
The built environment is responsible for 42% of global emissions, with 27% from building operations and 15% from embodied carbon. These statistics make ESG an urgent matter for the flexible workspace sector. But while many coworking operators focus on running an ethically guided business that is thoughtful about its impact on people and the planet, others are unsure where to begin.
In the ESG Playbook for Coworking Success, top flex operators share how they lead the charge and make ESG a competitive edge, featuring insights from the industry’s first ESG survey. This blog post pulls back the curtain to help you on your path toward a net-zero portfolio.
ESG certification is a competitive advantage
Flex operators are in the early stages of ESG adoption, with 47% having an ESG policy while 22% are currently developing one. Meanwhile, 46% of operators have gone even further, achieving ESG-related certification, including B Corp status, BREEAM, or a WELL Coworking Rating – the first health and wellbeing rating for the coworking industry.
Up in Manchester, Koba is the UK’s first WELL-certified flexible workspace. Olivia Chatten, Senior Consultant at Incendium Consulting, which launched the WELL Coworking Rating, recommends the accreditation for offering a “commitment to health and wellness initiatives that is achievable, affordable, and delivers meaningful impact to occupiers.”
If you’re still on the fence about ESG certification, consider this: up to 80% of new clients ask for ESG credentials before signing a deal, according to more than a quarter of operators. While it was once sufficient to send prospects your ESG policies, recounts Polly Bryan, Implementation and Quality Director at Orega, nowadays, she sees requests for more specific data. This poses a risk of “being reactive in dealing with every sales proposal, and that is too time-consuming.” Instead, Bryan recommends that operations and marketing teams work together to obtain “solid answers and real stats behind policies.”
Client engagement around ESG initiatives is expected to continue beyond deal-signing; last year, Josh Rose, ESG Manager, Clockwise, saw client requests for ‘specific ESG policies and data rise ten-fold,’ and expects this to continue. Our survey found that 73% of operators share ESG updates in ongoing communications and reports. Meanwhile, FORA goes one step further, working with net zero certification programme, Planet Mark, to “provide members with their carbon data and run forums and drop-in sessions to help them meet their reporting needs or tell them about the latest initiatives,” shares Sustainability Manager, Budelia Probert Watt.
While 40% of respondents track their carbon footprint, a third of operators don’t measure ESG initiatives at all, and 33% are relying on manual methods, including spreadsheets, to capture metrics. Some operators also expressed struggles around obtaining accurate information from landlords in leased space, which is holding them back.
How to align with landlords and investors for success
Adding to client and prospect demands to report on ESG initiatives, nearly 50% of operators are also experiencing moderate pressure from investors. However, Koba has uniquely turned this difficulty on its head, making its design partner, Cast, an investor in the business. While bringing this resource in-house overcomes financial barriers (cited as one of the industry’s greatest challenges to adopting ESG policies), it also puts Koba “at the forefront of adopting new practices around sustainability,” says Paul Nellist, Managing Director.
As Koba is strongly committed to achieving WELL certification across all its spaces, some opportunities have been turned down in buildings deemed unsuitable. This indicates some of the complexities of working with landlords. Polly Bryan confirms this: “If the landlords’ vision for the building is not aligned with the operators, or you are close to the end of a lease, it’s hard to ask for collaboration on ESG compliance.” Many of Orega’s 25 locations are owned by a cross-section of landlords under management agreements. Difficulties in uniform ESG policy implementation across sites also affect 30% of operators.
To align with landlords, Hubert Apt, CEO and Founder, New Work Offices, recommends that operators consider a management agreement with a profit share element. He justifies: “If the initiative is incentivised with additional profits, the landlord is motivated to invest and play along as well.” When it comes to ESG investment, 63% of operators favour having shared financial responsibility with landlords.
On the other hand, going down the building ownership route simplifies ESG initiatives “because we are not constantly asking for landlord permission. There’s a real saving in admin time without those constant negotiations,” expresses Magda Al-Nugaidi, Managing Director at Uncommon, which owns all of its five locations.
ESG in action
While financial challenges can restrict ESG initiatives, there are still many practical steps you can take to begin the journey. An overwhelming 97% of operators have active ESG initiatives, with some of their top environmental priorities including:
- Energy-efficient lighting and appliances (69%). Advice from William Hulls, Chief Revenue Officer at Demand Logic: ‘Be continually proactive about energy consumption. There is always room for optimisation, even after upgrades or refurbishments.’
- Recycling and waste reduction (81%). After TOG merged with FORA in 2023, the new ESG strategy fell to Sustainability Manager, Budelia Probert Watt. She started with some “ground-up initiatives,” including recycling solutions.
- Use of eco-friendly building materials (28%). Koba’s focus on designing an environmentally friendly fit-out led them to improve the circularity of materials, utilise recycled building materials and second-hand furniture, reducing embodied carbon.
Client participation was one of the biggest challenges EDGE Workspaces faced in implementing simple ESG initiatives. However, Evelien Bijl, Operations Manager, has taken a creative approach – replacing wastepaper bins with more central, divided solutions, and tackling commuting by offering free-to-use bikes. As commuting is one of the largest hidden carbon impacts linked to the workspace industry, EDGE Workspaces has taken action by having ample bike storage and a small car park that encourages tenants to carpool.
Growing social impact initiatives
In cooperation with UseSpace, an organisation working with office owners to utilise empty space during quiet periods, EDGE Workspace also hosts rehearsal space for a local orchestra, as just one of several social initiatives. Social impact – a sometimes overlooked aspect of ESG – is being taken seriously by 75% of operators who support charities or social causes.
For instance, at technologywithin, we’ve worked with The Society of St. James for the past decade, supporting homeless people in Hampshire. Likewise, Uncommon hosts fundraising events with its charity partner, Spread a Smile, and offers underutilised workspaces for non-profits. We found that 10% of operators similarly provide coworking scholarships or incubator programmes, while 57% host free community events.
By restoring Bromley Old Town Hall, an iconic period building at risk, back to its former glory, Clockwise has created a multi-space that now firmly has a place in the local community. Although creating social value locally can be challenging for flex operators, Budelia Probert Watt recommends undertaking a local needs assessment first to “offer the most help and create impact.”
Supporting your ESG journey
Despite the challenges, most operators were progressing with ESG initiatives, sharing that they were around the midway mark on their journeys. Interestingly, 63% saw knowledge sharing and access to industry best practices as vital support for improvement.
With this in mind, here are five key considerations to help you advance your ESG journey:
- Create a sustainability measures baseline across your portfolio – where are you currently?
- Set achievable, financially sensible goals for the next 6-12 months.
- Take a considered approach to certification, to find something that suits your mission and consider it a framework to support your journey rather than a badge for your website.
- Consider the wider social value of your spaces for good causes and the local community through a needs assessment alongside proactive ideas such as discounted meeting rooms for local charities.
- Divide your portfolio into tranches according to the amount of work required to bring each location in line with your sustainability goals.
Read more tips to support your ESG initiatives in the ESG Playbook for Coworking Success.
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