ESG in the Workplace

What is ESG and Why is it Important?

Environmental, Social, and Governance (ESG) criteria have become central to business strategies, reflecting a company’s commitment to sustainable and ethical practices. The concept of ESG gained prominence in 2004 with the United Nations’ “Who Cares Wins” initiative, which emphasised the integration of environmental, social, and governance factors into investment decisions to enhance market sustainability.

For decades, ESG remained a niche interest. It wasn’t until the mid-2010s that a broader spectrum of investors began scrutinising ESG data, including metrics like carbon footprints, board diversity, and labour policies. This shift was driven by growing evidence that ESG factors can significantly impact financial performance and risk management.

Why ESG is Important to the Workplace

Integrating ESG principles into the workplace is essential for fostering a sustainable and ethical work environment. By focusing on environmental factors, companies can reduce their carbon footprint and promote eco-friendly practices. Social considerations ensure fair treatment, diversity, and inclusion among employees, enhancing overall job satisfaction and productivity.

Governance aspects emphasise transparent decision-making and ethical business conduct, building trust among stakeholders. Embracing ESG in the workplace not only aligns with global sustainability goals but also attracts top talent, meets regulatory requirements, and appeals to socially conscious consumers and investors.

1. The Impact of ESG in the Workplace

ESG has a direct impact on the workplace and there is a lot that companies can do to initiate change and improve their ESG goals; from small measures like switching to LED bulbs to larger design and build changes like improving insulation, and monitoring heating through smart office design.

The office has become a showcase for how well companies are adhering to their goals – their approach to recycling, green building standards (green construction or sustainable building), and net-zero targets.

It is also becoming an increasingly more important benchmark for determining how responsible a business is, as well as other crucial decisions like whether it’s worth investing in. The influence ESG has on public opinion (particularly around the issues of climate change and social well-being) and willingness to invest in a company adds pressure on companies to ensure they meet ESG standards and targets.

2. Environmental

Environmental, the ‘E’ in ESG, is about an organisation’s impact on the environment. It’s used to show the impact that organisations have as they interact with the environment around them. It includes things like the reduction of carbon emissions (improvement of a company’s carbon footprint), wastewater discharge, the recycling of plastics, and the reduction in emissions of harmful chemicals in products.

Reducing Carbon Emissions

The UN’s 2015 Paris Agreement (the legally binding international treaty on climate change) committed the UK Government to achieve net-zero by 2050, and carbon reductions of at least 68% by 2030. The onus on offices to lower their CO2 emissions is founded on the significant contribution of office buildings towards those emissions.

In fact, nearly 40% of the UK’s carbon emissions come from buildings. 11% of that is from building materials and construction (referred to as embodied carbon). A larger 28% comes from the day-to-day building operations. This puts a huge responsibility on company directors, office managers, and indeed all staff members to reduce their carbon footprint while showing commitments to decarbonising their operations.

Embodied Carbon

The floor area of buildings globally is expected to double by 2060 in what is the largest wave of urban growth in human history. We’re expecting an additional 2.4 trillion ft² (230 billion m²) of new floor area added to the existing built environment. That’s the equivalent of adding an additional 480 New York cities to the world, or one every month for 40 years.

Operational Carbon

Operational carbon refers to the carbon emitted from the day-to-day operational use of an office building. A newly constructed building is far more energy-efficient than an older one. Considering that 80% of the buildings in 2050 will be the ones already built (i.e. embodied carbon), making commitments to decarbonising existing operations and safeguarding business growth from further emissions will be of prime importance. Some of the things companies can do to lower operational carbon emissions include:

1. Minimising Materials – minimising the number of materials used in office design. A less cluttered office environment with lots of open-plan space helps to reduce the number of materials used.
2. Responsible Materials – companies are making conscious decisions regarding the types of materials used avoiding high embodied carbon materials and opting instead for more renewable and natural materials in the selection of furniture and fittings.
3. Minimising waste – Minimising the amount of waste produced in a design and build helps to limit embodied carbon.
4. Recycling and Up-cycling – Rather than purchasing an entirely new set of furniture for each office move, companies nowadays are up-cycling – finding new ways to use that furniture in the new office space.
5. Certification – choosing a design and build company with sustainable office certifications and credentials can help set your office up for low emissions in day-to-day operations.
6. Smart Office Design – embracing smart office technology, like automatically adjusting HVAC and motion sensing light bulbs can all help in reducing carbon emissions, while at the same time reducing operational costs.

