ESG Potential: How Sustainable Offices Boost Business Success

As net-zero targets grow ever closer, customers and investors are increasingly turning their attention to businesses’ Environmental, Social and Governance (ESG) efforts.

60% of UK investors want to see companies become more transparent about the environmental impact of their output. Meanwhile, over a quarter of UK shoppers have stopped purchasing from brands altogether due to ethical or sustainability-related concerns. As a result, 38% of business leaders now rank meeting ESG criteria as their highest priority—outranking even the challenges of Brexit and COVID.

This is, of course, welcome news for the planet. But there are still lingering suspicions that businesses may be misplacing the focus of their endeavours.

The disconnect between real estate and ESG

Often, when we hear of corporate pledges to reduce carbon footprint, they involve physical changes to a company’s products. Think ‘we’re now using 10% less plastic in our packaging’, or ‘our coffee cups are fully recyclable’. Alternatively, an organisation might promise to donate a percentage of each sale to a chosen environmental cause.

While admirable, these efforts do little to address a business’s root polluter. Buildings are, in fact, responsible for as much as 40% of global energy consumption and a third of all greenhouse gas emissions. According to Knight Frank’s (Y)OUR SPACE survey, there’s a big disconnect between broader corporate environmental strategies.

Almost 75% of respondents acknowledge that their broader corporate ESG strategy has a moderate or significant impact on real estate decisions over the next three years, a substantial increase from just over half in 2021. This shift signals a growing recognition of the role of real estate in achieving sustainability targets.

Despite these challenges, there are realistic steps that can be taken to make workplaces more environmentally friendly, closing the gap between real estate practices and ESG ambitions.

ESG Strategies: Making the workplace more eco-friendly

When it comes to ESG in the workplace, it can mean a number of different things to different people. As mentioned, recycling at work can be considered to contribute to making the workplace more ESG-friendly, however, it might not be enough.

Switching to Sustainable Energy

Switching energy suppliers or tariffs are simple ways to begin a workplace’s sustainability journey. A growing number of UK suppliers offer 100% renewable energy deals, while others buy ‘carbon credits’ or offset emissions by funding renewable infrastructure and ecological projects. If a business is in control of its building’s energy supply, it’s easy to find a greener, better value provider too—simply use a comparison tool like Uswitch to choose a new tariff. If an organisation is leasing their workspace, managers may want to raise the possibility of switching suppliers with their landlord or provider.

Switching now might seem like bad timing in light of the 54% utility bill hike hitting the UK. But a big factor behind the increase is that the post-lockdown economic demand for energy has stretched fossil fuel supply chains. Though it won’t have an instant effect, switching to renewable sources promises to ease pressure on power grids and push prices back down.

‘Switching providers’ can also extend to supply chains, too. If the office suppliers you buy products or services from are lacking in their own environmental efforts, it might be time to look elsewhere. A good place to start is Ethical Consumer. The magazine rates organisations on their ‘ethiscore’—a review of their actions and policies around sustainability and pollution, plus other factors like workers’ rights and animal welfare—to help consumers make more informed choices.

Finally, workspaces can even generate their own renewable energy on-site. Solar panels and windmills are becoming increasingly low-cost investments (solar panel prices have decreased by 80% in the last decade). They’re a fantastic way to protect against price hikes, guarantee green energy usage, and even visibly demonstrate sustainability commitments to passers-by. Whether an organisation has permission to install their own energy generators or must suggest the idea to their landlord, they remain an excellent option for ESG-focused leaders.

Small business commitments can make a big environmental impact.

Educating and engaging the workforce

Making a workplace greener doesn’t just involve changing the infrastructure, but the people within, too. It can be easy for employees to forget the importance of energy-saving measures at work, especially when they’re not paying the bills. But gentle posters and emails that remind people about the basics, like turning off lights and appliances, going paperless where possible, and holding business meetings virtually rather than travelling, go a long way to cutting a business’s footprint.

Management-led sustainable policies should also be put in place, such as:

• A business-wide cycle-to-work scheme that encourages greener commuting
• Procurement strategies that list environmentally-friendly alternative products to further cut emissions.
• Some organisations might even want to set up an in-house sustainability team, comprised of eco-conscious volunteers who help to monitor business practices and educate their colleagues. Many workers will find this much more engaging and persuasive than simply receiving memos from the top.

However, humans can’t be everywhere. If a business wants to truly satisfy ESG criteria, it must enlist the support of technology.

Integrating Smart Technology

New advances in smart technology allow office occupiers to enjoy both remote and even AI-powered optimisations of their energy.

Basic examples include installing smart meters, which ensure energy bills are based on actual usage rather than estimations, and smart thermostats, which allow users to remotely control room temperatures using a smartphone app. But business leaders and their landlords can go one step smarter and retrofit smart, integrated energy centres for a full view and control over wider consumption.

Take central utility plant (CUP) optimisation technology. CUP software connects to a building’s major energy consumers, like the chiller and boiler, and monitors their usage and performance. Then, it combines both historical data and weather forecasts to create algorithms that predict a building’s energy requirements on any given day. So, if next Monday is set to be particularly warm, the software would automatically reduce boiler power, and focus energy towards the chiller.

Installing building management systems is another excellent way to boost efficiency. These software-powered platforms scan entire workplaces to pinpoint inefficiencies, diagnose appliance issues, and advise on corrective actions. The systems often come with their own ecosystem of digital apps, which allow facilities managers to adjust appliance energy consumption and monitor real-time spending. Armed with these ground-breaking insights, they can make more informed decisions than ever around their building’s sustainability.

However retrofitting these technologies into a live working environment can prove expensive, leaving workspace providers reluctant to invest. Instead, business leaders might prefer to move to a new workplace, with smart, energy-saving systems already baked into its infrastructure.

Smart technology gives managers a virtual birds-eye view of their building’s energy consumption.

Relocating to Sustainable Workspaces

Modern sustainability demands mean that more office buildings are now created with these IoT devices, management systems, and AI software platforms installed. So much so that the global smart buildings market is expected to reach £133 billion by 2030.

It isn’t just about technology, however. Newer workspaces are also built with extra consideration over land use, sustainable materials, water access, waste facilities, public transport connections, and more. It’s no wonder that green buildings are in such large demand—BREEAM-certified workplaces in Central London are able to command up to 12.3% higher rents.

With the world still struggling to contain climate change, it’s clear that corporate ESG commitments will only grow in importance. More business leaders must recognise that sustainable buildings form the foundation of ESG targets, and join the 38% of global real estate occupiers who already rate the likelihood of relocating their HQ within the next three years as either ‘definite’, ‘very likely’ or ‘fairly likely’.

The Benefits of ESG-Friendly Workplaces

Investing in ESG-friendly workspace is essential, not only to meet net-zero targets, and ensure your business is actively working on sustainable commitments, but to also reap a host of other benefits.

Employees place much higher importance on whether their workplace is sustainable than ever before. In a , 70% of respondents said they are more likely to stay with a company that is committed to environmental sustainability.

Aside from the positive impact on the environment which can include a reduction in waste sent to landfill, a reduction in CO2 emissions and a reduction in water consumption, there are many more benefits such as:

• An improvement in air quality and reduction in dust particles through better ventilation and use of non-toxic cleaning products
• Reduced stress levels through the introduction of greener spaces
• Improved mental health of employees
• A boost in employee creativity as green offices tend to have good natural light and better-designed spaces
• Lower energy cost for the business
• Increased ability to attract and recruit new talent

So, ready to begin your own relocation to a green workplace? Knight Frank is here to help—simply contact one of our experts today.