from places, etc. But our take is that we want to be able to deliver either on site or at the edge of site but certainly linked to what we do.
So for instance, sustainability, that is the energy part of it but also you have got the social part of this governance. So for us you have got the health part of it with holistic wellbeing tackling the physical, mental, social and financial elements of it. Qualitative assessments to ensure that our supply chain do the right thing in terms of employment of people and bringing forward a truly diverse workforce for the future. That to me is equally important in sustainability as just do some energy.
Dominic: Yes, is fascinating. I think for ESG and the wider ESG agenda is a really interesting challenge and opportunity for the IRC sector and wider senior living sector in particular. Because although there is wider social benefits in addition to the environmental side of things. I think you have got your first operational net zero carbon community due to open quite shortly?
Jamie: It rolls off the tongue doesn't it Dominic really.
Dominic: Yes, not so much.
Jamie: We need to do something to make that roll better. But yes, we started, and we are half way through the build, at a site down in Caddington in Bedfordshire which is call Millfield Green where we are using a ground source through a company called Kensa who we have a partnership with, a wonderful business, and photovoltaics in order to deliver a net zero regulated energy. We are actually in advance of that completing a scheme called Elderswell in Turvey, Bedfordshire where we are using ground source currently for that and not extended it to PV at this stage. So that is not quite net zero because we delivered that design a lot earlier but we are looking to actually say, well how do we bring that in now, how do we make sure that our portfolio not from Millfield Green onwards is net zero regulated energy but actually every scheme. So part of our pledge is really to look at not only our future park line and platform but also our existing.
Dominic: Great. And you mention partnering with the guys that are bringing in this technology. Are you looking at long term partnerships? You obviously talked about this big pipeline of new sites you are looking to bring forward and presumably getting a consistent supply chain around this and innovating together is going to be quite important?
Jamie: Yes. I am blessed because our investors are the likes of Legal & General and NatWest so they both as I said before are social impact investors. And I sit on a sustainability committee with Legal & General which allows me to have a much greater knowledge bank of what is happening within a wider portfolio across the world. So I make no bounds of wanting to lead the world in this space as a business and in doing that, we need to then see, who is doing it the best, how are they doing it, how do we learn from those people, how do we actually accelerate it, what is good about our sector, the retirement community sector, is a nascent sector, it is an area that people are very happy to work together for a greater good. And our residents are happy to be involved in helping support that. So we have a network of resource that we can bring into these sorts of opportunities and the likes of Kensa who are funded by Legal & General are leading the way in ground source. So we then work with those, we then hope to involve the product, we like Oxford Photovoltaics, so another business that we are looking to see how we can accelerate learning in terms of PV. So it is an exciting area and it is one that, as we evolve and as our sector evolves, the commonality should be something that allows us to get good value for money propositions from the supply chain and importantly make the supply chain take ESG seriously.
Dominic: Yes. So you talk about value for money, it obviously delivering green solutions if you call them that, does come at a cost then we are clearly operating at a time of spiralling land prices, spiralling construction costs, all pressure on the bottom line. So I guess part of the solution is who your backers are and their patient capital approach in the long term view. But how do you see that particular cost challenge from sustainability?
Jamie: I think across all sectors for all types of building, we are all suffering the same challenge in terms of inflation, the difficulties to get prices fixed because contractors are unable to unless they price significant risk into their tenders which we would have to accept. As I said right at the start, our first view is a fabric first. We look at what are we building, how do we ensure that whatever we build has the least effect on the planet and how do we lay out a building and what materials do we use in order to deliver that. We then look at who is delivering that and how sustainable is their agenda so our supply chain to make sure that we can influence the supply chain to do a little bit. So it is not everyone needs to do everything but if everyone does something then it just gets naturally better. We then sort of drive those elements forward across our businesses and then look at a long term view. So as a retirement community operator you are an operator of an asset. We do not suffer the same challenges as a developer who will build something, sell it and then move on to the next thing. Our life cycles go through two or two and half people's journeys. So typical apartment for us would be selling to two and half times through a life cycle that we would look at. And therefore we should be building our buildings with that in mind and then ensuring that as this sector evolves and as green asset becomes principally more valuable, that we have actually delivered that value at the start of the process instead of having to retrofit half way through a process. So it is really having a longer term view and a responsible view. And yes, your capex could be higher but actually the long term value, and value is not necessarily just a financial value, but actually a societal value, should deliver the similar results.
