The Leader Magazine

SEP 2017

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Page 23 of 67

F E A T U R E A R T I C L E Is sustainability a risk or an opportunity for corporate real estate professionals? by Julie Hirigoyen Corporate sustainability v2.0 Sustainability, environmental management, social responsibility, ethical performance… these terms have long since been on the radar for businesses large and small. Yet the more recent trend in corporate sustainability has been its growing relevance in the boardroom. Far from the days when sustainability was a key focus for a specifi c team, it's now widely recognised that a sustainable business is one that fundamentally re-evaluates its business model to deliver environmental and social value through its core products and services. Sustainability is another term for long-term success. A sustainable business must be resilient and adaptable to the dramatic, fast-paced changes facing all industries alike – including climate change, rising inequality, changing demographics, urbanisation and workplace transformation, technological innovation, and the rising importance of wellbeing, to name but some. CRE departments and teams are now fi nding themselves at the forefront of business transformation programmes aimed at tackling such changes head-on. The business case for sustainable buildings Let us consider climate change, for example, which clearly represents a signifi cant number of business risks. The direction of travel is clear; 2016 was the hottest year on record, and the World Meteorological Organization has said that "extreme and unusual" climate and weather trends will continue into 2017 1 . There is an estimated $100-billion- dollar "climate resilience gap" not covered by disaster insurance globally 2 . Yet fl ooding, overheating and extreme weather events can threaten the resilience of a real estate portfolio and impact on operations. Without effective measures in place to respond to this risk, CRE professionals can fi nd themselves at the sharp end of their company's performance. At a more human level, we know that Millennials will soon make up the large majority of the global workforce. So what is it that this generation of workers are looking for from an employer, and what does this have to do with buildings? In 2016, a study found that 75 percent of Millennials would take a pay cut to work for a responsible company, and 64 percent consider a company's social and environmental commitments when deciding where to work 3 . Of course, purpose-driven companies are expected to refl ect those values in the design, management and operation of their working environments. So it's perhaps unsurprising to see tech giants like Google and Apple placing environmental, health and wellbeing standards at the heart of their latest construction projects. Indeed, in 2015, JLL reported a 14 percent increase in tenant improvement projects in the U.S. since 2013 as companies compete for millennial talent 4 . At a time where employee engagement is at an all-time low (only 13 percent worldwide 5 ), the workplace itself can provide just the connection that's required between employees and brand, so long as it embodies the right messages and brand values. Even more signifi cant, perhaps, is the increasingly compelling case being made for signifi cant health and productivity benefi ts associated with green buildings. Research led by Harvard T.H. Chan School of Public Health, the CogFX Study, found that workers 24 SEPTEMBER 2017 ThE lEadER The world is changing fast, and those working in corporate real estate (CRE) are increasingly at the coalface of businesses' transformation plans.

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