3. Social

The social element of ESG is about employee well-being, which is a significant part of any successful business. The workplace thrives on social interactions, friendships and the general happiness of employees.

Conversely, a stressful environment can lead to employee turnover and taking sick leave due to stress and mental health concerns. This ultimately leads to a loss of productivity and profit for a company. Here are a few of the ways in which companies can support the social side of ESG:

• Hybrid Office Design: During the course of the pandemic employees felt isolated from the workplace. Restoring the balance with hybrid office design allows for flexible activity-based work and can help restore the wellbeing in the office  (see our article on hybrid office design)
• Flexible Working: Employees spend the majority of their day at a desk or workstations. Ensuring that the workplace has a variety of spaces to switch modes (e.g. from desk working to working in a quiet booth) can really help to improve wellbeing.
• Ergonomic Office Furniture: from sit-stand desks to ergonomic office chairs, it’s important to provide a range of equipment to employees to aid their work and avoid unnecessary stress and strain.
• Diversity and inclusion: creating an office environment that is inclusive means providing accessibility for all staff. Some of the considerations here include accessible parking space, health and safety measures, route maps around the office, wheelchair ramps, lighting adjustments, HVAC adjustments, meeting room booking systems, quiet areas, breakout areas, and the creation of accessible tea-points. Your fit out partner can assist you in all these areas from space planning all the way through the final fit out.
• Experiential Office Space: it’s not just employees where well-being is crucial, companies are increasingly competing for the attention of clients. We recently fitted out a remarkable space for DTRE (see the case study) which aims to draw clients to the office, creating a space for them to touchdown, work, and relax with a coffee or drink. From the creation of a stunning reception transformed in a barista area, to an exquisite client lounge, bar and dining area where guests can sit down for a meal and drink.
• Health and Wellness: there’s a range of office design practices that can be employed to improve health and wellness, inclusion and collaboration in an office space. These include the provision of healthy meals, snacks and fruit in tea-points areas; cycle to work programmes; offices gyms and shower facilities; breakout and games areas;  libraries quiet areas; hybrid and collaborative working areas; skylights and outdoor seating areas to maximise the availability of sunlight.

4. Governance

Governance (the G in ESG) is about the processes, values, guidelines and rules that a company puts into place that make its business accountable. Addressing environmental and social issues through good corporate governance is becoming a top priority for companies. Companies are constantly being scrutinised on their commitments to climate change, the well-being of their workers, and the impact on society at large.

In fact, 64% of Millennials consider a company’s social and environmental commitments when deciding where to work.Governance is pivotal to the success of a company because it bears consequences. Labour strikes, high levels of employee churn and public protests against companies breaching environmental and social protocols can damage a company’s reputation and ultimately impact its profitability. Measures to improve and maintain good corporate governance include:

• Working with companies and suppliers that comply with ethical practice
• Providing diversity and inclusion in the workplace
• Adhering to health and safety best practices in the workplace
• Considering sustainability in business practices (e.g. EPC ratings and smart office design)
• Fair employment practices

At K2 Space we make proactive decisions that apply best practices in governance for our office design and builds / CAT B Fit Outs. These include working with suppliers that adhere to the highest ethical and environmental standards.

