ESG in the workplace

As the visible manifestation of a company’s brand and culture, the workplace is not only a key way of demonstrating ESG credentials, but also a key tool to deliver them. Buildings account for a high proportion of an organisation’s carbon and spend, play a key role in the local community and are where businesses bring their people together and support them to be at their best.

But there remains a widespread lack of understanding as to what ESG actually means in practice. In the same OnePulse survey, a fifth of office workers didn’t understand the term ESG at all. This insight paper aims to demystify the concept and explain what it means for your workplace and wider organisation.

With 40% of the UK carbon coming from buildings , there is no route to net zero without significant changes to our built environment. While many commentators focus on the green credentials of new builds, the reality is that with 80% of the 2050 building stock already in existence, the real environmental savings will come from upgrading our current buildings.

There are two types of carbon in relation to buildings.

Operational carbon is the energy used to run a building – the lights, heating and IT equipment. New buildings are often very energy efficient with low operational carbon. Reducing operational carbon in existing buildings is easy to understand, measure and achieve through a refurbishment or the introduction of new plant or technology. But every change an organisation makes to its building will come with an embodied carbon cost.

Embodied carbon is the carbon required to produce a product or service. So everything from an air handling unit to a desk will have an embodied carbon cost and that is harder to measure, and therefore reduce, than operational carbon. It is only by focusing on embodied carbon in buildings that businesses can properly understand the full carbon impact of the decisions. Morgan Lovell recently launched CarboniCa, a carbon calculator externally validated by Arup, to help visualise, track and measure the whole-life emissions of a project and to support lower-carbon decision making. Tools such as these are invaluable in tracking this hard-to-measure area.

There are numerous ways to reduce embodied carbon during a fit out but all involve a partnership approach between the client organisation and the fit-out partner.

• Reusing materials wherever possible. Reusing furniture products whether from that building or elsewhere is an effective way of reducing embodied carbon as the carbon in those products has already been expended.

• Producing less waste. Designing for less construction is a key element of reducing carbon but it’s also important to design for deconstruction. Using mechanical fixtures rather than adhesives so products can be separated at end of life is an effective change, so long as a document is produced so the people around at the end of life know how to deconstruct the space and know what reuse and takeback schemes are available for their products.
  

• Accepting lower resilience. Many organisations specify a high degree of resilience through additional emergency generators, for example. But not all organisations genuinely need this. Accepting a lower resilience will reduce an organisation’s carbon.

• Changing expectations. Some buildings are engineered to cope with extremes in temperature – the 35 degree heatwave and the -10 winter freeze. By reducing thermal comfort expectations – accepting a wider margin for error, for example 16-23 degrees rather than 18-21 degrees – will help to save energy.
  

Research we carried out in both June and December 2020 underlines that importance. It revealed that people have most missed the social contact the workplace offers together with the ability to collaborate easily. Post-pandemic, many businesses are using the opportunity to refocus on the workplace as a collaborative and social hub. A hybrid working model encourages people to come to a workplace when they need to collaborate and stay at home if they want to focus on concentrated tasks. Ensuring that a workplace includes different settings – from quiet zones to breakout areas – to support a variety of working styles is important for inclusivity. Providing training and development opportunities for staff is also important as part of this commitment.

Another change as a result of Covid is the focus on wellbeing. Already of growing importance before the pandemic, it is now at the top of the corporate agenda to encourage people back to the office and rebuild the social capital lost through long-term home working. Creating an environment where wellness is integrated into its design and management improves people’s sense of wellbeing, productivity, engagement and reduces absenteeism. It also promotes diversity and inclusion. Wellbeing starts with giving each person the autonomy to choose where they want to work and personal control over that environment and is demonstrated through healthy meals and snacks in hospitality environments, free fruit, Cycle to Work initiatives, gym memberships and exercise/mindfulness facilities, and cultures which encourage movement through sit stand desks, walking meetings and outdoor spaces. Natural light and biophilia also play a part.

Corporates occasionally hit the headlines for lack of supply chain transparency, particularly around child labour, and this issue is becoming ever more important to people. Some 62% of UK consumers polled in a recent survey say that that a retailer’s ethics such as paying staff fairly, contributing to community, or caring about the environment, are more important to them now as a result of the pandemic, while the majority (52%) said that they are more likely to shop with retailers that have ethical suppliers or supply chains.

This backs up the results of our recent survey where 95% of office workers said it was important or essential that their company’s supply chain – the organisations they buy products and services from – is traceable, diverse, sustainable, and transparent. Clearly this is also a recruitment and retention issue.

When organisations embark on a fit out project, they can work with a supply chain of often hundreds of organisations, even if they only deal with one main contractor. Ensuring that those organisations are ethical and diverse can be a challenge.

While the majority of construction supply chains are made up of small and medium-sized business (at Morgan Lovell this is 96%), wider diversity can be more difficult at present. The construction industry is heavily male-dominated, for example. Businesses wanting to have organisations with under-represented groups in their supply chain (e.g. owned 51% by a woman, someone from an ethnic minority, or someone with a disability or who identifies as LGBTQ) should look at programmes like WEConnect and MSDUK which certify organisations owned by women and ethnic minorities respectively. Some organisations may self-certificate but it can be challenging to confirm those details, especially under GDPR rules.