The Covid-19 pandemic has driven corporations to rightsize their commercial real estate portfolios, and along with it has come an occasion for a marked shift in real estate's sustainability impact. It has opened a remarkable opportunity to educate occupiers and investors and impact long-term sustainability performance, both within the office environment and at home, while supporting the transition to a low-carbon economy.
This article was originally featured on Forbes.com as part of the Forbes Real Estate Council.
Corporate real estate has realized the weight of corporate social responsibility and long-term sustainability practices, both as a legislative requirement and as a practice expected by employees, clients and investors. The Covid-19 pandemic has driven corporations to rightsize their commercial real estate portfolios, and along with it has come an occasion for a marked shift in real estate's sustainability impact. It has opened a remarkable opportunity to educate occupiers and investors and impact long-term sustainability performance, both within the office environment and at home, while supporting the transition to a low-carbon economy.
Sustainability strategies have risen on large corporations' agendas, particularly over the last five to 10 years. Legislation has played an important role in driving this, ensuring large companies report on their carbon emissions and encouraging them to reduce their emissions and environmental impact. This can be seen in practice through both small and large initiatives in office environments. For example, some office parks have increased responsible investment in large-scale sustainable development projects such as installing solar panels or wind turbines. On a smaller scale, offices are engaging in waste recycling programs or LED lighting, all positively impacting a company's environmental impact.
Yet it's not just governments that have come to demand that companies take action to address their environmental and social impact. So, too, do employees. In recent years, employees — particularly Gen Y and Gen Z — have sought out companies that share their values, particularly on sustainability. They want to work somewhere where sustainability is high on the agenda, and they want to see this in practice. This goes beyond the physical real estate these companies inhabit.
The pandemic has changed the traditional notion and construct of the workplace, with the office no longer at its center. Working from home or remotely presents many opportunities for accelerating our transition to a low-carbon economy, such as by reducing corporate travel emissions and energy and waste produced by large offices.
However, while a company's office emissions reduce, employees are still using energy and producing waste at homes or in coworking spaces. Thus the new challenge becomes monitoring environmental impact and implementing sustainability initiatives with a remote workforce.
Key Considerations For Workplace Sustainability
Rightsizing is one step, but it's not the only step: As companies rightsize their real estate portfolios, they are likely downsizing their core offices in urban environments and supplementing with additional spoke locations near their employees' homes and work-from-home policies. However, what might look like a slam dunk as a sustainable practice or real estate metric is not necessarily so.
Consider the overall environmental impact: There are obvious benefits to reducing the size of your real estate portfolio. Downsizing in the city means less space and fewer emissions produced by those offices, but what does it mean for the many spoke locations and home environments? Will the increased emissions output from those new work locations outweigh the savings from what was scaled back in the core office?
The environmental performance of the space you procure: Whether you're adopting a hub-and-spoke model or flexible office solutions, be sure to inquire about the environmental performance of the space. Start by reviewing energy efficiency ratings and sustainability certifications.
Access to environmental data: As you look to monitor your environmental performance, ensure that you will have access to energy, water and waste data so you can measure your employees’ environmental impacts in new types of real estate.
Sustainability policies of serviced office providers: Ensure providers' sustainability initiatives align with the company sustainability plan and all parties have a corporate social responsibility plan.
Measure And Report To Improve Sustainability Awareness
Strategic review of sustainability best practices and reporting: For companies that haven't already put a sustainability plan in place, now is the time to review their sustainability position. This can be done by assessing peer groups' and industry leaders' sustainability performance, commitments and disclosures; benchmarking your position against the industry; and determining mandatory and voluntary disclosure requirements.
Identify the gaps: Companies need to establish where the current reporting gaps are and outline KPIs to report against. They should develop a process map to establish what data is required to start reporting against these.
Calculate company footprint, then reduce: Calculations of a company's carbon footprint can be done by evaluating emissions associated with energy used in buildings, operations and business travel. From there, you can identify high-impact areas, and action can be taken to reduce emissions.
Capture remote/homeworking information: Capture how many employees are working remotely, where they are working from (home or a coworking space), how many days they work a week and what their travel habits are. From there, assess the total footprint and start to estimate the emissions associated with remote and homeworking.
Improve Engagement And Environmental Performance At Home
Team education and engagement: With a hub-and-spoke model, sustainability practices should be transparent. Share goals and actions with employees, including companywide carbon reduction targets and everyday actions such as turning the lights and equipment off, recycling waste and conserving water. This will encourage individuals to adopt habits and initiatives seen in the office in their home environment.
Consider opportunities for green loans: As corporate priorities shift from investing in commuting options and benefits for employees, there is an opportunity to reallocate funds to support individuals to "green" their homes. Improving a home's sustainability performance through incentives, loans and support will make adopting these changes much more manageable for employees. It will also bring the remote working communities into the new virtual four walls of a corporate.
As real estate makes drastic changes in the 2020s, it is an exciting opportunity for companies to reevaluate sustainability practices and update them for the remote workplaces of the future.