SFMI 2025: Navigating sustainability challenges & opportunities in FM

By: Kristen Mierzejewski, Senior Consultant at Acclaro Advisory

Recent months have seen a regression in ESG commitments, from Trump’s election and the rollback of key climate policies in the U.S. to proposed weakening of the CSRD through omnibus regulations. Corporate responses have followed suit, with the six largest U.S. banks withdrawing from the Net-Zero Banking Alliance and several energy companies scaling back low-carbon investment plans. Yet, climate challenges remain urgent: January 2025 was declared the warmest January on record, accompanied by devastating wildfires in California. The World Meteorological Organization has confirmed that 2024 was the hottest year on record, marking the first time global temperatures exceeded 1.5°C above pre-industrial levels.

Despite this, sustainability remains a priority for many companies and investors. In the UK, several key pieces of legislation are set to be introduced this year, reinforcing the need for action. Within the Facilities Management (FM) industry, organisations continue to make progress, with many FM leaders identifying new revenue streams and market differentiation through high-return sustainability initiatives.

The SFMI

At the Sustainable Facilities Management Index (SFMI), we work closely with FM leaders to assess and advance their ESG strategies. Established by Acclaro Advisory in 2013, the Sustainable Facilities Management Index (SFMI) is dedicated to driving ESG leadership within the FM sector. Through a unique partnership programme rooted in research, assessments, strategic solutions, and collaboration, the SFMI provides a forward roadmap and challenges the industry to adopt best practices and embrace innovation.

Each year, the SFMI conducts comprehensive assessments, evaluating how FM providers integrate sustainability across 23 ESG criteria. We help FMs learn how to avoid risks, capitalise on opportunities, and become leaders in their industry. Our 23 Criteria each have numerous subtopics to fully understand the policies, strategies, and activities of FMs in achieving a more sustainable business. These criteria cover essential areas of operations and management, ensuring a holistic view of sustainability performance.

Each year, we update and adjust our assessment criteria in order to reflect changes in legislation, frameworks and societal trends affecting the industry. 

2024 Trends

The FM industry is becoming more complex. Beyond supporting workplace and operational property needs, FM providers must now navigate regulatory shifts, societal pressures, economic uncertainty, staffing challenges, and increasing environmental requirements. Despite these headwinds, SFMI assessments indicate steady ESG progress, with rising performance across Governance, Social, and Environmental categories.

Through expert insights and in-depth evaluations, SFMI has identified four dominant sustainability trends shaping the FM sector in 2024:

• Decarbonisation
• Wellbeing
• Social Value
• Risks & Opportunities

These themes reflect the industry’s growing maturity in commercialising sustainability, turning ESG efforts into tangible business benefits. They also underscore the importance of collaboration, innovation, and strategic integration to maintain competitiveness and resilience in an evolving market.

Decarbonisation: Turning Ambitions into Opportunities

FM leaders are at the forefront of transforming decarbonisation from a compliance-driven goal into a dynamic, revenue-generating opportunity. By bringing new service offerings to market that involve decarbonisation, not just for them but for their clients, they are setting new benchmarks for commercial success in FM. 

With a deeper understanding of the challenges and opportunities in decarbonisation, SFMI Partners have matured their approach. This has enabled the development of service offerings, and, due to increasing demand for these services across industries, is driving their commercialisation.

To meet complex client needs, FM providers are diversifying carbon services, including climate risk mapping, EV infrastructure, and sustainable building solutions. Fleet decarbonisation is a major focus, with companies implementing data-driven approaches to optimise EV adoption and mileage reduction. Leadership plays a crucial role in sustaining these efforts, requiring continuous upskilling and strategic foresight to integrate decarbonisation into business growth. Additionally, engaging supply chains to tackle Scope 3 emissions is becoming essential, as FM firms collaborate with suppliers to reduce indirect carbon impacts. By leveraging high-quality data and enhancing governance, FM providers can capitalise on the commercial potential of sustainability while staying ahead in a competitive market.

Wellbeing: The Value of Doing What’s Right

Wellbeing has become a key differentiator for FM providers, with SFMI Partners seeing commercial benefits through improved employee retention, customer satisfaction, and organisational diversity. Last year, wellbeing scores rose, but significant potential remains untapped. The FM sector is expanding beyond traditional health and safety measures, incorporating aspects like sleep, neurodivergence, and menopause into wellbeing initiatives. These efforts reduce absenteeism, enhance employee engagement, and strengthen business performance.

