In the first of our interview series with ESG experts, Sam Pickering introduces net zero and the challenges the flex sector currently faces. Throughout the series, our ESG experts will explore how flex space can transform corporate real estate on the journey to net zero...
KEY TAKEAWAYS
- Understanding the impact of each space, from what you control within the office through to procurement, is the biggest challenge for occupiers of flex space currently.
- Brand impact and cost of inaction is driving demand for sustainable solutions.
- The private sector is driving change in the way they invest which is turning the tide far quicker than policy or legislation.
- The parameters of net zero are quite simple - the key is getting people to think with a different priority mindset.
IS THE FLEX SECTOR ON ROUTE TO NET ZERO?
At this stage, no.
The flex sector is growing and, therefore, has a much bigger impact environmentally in developing an approach to net zero. However, each approach differs vastly as some flexible workspace providers occupy the whole building whilst others occupy a smaller proportion and, with that, comes complications.
Understanding the impact of each space is the biggest challenge, from what you control within that office space, in terms of electricity, gas, water, and waste usage, to other elements such as procurement. Many operators are tackling this challenge and can identify the environmental impact of the entire space. However, they struggle to define the impact of each occupier individually and, without understanding their individual impact, occupiers cannot begin to reduce their carbon footprint.
Moreover, occupiers face corporate legislation, particularly across Europe (and soon to be the US), which requires them to provide their emissions performance baseline as well as the improvements made to it. And, because the flex sector cannot report back to occupiers on their individual impact, it is a challenge for corporates to expand a portfolio to include more flexible workspace because performance data cannot currently be provided.
HOW DO SUSTAINABILITY GOALS DIFFER GLOBALLY?
Unsurprisingly, it changes country by country as the availability of renewable energy differs across geographies, even in Europe. In the US, it's different in each state; for example, the difference between Florida and California’s approach is vast and down to politics.
In APAC, where you cannot get a renewable energy source in certain areas because the infrastructure is not in place, you can then offset those emissions to make sure your environmental impact is mitigated in the short term before infrastructure investment takes place. And, as infrastructure improves, carbon emissions will reduce and the amount you have to offset will also reduce. There are numerous different ways to mitigate your impact.
Sustainability and net zero are not about stopping the economy, it’s about enhancing it. Going sustainable is without a doubt beneficial to the economy. Organisations that don't take this seriously will become increasingly difficult for clients to procure. Simply put, clients will not work with you, consumers will not buy from you, and job seekers will not seek you. If everyone gets on this bandwagon, then everyone improves. For example, if all supply chains followed sustainable guidelines, then the client’s overall carbon footprint reduces significantly.
This is primarily a governmental / infrastructure problem, however, the private sector is driving change in the way they invest which is turning the tide far quicker than short-term politics allows.
WHAT LEGISLATION IS DRIVING THE NET ZERO GOAL OF 2030?
The goal is to slow climate change to 1.5 degrees or more. Anything above that is predicted by the IPCC to have a catastrophic effect on the planet, particularly in emerging markets. This is well documented, so various countries have set their country-level legal requirements. The UK is by 2035, as an example, but others have set this to 2050, which is a backstop year in terms of the opportunity to slow climate change.
Within the business sector, 2030 is the year that many corporates have set and is governed by the Science-Based Target Initiative (SBTi), a non-governmental organisation (NGO) that reviews the data from a business and, every year, the business must demonstrate progress towards the goal of 2030.
The impetus is twofold: one is legislative at country level, around industry and infrastructure. The corporate level of 2030, whilst not legislative, has begun already. The second is the demand from people. Whilst not governed by law, the brand impact and cost of inaction could lose clients, consumers, and employees.
DOES THE PROPERTY SECTOR NEED TO CHANGE TO ACHIEVE NET ZERO?
In theory, it does not need to change hugely. The key is getting people to think with a different priority mindset. The parameters of net zero are quite simple. It requires the right questions to be asked throughout the property lifecycle.
Key ESG questions you should be asking about your workspace:
- What data is needed to monitor the environmental impact of this space?
- How can we share before and after emissions results?
- How can we automate controls within the space?
- How can we make the controls more intuitive in terms of lighting, heating, and cooling not being on 24 hours a day?
- How can you segment your part of a building so the controls are yours as opposed to controlled by the landlord?
- How do we get renewable supplies?
- How can we electrify the building?
- How can we make the space even more efficient?
- How can we reduce the amount of materials we specify during projects and have a use for them at the end of their life?
From a portfolio perspective, understanding each impact is essential when changing to flex; from the emissions before and after, to commuting, to water, to electricity, to gas, to renewable energy, but also procurement of goods and services. Taking ownership and being able to clearly show the cost benefits of making that change and the environmental impact and benefits will set corporates on route to meeting their net zero goal.
It’s not difficult, there is just no clear process for flexible workspace that aligns to net zero, currently. As soon as you achieve that, then all the other environmental impacts, such as reducing the number of single-use products, improving recycling, etc. can be implemented and help to build a sustainable curated experience.