Dominic: Yes, I fully agree with that. I think it seems pretty logical that, if you are equipping these schemes well now, this is going to affect re-sale values, it is going to affect event fees, so it is a virtual circle.
Jamie: Yes you cannot look at it too narrow. I think that it is now time for the likes of, what is exciting about … people who are going to be listening to this podcast are people in a position of influence. And I always say that, if there is a will you will find a way. If there is not you will find an excuse. And I have said that a number of times. And I have actually seen that within the world of ESG and the way that people are looking at it and because it is a little difficult, because they might have to think a little bit more about building something, then it becomes into to the 'well I will just find an excuse, I will just build it to the minimum standards I possibly can and I will worry about it later'. Well that is not the way to approach true sustainability. We all have a responsibility now I think to leave this planet in a better place than we joined it. Absolutely need to it. And if we do that, and as leaders of businesses we take that seriously, we will make the significant changes that need to be made and not keep making excuses about it just because it is a little bit more difficult.
Dominic: Just picking up on that 'leaving the plant in a better place', how important do you think sustainability is for your residents. Are they embracing this? Is there a big learning journey for them as there is for I guess the rest of us?
Jamie: Yes, I think what is fascinating actually, that, I think Covid has actually channelled people's minds more. That pre-Covid everyone was just getting on with life, everyone then had a period of time where they were locked away and they re-evaluated what they were doing, their interactions with others and their responsibilities and the like. And we found that a number of residents now are starting to not only think and talk about the climate crisis and changes and how they are going to leave the planet for their grandchildren and their grandchildren's grandchildren but seeing what they can do to help.
So we have across our business, we have sustainability committees and energy committees within our residents. So from my view that is a free resource. And yes, these people they have an agenda and they want to be able to deliver something for themselves, maybe in the short term in terms of reducing the energy costs or something, but actually a very engaged person or group of people is very powerful. And therefore from our perspective it inspired. We want to channel that. So if somebody said I want to get involved in this, absolutely get involved in it because we have common goal. We want to be able to deliver a better future. It is not an adversarial hand off type situation, this is more about us bringing the best brains that are around and engaged and enthused people who want to try and find a way of doing something who have more time on their hands in essence into our thinking to help us drive the significant changes we are.
So we are seeing a greater degree, and actually are people willing to pay more for a green product? Well they are definitely willing to pay more for something when they have not got the risk of large increases in utility costs. So people will look for certainty. The reality is that our residents are generally on fixed income. They generally have income through pensions that would be linked to CPI generally or investments that have various index linking and there is a mismatch between CPI and utilities. So for a CPI increase, utilities will attract half of that. So it is a mismatch.
So on a selfish short term view they are saying, what can we do, what is there and actually that channels that resource of people saying actually, come on, get involved a bit bigger, be part of the legacy, be part of actually driving the change. Be part of the journey and know that you have been part of that journey. And we are seeing more people wanting to engage on that front. So it is early stages but I would say that we are seeing that revolution start of people really wanting to make a difference.
Dominic: That is good to hear. I suppose another facet of it is, most of the residents we talk about are obviously your existing residents and existing schemes which were not perhaps built to the net zero standards just because of timing. So what are you doing about improving sustainability for those schemes?
Jamie: Well as like others we are very early on our journey of the built environment. So we have six operating villages and another two coming over to opening in the next few months and of all of those, they are already part on their way selfishly. So we have air source heating on four of them and district heating on three of them and ground source on the other. So our move to net zero is not as large as what it could be for others. So I would have to take into account that it is not … it is a bit easier for us. So we are making an assessment of, what can we do on our existing portfolio in order to create our business to be a truly net zero business. So I was reading about Google and how are looking to pay pack the carbon that they have used. And we are trying to think, well, can we do that? Can we actually look at what carbon we have used since our formation in the business and then try and calculate that and see what we do. And we know some of our competitors are looking to do something similar and I think as we are all trying to do something, we will ultimately get us all doing everything if you know what I mean. So for me, it is a case of ensuring that we do not just ignore our existing portfolio, we think hard about what we do and we work with our investors who may re-value the asset in a different way if it is more green that if it is not. So how does that work? How does the obligation of retrofit onto the long term property costs affect those that do not do it? At the end of the day we are all going to have to do our bit at some point so why don't we just be in control of that and do it at the right time like now.
