What does the UK's sustainable office of the future look like?
Many of the UK's biggest businesses are planning to downsize their office estates this year, while outlining plans to continue remote working post-lockdown. But are environmental considerations a driver, as well as Covid-19? And will the office of the future be truly sustainable?
Those are some of the questions edie is exploring in its new, free Explains guide on sustainable offices in the ‘new normal’, published this week and hosted in association with Rio ESG.
But, since work began on the ten-page report, additional research has been conducted into corporates’ post-lockdown office plans; additional businesses have finalised estate plans and remote working requirements and, of course, Government Covid-19 rules have continued to shift as the roadmap out of lockdown progresses.
This feature, therefore, builds upon the report with comments from some of the leading businesses that occupy – and finance – office space across the UK.
Smaller estates and more flexible space
A recent Accumulate Capital survey of 500 UK firms found that 73% are expected to finalise downsizing plans by September 2021. The key driver is clear – most workers want to continue working remotely, at least part of the time, once lockdown lists. The KPMG CEO Outlook Pulse Survey for 2021 polled 500 chief executives and found that one-fifth are predominantly looking to hire remote workers, while a further one-third are looking at a hybrid model of working for all staff.
The secondary driver will, of course, be the need to reduce costs. The UK economy contracted 9.9% during 2020 – the sharpest year-on-year contraction since 1709. But many businesses are also hoping that smaller estates will help provide a boost for social and environmental sustainability as well as the bottom line.
Mitie’s chief of staff Peter Dickinson tells edie the business has been testing a “hub” approach, whereby staff who need to work from the office can visit their nearest office, rather than their usual base. Staff have been observed to take advantage of this scheme for meetings and collaborative workshops particularly, with most having expressed support for a ‘hybrid’ model, in which routine solo tasks are completed at home and group work is completed at the office.
In the long-term, Dickinson claims, some offices will likely be consolidated if these patterns of behaviour continue. “Focusing on larger hubs and moving away from small offices is also much more energy-efficient and helps us to minimise our impact on the planet,” he said, alluding to Mitie’s commitment to reach net-zero by 2025. Building energy use is notably one of the firm’s largest sources of emissions, along with transport.
Dickinson additionally explains that Mitie has seen many of its business clients undergo a similar “change of mindset” over the past 12 months – a recognition of the interconnected benefits for people and planet that hybrid working can bring. This recognition was evident in edie’s discussion with EY’s UK chair Hywel Ball, who says: “We believe there will always be a need for EY to have office space across the UK, but how we use our offices in the future is highly likely to change with greater emphasis on collaboration spaces and meeting rooms for example rather than hot desks for independent working which is more likely to be done from home. We will be listening carefully to our people and clients to see how their needs and behaviours change as we come out of the pandemic.”
Competitor PwC is making similar changes, investing £75m in the UK alone to create “ more open, collaborative spaces and fewer traditional desks, and investing in technologies such as audio and visual equipment to support remote working and client engagement “ over the next 18 months. “ For example, our new Watford office has designated garden space, social space and library space, “ a PwC spokesperson tells edie. “ This summer we're opening a new office in Belfast which will take a similar, multi-use approach. “
Another organisation consolidating its office space is the Cambridge Institute for Sustainability Leadership (CISL). The Institute is merging five offices into one and has chosen a former telephone exchange building for a multi-million-pound retrofitting project that will dramatically improve energy efficiency. The office will, overall, have more total space than the five offices collectively provide.
#EntopiaCambridge is being delivered through @Cambridge_Uni's Estates Division by a team of leading sustainability-focused firms who understand the need for deep collaboration and #innovation to achieve stretching #sustainability targets: https://t.co/AQVePb8Ztx #buildingchange pic.twitter.com/fsoiufiCe4— Cambridge Institute for Sustainability Leadership (@cisl_cambridge) March 10, 2021
CISL founder and director Dame Polly Courtice tells edie that the Institute was planning the move before the UK’s first lockdown and has continued to ask staff about their changing needs and preferences. These considerations of staff wellbeing will be intersected with the organisation’s environmental mission; the new ‘Entopia’ office is targeting an A rating on the EPC, up from an E rating at present, as well as BREEAM ‘Outstanding’, Passivhaus ‘Enerphit’ and WELL Gold certifications. This latter certification covers things like natural light, thermal comfort and fostering community, beyond environmental metrics.
