Reprinted from GreenBuzz, a free weekly newsletter. Subscribe here.
I spent a day last week talking real estate. Specifically, about the new realities of returning to the office at a time when landlords and their tenants are navigating new work styles, social and environmental issues, and investor concerns.
That is: ESG and DEI meet the Great Resignation and the climate crisis. Amid a pandemic.
The event was the inaugural ESG Summit hosted by Join, which "digitally transforms buildings for owners and occupiers as a service, connecting everything securely and providing real-time insights." The event, held at a boutique resort set amid vineyards 70 miles north of San Francisco, explored how environmental, social and governance (ESG) issues are intersecting with the world of work. In the room were leaders from commercial real estate companies, investors and a handful of large companies that house hundreds of thousands of workers.
Perhaps uncharacteristically, I led a conversation focusing on the "S" pillar of ESG, a departure from my usual perch in the environmental realm. The conversation focused on how commercial building owners and their tenants are meeting employees’ shifting needs in a nearly-post-COVID world that is also confronting social and environmental change.
Some workplaces could well become 'more like a cruise ship.'
Like so many things on the environmental side, data plays a critical role, said my panelists. They included Mark Jacobson, CEO of Terrain Analytics, a workforce analytics startup that helps companies identify the best markets for their talent needs; Erika Ryback, director of real estate strategy and transformation at PwC, who helps clients with their workforce needs; and Kim Vu, vice president of ESG at Remitly, which enables immigrants around the world to efficiently and affordably send money back home.
The data part involves a growing array of algorithms, analytics, artificial intelligence and management tools to assess everything from where in the world to site a facility, to how to accommodate employees’ changing needs and desires. And, along the way, to collect gobs of real-time feedback to optimize buildings and occupant well-being. The demand for data is coming from investors but also from vendors and other partners, who want to both share and receive information about building operations and employee needs. And from employees themselves, some of whom want to monitor and assess progress on their company’s diversity and other goals.
There’s a Tower of Babel therein, in which the interoperability of data and information systems is found wanting, exacerbated by gaps in data quality, quantity, consistency and timeliness. Data sharing is done ad hoc and in piecemeal fashion, a state of affairs familiar to almost any corporate sustainability professional.
While the environmental side of last week’s event focused on decarbonization — after all, buildings generate nearly 40 percent of global greenhouse gas emissions — the social side focused on a range of issues: attracting and retaining talent; meeting company diversity goals; accommodating new post-pandemic work styles; rethinking workplace locations and amenities; and more.
Some challenges are obvious: creating welcoming environments for those who haven’t set foot in an office for some time (and who may not yet have met their colleagues face to face); figuring out staggered work schedules for those who will be combining work in the office and remotely; the kinds of amenities to make available, balancing those desired by employees with those that ensure a safe workspace as we all grope our way out of the pandemic.
But some considerations and amenities aren’t as obvious. For example, the Muslim holy month of Ramadan, which begins later this week, may affect lifestyles and workstyles of some employees, who fast in the daytime during this period. Or the fact that employees whose disabilities aren’t necessarily visible may have found that working from home during the pandemic allowed them to optimally control noise, lighting, temperature and other factors, something they’re no longer able to do as they return to the office.
The disability community "never had a voice in the physical offices," noted Vu. "As we go back into the office, we're talking a lot about race and ethnicity, and that's an important kind of grounding for the conversation around diversity. But there's also the intersection of all these other experiences, too."
And then there are companies with remote workers or clients in Eastern Europe. "One of our customers is one of the largest employers of software engineering in Eastern Europe," said Jacobson. "So, the last 90 days have been very stressful for them. They've got both Russian and Ukrainian workers, and they will not work in the same office together. The client now must move 1,000 employees safely somewhere. We've run the analysis for them; we can derisk one city versus another. But they are saying, ‘We need to move away from geopolitical risk.’ So, we have to re-architect an entire global workforce around what's happening today."
There’s a strong incentive to get these things right. There’s the war for talent, of course, in which job seekers and job changers have the upper hand in choosing employers, jobs, even working conditions. There’s the rising generation of Gen Zers entering the workforce, purportedly in search of "purpose," however they define it.
But there’s also pure economics. Consider that, on average, workplace costs per employee represent only about 3.5 percent of those employees’ compensation, and that the cost of attrition for an employee earning $150,000 a year can run between $75,000 and $140,000, according to Jacobson. That can make investments that engender even small increases in productivity, satisfaction or retention well worth it.
It's a brave new world. PwC’s Ryback suggested some workplaces could well become "more like a cruise ship," complete with "an app that tells you when the yoga classes are down the street, what's the menu at your favorite restaurants or when your laundry is ready to pick up, and that lets you order coffee. It’s giving you alerts throughout the day, connecting the building into the broader community."
I’ll confess to being a tad unclear how cruise ships — those superspreading bastions of hedonism and self-indulgence — square with the hardcore realities of worker well-being and business productivity, but perhaps that’s just another facet of the changing worlds of real estate and work.
At minimum, it gives new meaning to the term "anchor tenant."
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