FM leaders are also integrating wellbeing into broader sustainability strategies, linking it with net zero and biodiversity initiatives. Forward-thinking companies are embedding wellbeing into leadership priorities, with executives championing programmes that enhance workplace culture and attract talent. 

However, there remains significant room for growth in integrating wellbeing with nature, decarbonisation and net zero strategies. While wellbeing and nature are beginning to find their place in strategies, they are not yet at the core. The next phase involves refining metrics, deepening integration into contracts, and leveraging nature-based solutions to maximise the commercial and social benefits of wellbeing-focused sustainability strategies.

Social Value: Turning Purpose into Profit

Last year, SFMI partners made significant strides in social value, with scores rising about 14% across the relevant criteria. This reflects a growing recognition that the partners have been giving to this area. As companies expand their social value activities, driven by government mandates or client requirements, measuring the benefits is increasingly proving commercial value of these new approaches. 

Beyond fulfilling regulatory requirements, social value initiatives enhance company reputation, employee satisfaction, and recruitment efforts. FM firms are now demonstrating structured approaches to social impact, ensuring initiatives translate into tangible business benefits.

Innovative programmes, such as one company’s ex-offender employment scheme, highlight how FM providers can drive measurable social outcomes while improving operational efficiency. The industry is also advancing social value tracking, with some companies integrating real-time ESG dashboards to measure impact. Successful FM firms are embedding social value into contracts and linking initiatives to financial performance, strengthening their market position. To sustain this momentum, FM leaders must continue fostering collaboration, refining data measurement, and upskilling teams to turn social value commitments into long-term commercial success.

Risks and Opportunities: Turning Risks into Rewards

As the FM industry faces more risks, SFMI leaders are turning challenges into opportunities. Encouragingly, the majority of SFMI partners are demonstrating a deeper understanding of monetising sustainability, with some already leveraging their expertise to deliver services that enhance both their own sustainability goals and those of their clients. The SFMI’s latest findings reveal that companies with a strong grasp of monetising sustainability are successfully integrating climate risk assessments, decarbonisation strategies, and supply chain improvements into their business models. 

However, challenges such as data reliability, Scope 3 emissions, and ecological risks remain key barriers that require innovative solutions. Yet, these same risks can serve as springboards for innovation. FM leaders that turn these hurdles into opportunities – such as through enhanced decarbonisation services, decarbonising fleets, assessing climate risks, contracts improvements, and upskilling decision makers – are positioning themselves as market leaders in the industry.   

The sector’s governance practices are also evolving, with board-level upskilling enabling companies to better manage risks and improve ESG performance. FM providers that proactively embed sustainability into governance, contracts, and service offerings are positioned to lead the industry, securing long-term financial and environmental resilience. Looking ahead, it’s reasonable to expect that commercialised opportunities will continue to grow, while less monetisable risks may lag. Factors such as regulatory deadlines and potential commercial impact will likely drive prioritisation, with supply chain and climate risks taking precedence. 

Insights & Next Steps

The 2024 SFMI Assessments show significant ESG progress, with Governance leading due to improvements in Diversity and Collaboration. Social aspects, particularly Wellbeing and Sustainable Communities, have strengthened, while Environmental gains are notable in Energy but remain weak in Ecology, Biodiversity, and Water.

Key Takeaways:

• Governance is driving sustainability progress, with further potential in integrating ESG into financial decisions.
• Social Value & Wellbeing are becoming embedded across operations, but Supply Chain Management remains a challenge.
• Environmental Progress is growing, yet critical gaps in Ecology, Biodiversity, and Water demand urgent attention.

Next Steps for FM Leaders:

• Upskill & Assess Risks: Conduct materiality assessments and climate risk evaluations.
• Invest in Sustainability: Allocate resources to pioneering ESG initiatives.
• Turn Risks into Opportunities: Innovate solutions that create both sustainability and commercial value.

By prioritising collaboration, data-driven insights, and strategic investments, FM providers can lead in sustainability while driving business growth.

Join the SFMI 2025 Programme Launch webinar: 

The SFMI is hosting its 2025 Programme Launch webinar on 15^th May at 10am. This is a fantastic opportunity to learn more about the SFMI and discover the plans for this year’s programme. Register now.