5. ESG in Practice

Considerate Constructors Scheme and ESG

At K2 Space, we are involved in the Considerate Constructors scheme which commits sites, companies and suppliers to respect the community, care for the environment and value their workforce. Our involvement with the scheme creates full transparency and accountability for the sites we work on. Among our commitments are the requirements to optimise the use of materials and resources, including minimising carbon. We also employ construction practices that minimise the negative impacts on the environment.

BREEAM and ESG

BREEAM (Building Research Establishment Environmental Assessment Method) is the world’s leading science-based suite allowing validation and certification systems for a sustainable built environment. BREEAM’s holistic approach to achieving ESG, health, and net-zero goals has been registered by millions of buildings around the world.

It examines a building’s design, construction, and operation in relation to a set of performance targets. K2 Space worked with Envision in achieving BREEAM status for a recent fit out project for a market-leading property advisory business. Gaining BREEAM Status involved working through an extensive list of criteria that we had to achieve to be awarded the accreditation, from compliance in energy-efficient light bulbs with movement sensors, to glare and light control to ensure the best work conditions for staff.

There were numerous criteria in the audit with strict targets to achieve them. The design stage for instance comprised 56 target criteria across areas of the ESG guidance – Environment (energy, transport, water, materials, waste, ecology and pollution) Social (health and wellbeing) and management (Governance).  We had to ensure a whole range of criteria were met and information provided, for example:

Management (Governance)

BREEAM’s Management criteria included:

• Adhering to  ISO 14001 environmental practices in accordance with Pollution Prevention Guidelines
• Monitoring the  project to ensure ongoing compliance with the relevant sustainability performance/process criteria
• Ensuring that wood used in joinery is sourced in accordance with UK Gov’s Timber Procurement Policy.
• Registering with Considerate Constructors Scheme and achieving a set score
• Monitoring weekly energy and water usage during programme
• Monitoring weekly transport to and from the site

At K2 Space we make proactive decisions that apply best practices in governance for our office design and builds / CAT B Fit Outs. These include working with suppliers that adhere to the highest ethical and environmental standards. A good example of this is our close working relationship with Humanscale, a company who are committed to environmental safety, net positive products and complete transparency in the materials used in their products through their unique Declare programme.

6. Health and Wellbeing (Social)

The ‘social’ element of ESG is reflected in the “Health and Wellbeing” aspects of BREEAM assessment. Criteria here includes, but is not limited to:

• Assessing the potential for disabling glare and the provision of a glare control strategy
• Making sure that 95% of the floor area in each relevant building area (office function) is within 7m of a wall, which has a window or permanent opening that provides an adequate view out.
• Using high frequency ballasts for all LED’s and compact fluorescent lamps.
• Providing an indoor air quality plan
• Providing decisions and actions that minimise indoor air pollution during the design, construction and occupation of the building.
• Carrying out thermal Modelling to demonstrate summer and winter operative temperature ranges in occupied spaces

Environmental (energy, water, materials, waste, ecology and pollution)

Reduction of energy use and carbon emissions, measuring major energy consuming systems and utilising energy efficient equipment are all BREEAM criteria that hinge on ESG goals. Others include the monitoring of water consumption (through meterage and flow control devices – such as those regulating water in WC areas); material sourcing that is responsible and sustainable; and the reuse and recycling of materials.

7. How Can K2 Space Help Meet Your ESG Goals?

At K2 Space we are committed to working in a sustainable manner that embraces ESG principles and integrates ESG considerations into your workplace design. Furthermore, we believe that we can have a positive impact on your ESG goals by helping you measure and assess the impact of the design through choice of materials, choice of furniture, and the use of sustainable and considerate measures in the overall build process.

If you’re looking for a fit out company nuanced in BREEAM and other building accreditations, such as the Considerate Constructors Scheme, that require thorough attention to detail, we are ready and able to assist. We strongly believe that our projects have the potential to shed a positive light on our client’s ESG commitments. Our team can also support you in assessing the impact of your office design and build project, as well as providing advice on the design and build criteria that support ESG goals.