Dominic: Yes. And with the embodying of carbon in new construction as well as the legacy portfolio, what role do you think carbon offsetting has to play for you. How will that play out?
Jamie: Well I am not a green washer as some people call it, there is carbon offsetting where you are offsetting within the sort of area of your scheme or just to educate. We have a scheme where we are looking to put PV on an adjacent site and then give the occupier of that adjacent site the benefit of free energy as part of the transaction and that allows us to sort of balance and deal with that under the same sort of blanket of the site you know. We are lucky because our schemes are generally on edge of the conurbation or inter rules so we have a bit more space so we have not got the same challenges as city centre so that poses a different challenge for others that we do not have. The offsetting of, sort of investing in a forest in California is not something I would be considering, it is not something you can do but you are hearing of others that are suggesting that type of thing.
Dominic: OK and again sort of monitoring and measuring performance it is a very challenging and very difficult thing to do and there are many sets of measures and it is very difficult I guess to compare apples with apples but to what extent do you think that senior living sector, integrated retirement communities in particular can and should be doing more to try and come up with some sort of standard forms of measure of sustainability and wider ESG performance.
Jamie: I think, I mean there is a body the Integrated Retirement Community operate ARCO so anyone in the sector or anyone thinking about the sector that that is the sort of body that we links lots of us together. And that is a great sort of forum of collaboration from my experience. It is one where people go into meetings and/or sessions with a view of trying to get a combined out for it, if that is the right word for it. And I think if we were actually to come together as a body looking at those criteria and maybe a few of us do a bit more heavy lifting.
So whilst we have a network as I said with the likes of L&G Sustainability Committee and NatWest with wider portfolios where we can actually look at what others are doing and then bring some others along with us. So some of the operators that might not have that band width that we have, you know work with us through ARCO to create that standard at a standard that we know we can all deliver and we all accept and we all sort of come in this together and then that steps us on and as we, as the explosion of new schemes come forward in the next few years which we know it will, linked the to the sort of demography change of the over 65's and more importantly the over 80's doubling then if we have set the foundations right now, we have done it through the body of ARCO so we are actually all joined in so it's not desperate sort of strategies from different bodies with some of us then helping the more smaller sort of owner occupier and the businesses then we are delivering proper change Dominic and that is what we should be doing so for me it's coming together possibly through ARCO and then again engaging with the government and new taskforce.
You know there are some really positive steps coming forward. The taskforce probably shouldn't just look at planning reform they should look at setting the tone, setting the standard, showcasing the UK as the leader of the world. You know.
Dominic: OK, it feels to me as though you are setting the tone, your enthusiasm for this subject is quite infectious I think so if we can sort of end with some future gazing. You have got this ambitious plan to I guess grow the portfolio over the next few years and say in a decades time all these schemes will be mature and operational so from that sustainability perspective what will good look like for you in ten years' time in terms of the Inspired Villages portfolio?
Jamie: So good for us would be for us to have created a legacy that is transforming the way that people view aging for starters and that is a legacy in the built form and also using technology to help drive difference outcomes for people so we talk about people, this being the best years of your life so we want people living with Inspired Villages to have the best years of their lives so this should be a time when they are carefree as they were as a student except they have a bit of something behind them and life lessons behind them so they can have a similar sort of experience as they get older.
We also then look at how do we drive better outcomes for people who may never live in the setting, 90% of people who are always want to live in their own home. Well how do we ensure that they live better for longer, how to we ensure that you know we can link back in to create a healthier society so we reduce down the number of falls, we actually create a country that is so much more focused on physical, mental, social, financial wellbeing.
How do we let technology drive that decision so no matter where the family live in the world, you know the grandparent is in charge of the family again. Doing that via technology, walking ten steps to the grandchild who does not switch of the Xbox until he runs a mile, wherever they are in the world you know. We need to sort of think really laterally about what we do to society and you know in ten years' time, if you Dominic and anyone listening onto this feel like you have done your bit and you have been part of that, you have helped create a legacy of change. How cool is that. It is better than anything you can think of doing if you have sat there thinking I have a part to play in that.
I think that is what we need to be thinking, do you?
Dominic: You have laid down the challenge, so that seems like the perfect note for us to end on today so thank you so much Jamie for joining us on the How We Live Sustainably Podcast.
Jamie: Thank you very much everyone, take care.