“Our aim is to create an office that staff look forward to coming to, but that also enables the flexibility and remote collaboration which will form a part of the culture of work in future,” Courtice says. “There is much development proposed and happening in and around Cambridge. We hope The Entopia Building project will show that high sustainability standards are possible and desirable, inspiring others to follow our lead.”
A new frontier for emissions accounting
Smaller offices typically mean lower energy bills and less carbon – and working from home cuts out emissions associated with commutes and business travel too. BEIS’s latest emissions statistics revealed that business sector emissions dropped 8% in 2020. But home working is not without an environmental footprint – BEIS’s data also revealed a 2% increase in domestic emissions.
Research from Bulb and EcoAct in summer 2020 revealed that UK businesses could collectively under-report their annual emissions by 470,000 tonnes, due to challenges measuring emissions from remote workers. EcoAct has since launched what it claims is the first accounting tool in the national market for these emissions.
The debate around best-practice for accounting and reduction remains lively, several months on. Some businesses, like Mitie, have produced dedicated employee communications and engagement schemes providing advice on domestic energy efficiency to colleagues. Others have either launched, or are currently developing, schemes to help staff finance domestic solar panels, home insulation or low-carbon transport.
While few businesses have publicly announced initiatives of this latter type, Legal & General Real Assets’ sustainability manager Malcolm Hanna says they provide “an exciting opportunity for employers to align their sustainability objectives with this new model of more flexible working”.
Legal & General Real Assets is one of several office development investors to have announced new climate targets in recent months, against a backdrop of reports into increased ESG investing and mounting pressure on investors to align financed emissions with climate science.
Other announcements in this space came from the likes of Grosvenor, British Land, Orchard Street and Aviva Investors. Many firms claim they had been planning big changes in climate strategy pre-pandemic, but it would be hard to deny the impact that Covid-19 has had on the sustainable finance conversation.
Pictured: An artist's impression of Grosvenor's build-to-rent neighbourhood, under development in Bermondsey
Aviva Investors Real Assets’ head of ESG Ed Dixon says the events of 2020 “strengthened the resolve of our leadership team”, accelerating the development process – and heightening the ambition level – of its climate plans. “We’re under no illusion that investment in the built environment can return to normal after the Covid crisis,” he adds. “This is the biggest investment opportunity our generation will face and through rapid acceleration toward low-carbon solutions, we are seizing the opportunity on behalf of our clients.”
Over time, it is clear to see how the commitments of asset managers will reshape the UK’s office landscape. New-builds will be lower-carbon across the life-cycle, as well as better for employee wellbeing. Retrofits will be held to higher energy efficiency standards and, for many investors, are now being prioritised, partly due to their resource efficiency benefits.
“The availability of net-zero carbon offices is going to increase significantly over the next 5-10 years in prime office markets,” Orchard Street’s head of responsibility and ESG Lora Brill summarises.
“We expect that operational energy and carbon ratings such as BREEAM In-Use, NABERS UK and Government-backed rating schemes will increase in prevalence in the market to reduce the carbon performance gap in buildings. Intensive, real-time monitoring of building plant and indoor environmental quality, particularly air quality, will [simultaneously] become standard in well-managed prime, multi-let office buildings.”
Pictured: Manchester's Bauhaus office block, backed by Orchard Street
Brill’s sentiments are echoed by her peers – but future benefits are not a given, it is agreed, and further collaboration will be both a key challenge and opportunity.
LGIM’s Hanna, for example, tells of how properties that are fully managed by occupiers directly cover around half of the business’s portfolio. In these instances, occupiers have to be continually supported to collect energy data and to improve efficiency; LGIM uses engagement schemes as well as financial incentives and educational tools.
“The level of engagement varies, and this will be reflected in the time and effort required to action these changes,” Hanna states. “We also recognise that SME occupiers may need more help in this area, so, we are able to provide direct access to our network of specialist partners to support energy efficiency programmes.”
All in all, the ‘new normal’ does seem to be a situation in which offices become more holistically sustainable. But businesses of all sizes and at all parts of the value chain cannot rest on their laurels; the next 12 months will see theories about the office of the ‘new normal’ either materialising or falling through.
Find out more about making your organisation’s offices more sustainable in 2021 and beyond with edie’s new edie Explains guide on the topic, hosted in association with Rio ESG.