There was a time when environmental, social and governance (ESG) was considered voluntary for organisations, but as ESG becomes more important to potential investors, these factors are becoming more significant.

ESG credentials say a lot about a company’s brand and ethos, giving insight into how an organisation values their people. Buildings are responsible for a high amount of an organisation’s carbon and spend, therefore the office can play a vital role in helping improve the local community by supporting and bringing people together.

But there are challenges for businesses. For starters, there is a lack of awareness about what ESG actually means and how to put it into practice. In fact, a recent OnePulse survey states that a fifth of office workers didn’t understand the term at all.

Read on for a breakdown on what this concept is and what it means for both your workplace and the wider office landscape.

Morgan Lovell employees

1. Environmental

In 2015, the Paris Climate Change Agreement committed the UK to net zero emissions by 2050. As a result, companies are looking into ways to reduce their carbon emissions, with over half of the world’s largest businesses having made some form of pledge to achieving net zero emissions.

A good place to start reforms is the efficiency of buildings. Although it’s a step in the right direction for greener new builds, an estimated 80% of the building stock for 2050 already exist. Therefore, we need to focus on upgrading our current buildings. To do this, we need to investigate the types of carbon impact.

The carbon footprint of a building can be split into two types:

  • Operational carbon: the energy used to run the building, such as lights, heating and IT. New buildings are often very energy efficient, meaning less operational carbon. Reducing operational carbon in older, existing buildings is still achievable with a refurbishment, however, with every change, there is an embodied carbon cost.
  • Embodied carbon: the carbon required to provide a product or service. Everything, from the desks to the pens you use, have an embodied carbon cost which is harder to measure than operational carbon. By focussing on embodied carbon in buildings, businesses can understand the full carbon impact of their projects, and start to investigate how they can reduce it. We use an invaluable tool called CarboniCa, which is a carbon calculator validated by Arup. It measures the whole-life emissions of a project to ultimately encourage lower-carbon decision making.

To reduce embodied carbon during a fit out, the client organisation and fit out partner must communicate and work together on ways to accomplish this. Here are some ways to do so:

  • Minimalism: try opting for a simpler design to reduce the number of materials and products used. This doesn’t mean you have to compromise on quality, but instead choosing a smarter design, for example multi-purpose products that can be used in a variety of ways.
  • Caution: choose your materials carefully, avoiding materials with high embodied carbon, such as concrete, steel and glass. Instead, look into rapidly-renewable materials like bamboo and timber. It’s also important to know the difference between a product with a high recycled content (meaning it’s made from previously-used materials) which is preferable, and recyclable (products that can be recycled). If unsure, look for products with an Environmental Product Declaration (EPD) which transparently shares the environmental performance/ impact of any material or product throughout its lifetime.
  • Reuse: wherever possible, using products/ materials again is an effective way to significantly reduce embodied carbon.
  • Resilience: many organisations request a high degree of resilience through additional emergency generators, but not all genuinely need this, especially for organisations where staff often work from other locations. Accepting a lower resilience helps reduce carbon.
  • Expectations: it’s important to manage expectations. Some buildings are able to handle extreme temperatures, from hot summers, to icey winters. By changing expectations in regard to the building's thermal settings, such as 16-23 degrees, as opposed to 18-21 degrees, significant energy (and carbon) could be reduced.

2. Social

The 'S' in ESG refers to social, indicating how an organisation manages and adds value to its relationships with its people and the environment it both operates in and impacts. A company that doesn’t acknowledge the importance of Equality, Diversity and Inclusion (EDI) could damage its reputation with its people and investors.

An organisation’s office plays a key role in demonstrating their commitment to its social responsibilities. It's a great place where those from all backgrounds and beliefs can come together and feel part of a community.

In 2023, we carried out a OnePulse survey where 500 business leaders were asked to rank the most important topics the workplace is currently facing. Workplace Inclusion was voted most important, showing how EDI and Social Value initiatives are at the forefront of businesses’ minds.

In 2020, research we carried out revealed that most people missed the socialising and collaboration that the office environment could provide. The office landscape has drastically changed since then, with more and more people returning to work, so it’s important to provide a variety of workspaces to accommodate teamworking, independent working, and breakout spaces to let your team relax and recharge. This also helps cater to different working styles, supporting inclusivity.

Another change since Covid is the focus on wellbeing. Already important pre-pandemic, it’s climbed its way to the top of many corporate agendas, with many implementing wellness initiatives. Some of these include flexible working, providing healthy snacks, Cycle to Work schemes, gym memberships and more. This, paired with thoughtful designs such as biophilia, also play a pivotal role in improving mental health.

3. Governance

The values of companies are more frequently being held under scrutiny, from poor environmental practices to violations of human labour laws. A recent survey reported that 52% of UK consumers polled, said they were more likely to shop with ethical suppliers and supply chains. This backs up the results of our recent survey where 95% of office workers said it was important, even essential, that their company’s supply chain is traceable, diverse, sustainable, and transparent.

This, however, can be a challenge. When an organisation embarks on a fit out project, they can work with a supply chain consisting of hundreds of companies, making tracking ethics and diversity difficult.

Key areas to focus on when it comes to ethical and transparent supply chains are:

  • Freedom of employment and association
  • The eradication of child labour
  • Safe and hygienic working conditions
  • Appropriate pay and working hours
  • Humane and non-discriminatory treatment
  • Anti-bribery and corruption
  • Environmental awareness
  • Eradication of modern slavery
  • Regular auditing of procurement and supplier’s policies

Although many construction supply chains are made up of small and medium-sized organisations, diversity of ownership and operatives can still be a difficult task. The construction industry is heavily male-dominated for example. This is where programmes like WEConnect and MSDUK, which certify organisations owned by women and ethnic minorities, are really useful for companies looking to have organisations with under-represented people in their supply chain. Some organisations may self-certify, but this is challenging to confirm, especially under GDPR rules.

Unfortunately EDI issues are unlikely to change as quickly as we would like, but it is possible to make a difference with small actions. Ask organisations about their EDI policies; those with strong EDI processes can be celebrated, even if they’re not owned by someone with protected characteristics. Some small companies may not have EDI policies, which is where main contractors can be hugely influential by helping raise awareness of the significance.

We are accelerating towards more ethical investing and encourage people to demand more from organisations. What was once a competitive differentiator, ESG policies are now prerequisites for a businesses’ success. Organisations who fail to adjust, will be left behind.