Workplace and Real Estate’s Role in Achieving Net Zero

Accelerating corporate net-zero pledges have important implications for commercial real estate and workplace strategy. 

Commercial space and our carbon footprint 

Commercial buildings make up 97 billion square feet of real estate in the US alone, generating 826 million metric tons of Co2 emissions per year. It goes without saying that these are big numbers. What’s more surprising, is that these same buildings sit empty more than 50% of the time and a full third of the energy they consume is used to keep them running when no one is using them. If I were a CFO, I’d be scheduling a meeting with my head of sustainability and my head of corporate real estate to fix this issue ASAP.

Doing the right thing: The rise of net zero pledges

Encouragingly, these conversations are happening across global enterprises right now, as companies everywhere are committing to achieve net-zero emissions by 2040 and signing climate pledges. To date, one fifth of the world’s 2,000 largest companies have committed to net zero. 

The big question facing these companies now is how to deliver on their commitments. Given the unprecedented rise of remote working over the last two years, and the scale of the potential impact within CRE, our industry has a huge opportunity to be leaders in this space.  It’s a role we should all embrace, as a number of external stakeholders are strongly encouraging us to step up to the plate:  

• Increased regulatory requirements: The US re-entered the Paris Climate Agreement in spring of 2021. To meet the terms the US and others must cut greenhouse gas emissions by 20-50% in the next 10 years and achieve carbon neutrality by 2050. Cities are also taking a lead, with New York City effectively putting a price on carbon emissions from buildings with Local Law 97 that penalizes real estate portfolios lagging behind performance targets  
• Ballooning employee demand: As Millenials and Gen Z continue to grow into the largest workforce demographic, their values increasingly influence corporate employers. Tomorrow's talent simply won’t work for companies who aren’t good environmental stewards. Period. In such a competitive labor market, companies must find ways to authentically live-up to these values. 
• Financial penalties for bad behavior: Even in the black and white world of corporate finance, green is on the rise. Outdated, legacy systems increasingly cost more in hard dollars than progressive systems, that are aligned and built on environmental responsibility. As one example, the real cost of capital for new coal plants is 15% higher than for renewables.

These trends represent the increasing prevalence of climate considerations at the core of big business and are very likely to accelerate through the next two decades.   

Without exaggeration, this presents a once-in-a-lifetime opportunity--workplace/CRE leadership should jump at the opportunity to own the narrative through restructuring their organization’s approach to workspace. 

Tools and tactics

Change is never easy but a small number of focused initiatives can have a powerful impact, helping companies transform their workspace to better support employee needs while minimizing costs and environmental footprint. 

Step 1: Triangulating true utilization

In order to properly understand how much space an organization requires, many data points must be considered. From sensor data, to post-occupancy analysis, to employee apps--there are many different methods for collecting information on how space is being used. Having a singular window through which to view these different data points helps workplace and RE teams better understand how much of what kind of space is actually necessary. 

Armed with this insight, workplace and RE teams can make better informed decommissioning decisions which represents the single greatest opportunity for cost and emissions savings in the world of CRE. Cutting the fat also helps workplace teams build purpose into remaining spaces--strategically investing in environmentally conscious workspace, better supports the unique needs of the organization.

Step 2: Building a digital infrastructure for a dynamic portfolio

Beyond generating insight on how space gets used, workplace data must be actionable--i.e., it should drive the evolution of the workplace over time. At Saltmine, we build technology that connects utilization data with a digital footprint of the portfolio and a toolset for workplace strategy, planning, and design.  

The world runs on digital infrastructures and the workplace requires one which empowers workplace and RE teams to be more responsive to the spatial needs of the business and their people. 

Step 3: Investing for impact 

Decommissioning projects, driven by insights into how your organization uses space, puts more money in your pocket and allows for strategic re-investment into things that matter more than the maintenance of empty buildings.   

Workplace and RE teams on their own have a huge role to play in helping the business--as a whole--run better, through helping to achieve carbon neutrality commitments, while also providing employees with spaces that are intentionally designed for them and the work they do. Alternatively, workplace and RE teams could also show these savings as profit and give it back to their shareholders. 

Either way, being environmentally conscious is just a better--and more positively impactful--way to do business. 

If this resonates, we encourage you to download the guide below for additional recommendations on environmental stewardship and sustainability via workplace strategy: