The eyes of the world this week are focussed on Glasgow and the combined deal-making of those assembled for the pivotal COP26 environmental summit. The U.K. Chancellor, Rishi Sunak, has this week outlined a proposed regulation at the climate summit that would require big firms and financial institutions to identify how they are going to mitigate their environmental impact and achieve a lower carbon future within their various organisations. In little over a year, detailed plans would be required to be made public. The Chancellor is deploying the carrot and stick approach, with a heavy hand on the stick.
Many of the biggest businesses in the UK have been making headway with their ESG strategies in recent years. The Chancellor’s speech has now further incentivised those already leading this effort and is likely to further supercharge business planning and implementation. As a result, the carbon footprint of the office will come under even greater scrutiny, with the operation of buildings contributing approximately 28% of all global C02 emissions.
The Chancellor previously employed the same tactic earlier in the year when announcing that large office tenants should make energy consumption figures publicly available. Sunak is hoping that the prospect of corporate shaming will ramp up change, rather than waiting for industries to lead. The office and its associated operations are indeed significant carbon emitters. Landlords and investors have the responsibility to ensure that the UK’s office stock is of a high ‘sustainable’ quality, this is made all the more difficult as a large proportion of UK offices are old and would require investment, time and appetite to retrofit. Similarly, all three of these attributes are needed from tenants in order to embark on their green office journey.
Change in office trends comes about through investor appetite and a shift in tenant requirements. We are at juncture where both of these are moving at pace and towards a similar goal, which should support long-term government net-zero targets. However, they are not necessarily moving in tandem, and we will possibly start to see a green office divide between the larger office tenants and the smaller ones, with the former having greater clout both in terms of investment and relationships to influence change. The real estate industry and all its constituent parts have an opportunity to come together and build upon the relationships founded through the pandemic, working towards a common goal. The timing coincides with businesses, landlords, architects etc who are all reinventing the way we work, what the future office looks like and what its purpose is. The Chancellor’s announcement is a start, but it only addresses one part of the office occupational market.