Changing attitudes to the culture of work is leading to a new focus on ESG principles in the property sector
The future of work is employee wellbeing, trumpeted a headline last year in the prestigious business magazine Forbes. It was hardly news. After all, ‘Do unto others as you would have them do to you’ – Jesus’ words in Luke 6 – has been the common-sense basis of the ethical systems on which many societies have been built for two millennia. And ‘the pursuit of happiness’ was enshrined as one of humankind’s inalienable rights in the American Declaration of Independence in 1776.
However, the current economic dispensation – which has largely subsisted since the ascent of Thatcherism in 1979 – has recently been shaken by two seismic events: the realisation that Earth’s resources are finite and rapidly diminishing and that we are spiralling towards a global climate catastrophe caused largely by anthropogenic factors; and the onset of the Covid-19 pandemic.
Both have radically altered attitudes to the culture of work, probably permanently. The traditional British acceptance of long hours (the longest in Europe according to a 2019 study by the Trades Union Congress) is disappearing. Working from home, or at least hybrid working, is here to stay: in a survey conducted in March by global consulting firm Korn Ferry, almost two-thirds of professionals said that returning to the office would have a negative impact on their mental health.
Unless employers – and developers – take these new positions on board, the future of our town and city centres as centres of work is at considerable risk, which is causing concern in the boardroom and tightening the focus on Corporate Social Responsibility (CSR) and, increasingly, Environmental, Social and Governance (ESG) issues.
Scottish Property Federation director, David Melhuish, said: “ESG principles are fast becoming central to the property industry’s investment, development and management activities, which reflects the impact the sector has on individuals and communities across the country.
From where we live and work, to the places where we access essential services and spend our free time, most of us engage with the built environment multiple times a day, and these interactions can have a significant impact on socioeconomic outcomes and the environment.
“There is also growing recognition that having a strong ESG framework is key to making sound long-term decisions. This is critical in an industry that is planning, constructing, and managing buildings that will be around long after the Scottish Government’s 2045 target for reaching net zero and that must continue to serve the needs of communities for generations to come.”
He concedes, though, that there is much more to be done, particularly around how we plan for the retrofit of existing buildings to reduce their contribution to climate change as well as making them easier and more affordable to heat.
“There is a need for better collaboration within the industry around enhanced data collection and sharing to get a more accurate picture of the impact the industry has and to share best practice.
“A number of initiatives are seeking to address these gaps including the British Property Federation’s new net zero pledge, which is making it easier for real estate companies to share information and knowledge and support each other on the journey to net zero.”
Colin Mackenzie, office agency partner at Knight Frank in Glasgow, agreed that the Covid-19 pandemic has prompted a huge growth in the ESG element of the industry. “Sustainability and wellbeing are becoming much more prominent in almost everyone’s agenda; from something that was frequently the subject of discussion it’s now at the forefront of decision making,” he says.
Stephen Lewis, managing director of HFD Property Group, predicted “a flight to quality” and said that could be seen at HFD’s flagship 177 Bothwell Street office development. Energy is supplied by Blantyre Muir Wind Farm in South Lanarkshire, ensuring it is 100 per cent renewable from an identified local source.
The development, which is due to open shortly and whose occupiers include Virgin Money, BNP Paribas, AECOM, CBRE and Transport Scotland, will also feature a rooftop terrace and running track, 318 cycle spaces, electric vehicle charging points, and touchless technology throughout.