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Why ESG is no longer just a passing thought for landlords

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(Image credit: Image Credit: Moon Light PhotoStudio / Shutterstock)

The notion of environmental monitoring has been on the backburner for some time. For years it has merely existed as a checklist activity to tick off without too much thought. Businesses have traditionally treated it as a gimmick, with no clear idea of what it is they’re trying to achieve.

However, amid the current climate crisis, measuring the sustainability of a business is more vital than ever. Multinational tenants are now held accountable for their Environmental, Social and Corporate Governance (ESG) compliance, and will not lease or license a property unless they can obtain the environmental data they need from the landlords and report it accordingly.

The government’s prioritization of environmental monitoring has seen the process evolve – and now, data relating to sustainability can be converted into action. For instance, rooms could now be configured to meet certain criteria to ensure they are up to standards and minimum productivity thresholds for temperature, lighting and carbon dioxide levels. Smart meeting spaces could also now inform staff that they should take a break if a certain carbon dioxide level is breached.

It is crucial that landlords and companies are aware of the need to be proactive to differentiate themselves from other buildings and businesses. Part of this process is creating  ESG strategies that attract tenants who place environmental issues at the forefront of their agenda.

The impact of indoor air quality

While the monitoring of air quality within the workplace is a fundamental aspect of ESG policy, CO2 levels, humidity and temperature all have an impact on employee productivity and health. And when it comes to productivity, tenants have become far more expectant. No longer will they accept leasing empty office space within four walls. The onus is shifting towards landlords providing a tech-enabled, service-rich workspace ecosystem that also satisfies the wellness and environmental concerns of tenants. 

Scientific evidence points to the fact that optimal performance in the office and fresh air go hand in hand. Overcrowded, poorly ventilated workspaces and long meetings in compact boardrooms equals a CO2 hotbed. High levels of CO2 result in 23 percent impairment in decision making, slower reaction times, loss of concentration, reduced attention spans and increased drowsiness.

Poor air quality is also linked to the spread of illness, which is a major concern in the wake of the Covid-19 pandemic. Humidity and temperature also play a part in the survival rate of viruses, with low humidity directly compromising the body’s natural defense system.

The Office for National Statistics’ last pre-pandemic recording of sickness absence took place in 2018 and found that 141.4 million working days were lost because of sickness or injury in the UK. Minor illnesses such as colds and coughs accounted for 27 percent of these illnesses, equating to 38.5 million days.

Through the monitoring of CO2, landlords and employers can provide a safer, more productive environment, with employees proven to work up to 60 percent faster in lower CO2 concentrations. By reacting appropriately to these levels and monitoring the air quality in general, companies can prevent sick building syndrome and enhance worker performance – and crucially, be prepared for preventing, and reacting to, another instance like a pandemic.

Attracting and retaining talent

Thanks to the pandemic, workers are truly starting to prioritize physical and mental wellbeing when it comes to their careers. According to Gallup’s State of the Global Workplace report, workers across Europe are less satisfied than the rest of the world when it comes to environmental protections within their own country, with only 46 percent satisfaction compared with a global average of 62 percent.

Employee preferences on wellbeing and sustainability are important for both talent attraction and retention. Companies must prioritize these wishes to halt resignations and minimize the risk of losing their top talent to competitors.

Organizations with high employee engagement are 22 percent more profitable, however only 33 percent of employees feel engaged. So, not only will environmental awareness maintain a steady workforce and employee satisfaction, but also boost company performance.

The role of sensors    

Collecting data is critical to meeting room productivity scores, and sensors play a key role in collating such information. Temperature sensors through digital signage are an effective way of communicating critical environmental factors to tenants. 

But it is important to note that access control systems, sensors and digital signage work best and are fastest to implement when they are feeding into a single platform from which they can operate in parallel, sharing information and communications. These systems add more value when integrated together than when working in separate silos, to ensure room productivity levels are met.

And of course, while the world of work is returning to some degree of normality after Covid, the general mindset is switching to ‘how do we keep another similar outbreak from happening again?’. Population monitoring in spaces, room temperatures, access control and air quality are all aspects of maintaining a safe space, and sensors will play a key role of collecting actionable data on each measurement to maintain safety.

We will see a shift from separate point solutions to integrated software and technology platforms as the standard as landlords continue to drive towards ESG compliance and innovation.

Why ESG is no longer a passing thought

Through implementing ESG standards landlords can retain tenants, optimize staff wellbeing and productivity, and help to preserve the environment, all while being cost-effective. The office market is rapidly evolving, and environmental impact are high up on tenants’ agendas.

COP26’s journey towards net-zero is set to demand cooperation and a level of commitment from corporations and the public alike, and so ESG will see a further push towards becoming a key element of business models. PwC has stated that by 2025, almost 60 percent of mutual fund assets in Europe will be ESG related, with COP26 set to increase growth and influence of ESG investments.

A shift in investor priority and emphasis on corporations to adopt sustainable and ethical business models for the transition to net-zero, only further exaggerates the need for landlords to keep up with their tenants’ ESG demands and expectations. ESG can no longer be a passing thought.

James Shannon, Chief Product and Technology Officer, essensys

James Shannon has a storied career as an entrepreneur and technology leader. He possesses a deep passion for applying his knowledge and experience to create innovative and inspiring products. His experience includes the development of large-scale cloud services, award-winning mobile apps, integrated smart devices and cutting-edge consumer hardware for leading global brands. With extensive experience in enterprise SaaS and product development, James plays a key role at essensys in enhancing the user experience for flexible workspace operators and occupiers alike.