Employers need to balance the social and environmental aspects of the ESG equation carefully if they are to meet their emissions obligations and attract the best talent
The widespread shift to hybrid working among office-based employees is not as good for the environment as many commentators would have us believe, according to recent research published by Cushman & Wakefield. Although the company is a global real-estate giant that may have a vested interest in bolstering the commercial property market, its study’s findings still give pause for thought.
Based on the experiences of Australian companies, the research has found that the hybrid approach produces more greenhouse gas emissions than the conventional five-day week based at HQ. The problem is that, while organisations are continuing to heat and power their offices, their employees are using more energy in their homes.
As a result, although many firms are cutting their own energy consumption and direct CO2 emissions, their indirect (scope-three) emissions, which aren’t widely measured, are on the rise. This situation is likely to cause compliance risks in future, as the regulatory pressure to report scope-three emissions builds around the world.
Given these factors, the greenest approach for employers would simply be to oblige their hybrid workers to return to HQ on a full-time basis, the report argues.
But doing that would go against what many knowledge workers say they want. The past 12 months have seen a trend that has become known in HR circles as the Great Resignation, as people have quit their jobs in record numbers. For the many organisations that are finding it hard to recruit and retain people, the ability to offer flexible working arrangements is a key weapon in the war for talent.
So how can employers best balance these apparently conflicting interests? Gudrun Cartwright is director of climate action at Business in the Community, a UK charity advocating responsible enterprise. She believes that an “element of pragmatism” is required, not least because other studies have produced more mixed results, particularly when the environmental impact of commuting is taken into consideration.
For instance, the Carbon Trust’s Homeworking Report in June concluded that it was more environmentally friendly for the average “teleworker” to operate purely from home for numerous reasons. The researchers added that it was difficult to plan for a “carbon optimum” under hybrid models, as patterns of employee travel and energy consumption are harder to measure.
The International Energy Agency (IEA) takes a similar stance. In June, its website published an article entitled “Working from home can save energy and reduce emissions. But how much?” This concluded there were some environmental benefits to be gained from employees working remotely for even one day a week, but added that longer-term effects of such arrangements were “uncertain”.
While a more significant shift to remote working may reduce demand for office space, leading to an overall reduction in both energy consumption and CO2 emissions, the IEA added that “habitual home working could lead to people living farther from their place of work, potentially offsetting the demand reductions in energy for commuting”.
Cartwright believes that it’s “probably too early to say what the real impact will be, although we do know there is a risk that hybrid working could make things worse environmentally. Only time will tell.”
One company that believes taking a balanced approach will be key, particularly in keeping its 1,000 office-based staff engaged, is courier company Hermes UK. These employees are working three days at home and two days at its base on the outskirts of Leeds. The arrangement is giving the firm the flexibility it needs to attract recruits from a wider area.
The company’s chief people officer, Penny Garnett, says that her approach is to “make decisions about people with one eye on our ESG agenda”. The single biggest reduction Hermes can make to its carbon footprint, she notes, is to continue replacing its diesel-fuelled delivery vehicles with greener vans equipped with route-optimisation systems.
As for hybrid working, the situation is “slightly more nuanced”, according to Garnett. Here the focus is on optimising the use of office space and using smart systems, such as motion-sensor lighting, to reduce energy consumption on the premises. Her colleague Nancy Hobhouse, head of ESG, adds that the company is also planning a learning and support programme to help employees cut their emissions at home.
In October 2020, environmental consultancy EcoAct published a Homeworking Emissions Whitepaper offering a methodology for employers seeking to get a grip on their scope-three impact. It suggests a range of measures for reducing remote workers’ carbon footprints. These include encouraging them “to switch to renewable-energy tariffs for their home energy; investing in more energy-efficient technology for colleagues working from home (this could involve setting green procurement requirements for all new laptops and other technology); and incentivising colleagues to move to more energy-efficient heating and cooling systems”.
For Hobhouse, it’s a matter of “ensuring that you balance the ‘E’ and the ‘S’ in ‘ESG’, because it’s important to look at the situation holistically. This boils down to ensuring that you understand the potential ramifications of your decisions as an employer. So, if you’re thinking about bringing in more flexible working, for instance, you’ll need to know all the potential effects of that move, both on the environment and on employee wellbeing and inclusion.”
Given that the shift towards hybrid working is still relatively new, Cartwright observes that “there is still an element of everyone feeling their way”. As a result, she concludes, there is a lot to be said for “taking the best of what was there before the lockdowns with the best of what we’ve learnt since then and blending the two. But this does mean that there’ll be an element of trial and error before we get the balance right.”