Real estate: CSR as an essential part of the recovery plan
This health and economic crisis also renders environmental, social and governance (ESG) issues more visible, which until now could be relegated to the back seat, competing against more short-term financial profit goals. These new non-financial issues naturally lie at the heart of corporate real estate strategies: their operating assets being both a major factor in CO2 emissions, and also a tool in increasing the quality of work life. However, ESG budgets must be handled with precaution.
Applying budget restrictions to ESG presents 3 major risks
The review of strategic plans implemented by many businesses to counter the sanitary crisis is without doubt an opportunity to upgrade the positions of ESG. The idea is to provide a better reflect of the social issues popular among employees while also contributing effectively to the recovery. In the current context, budgetary restrictions are a challenge, but letting them have too much of an impact on the launch of an ESG strategy does not clearly fit in with a sustainable approach… Our talented employees would probably be quick to penalize this, all the more so due to the increased sensitivity to ESG issues among employees and investors ensuing from the Covid-19 crisis. Ignoring this fact today is very risky:
- HR risks: recruitment problems and loss of talents looking for meaning and transparency, which is all the more important with the arrival of Generation Z on the job market;
- financial risks: disengagement of certain investment partners who do not wish to be associated with a non-virtuous company;
- media and reputation risk potentially leading to a fall in appeal and a slowdown in activities in the event of customer boycotts.
Real estate at the heart of the question
Managers in today’s post-Covid world are expected to give a reply to these social questions. Office real estate makes sense in ESG issues. The idea of multiplying workplaces and the new dimension of home office on a massive scale, turning the home into an extra office with its own challenges, must be acknowledged.
Some essential points, which the majority of companies have in common in their real estate strategy, are key elements in any reflections on the three ESG pillars:
- A reduction in office size, to increase social distancing and thus reduce commensurately the environmental impact. This strategy completes the efforts already made to strive for tertiary assets with a high environmental performance.
- Resorting more to data generated by the building to strive for a smarter operation. For example, by correlating the occupancy flow to catering services, cleaning or heating/air-conditioning to fight
- against waste and unnecessary consumption.
- More and more new services, even in our colleagues’ homes to deal with social issues such as the comfort of physical installations and insecurity: providing office furniture, meal delivery, psychological consultations with qualified professional…Not forgetting connectivity, because digitalisation - accelerated by the pandemic – lies at the heart of the development of a service environment adapted to nomadism. And not all places are equal in this matter.
- Redesigning and modulating work space to provide the best possible office conditions, and reasserting it as a place for exchange and collaboration.
- Different work spaces must fit together better to supplement each other sustainably and not just during a crisis.
- A generalisation of “ESG real estate reporting and innovation” staff in order to have relevant governance and indicators.
The multiple crises linked to the pandemic led to an abrupt shift in approaches; once the shock of the nationwide lockdown imposed in March 2020 passed, deeper strategic ideas were implemented, including in the field of ESG. Public authorities are setting the work standards of the future; businesses, rather than being stuck in the current environment packed with uncertainties, are anticipating and adapting in real time. Even if nothing is certain any longer, a new balance between general interest and financial interest does seem to be appearing, which is exactly what the majority of salaried staff are expecting1.
1 Mazars study " Stratégie immobilière post-Covid : 15 responsables immobilier livrent leur vision" [Post-Covid real estate strategy: 15 real estate managers explain their vision”]
This article was written by Claire Gueydan-O’Quin, Partner at Mazars and Morgan Iafrate, Manager at Mazars.