Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
The emphasis in ESG reporting is usually on the ‘E’.
Environmental numbers are examined by investors, they point most dramatically to the progress being made in the name of climate change and resilience – especially when resilience pertains to physical threats like fire and flood.
The ‘G’ is also getting some attention with transparency and diversity also becoming focal points on boardroom agendas.
However, post-pandemic the future of ESG reporting must lie with the ‘S’ and particularly with stakeholder engagement. Indeed, when the future of the office sector lies entirely in the hands of the occupiers, it surely makes sense to engage them as much as possible in everything you do.
“If you’ve not got occupiers, you’re not a landlord,” says David O’Sullivan, Director of Occupier and Property Services at Great Portland Estates, a major British property development and investment company.
His organisation is one which regularly asks its customers what they want and how GPE can help. As a consequence, the levels of satisfaction enjoyed by those occupiers enable GPE to believe it can plan its future offerings with some confidence.
In short, offices will be saved not because developers like to build them, investors to own them and corporate leaders to enjoy their corner domains, but because people choose to work in them.
Employees of the past had little choice where they worked but that’s different now. Covid-19 has broken the dam and given employees the world over the taste for a different workstyle. The rows of empty desks in global cities and business parks are the strongest reminder that it’s employees who are our ultimate customer.
Investors can only earn revenue if their buildings are occupied.
“It has never been more true that landlords must stay close to their occupiers,” says Louise Freethy, the Head of Insight at RealService. “And it has never been more important for landlords to capture the insight which occupiers can provide.”
There’s a joke about outrunning a bear that Benedict Cumberbatch (as Alan Turing) tells in The Imitation Game.
There are two people in a wood, and they run into a bear. The first person gets down on his knees to pray; the second person starts lacing up his boots. The first person asks the second person: “My dear friend, what are you doing? You can’t outrun a bear.” To which the second person responds: “I don’t have to. I only have to outrun you.”
Faced with the Covid-19 crisis, is it better for the property industry to pray or to lace up its boots?
UK data from Leesman doesn’t give much comfort to the “prayers” as 82% of 127,000 employees surveyed agreed with the statement that “my home environment enables me to work productively”. That is 19% points higher than the 63% of employees who say they have a productive workplace.
But, it’s not that simple. There are a lot more than two types of customers, and the task of creating a new vision for the future workplace requires a granular understanding of the needs of the close to the 30 million people who form the UK working population. That’s just the UK. Imagine the numbers when you scale up to consider the rest of the world.
The future of the office industry lies in getting in-depth insights into what motivates both the 82% “productive at homers”, and the 18% who are looking for a different solution. We can learn lessons from the hospitality industry (itself decimated by Covid-19) where the focus is on asking: “What is the experience that our customers want?”
For the property industry, this means applying the tools and techniques of service design to our existing assets and future developments. The starting point for our asset management or development plans should be: “Who is our customer and what are their practical and emotional needs?”, and not: “How much space can we get on the site?”
Likewise, our customer retention strategies need to step out of the world of spreadsheets and into the world of loyalty and brand building. The successful development, asset and property management strategies of the future will be shaped by standing in the customers’ shoes.
It’s the customer who will shape the future of ESG reporting and it’s only by truly aligning ourselves with the ultimate customer that we’ll be able to outrun the Covid-19 bear.