How office real estate can (or cannot) contribute to sustainability strategy goals?

In the first article of this series, I made a point that the selection of office real estate can have a significant impact on the company’s ability to deliver its sustainability strategy. This time I’d like to elaborate a bit on how it works in general and about our approach at Skanska commercial development unit in CEE. I have organized my thoughts on these topics in alignment with ESG terminology. Have a good read and share your thoughts by adding a comment below!?

E for Environmental impact??

Each business strategy should include the objectives to be achieved. The same should apply to detailed action plans in various fields of company operations – including those regarding its impact on the natural environment. What an organization could aim for in this field is – for example – reducing its carbon footprint. For this target to be credible (including for external stakeholders, who may not have full knowledge about processes inside the company), it should be realistic, measurable and in line with scientific methodology.??

Skanska Group aims to achieve net-zero carbon emissions in its own operations and its value chain (scope 1, 2 and 3*) by 2045. We also have 2030 interim targets for our development streams: a 70 percent decrease of own (scope 1 and 2) carbon emissions by 2030 and a 50 percent decrease of value chain (scope 3) carbon emissions. Our carbon targets have been verified by Science Based Targets initiative (SBTi). If as part of #ESGduediligence processes tenants or investors ask us about targets, we have an answer validated by independent experts.??

?We constantly analyze various fields of our activity, monitoring emissions they generate and implementing solutions helping us reduce our carbon footprint. These solutions include using low-carbon building materials (e.g. low-carbon concrete), reusing materials from demolished buildings (in line with circularity rules ) or introducing solutions increasing the energy efficiency of our buildings (e.g. airtight facade, materials reflecting sun radiation installed on roofs that help limit the heat island effect in cities, energy efficient heating and ventilation system, LED lighting, etc.). Also worth mentioning are modern building management systems (BMS) that enable monitoring and adjusting building operations in a way that lowers energy consumption, which reduces our operational carbon footprint. Our BMS includes additional algorithms that enable adjusting energy consumption to such parameters as the number of users present in the office and the amount of natural light in the building. At the same time, BMS serves as a source of data for tenant’s reporting purposes, including in the ESG area and for investors’ analyses of assets to be purchased.?

The impact of office real estate on the natural environment is not limited to carbon footprint alone. It also includes water footprint (using water resources). To cut the consumption of potable water for purposes other than drinking, we use a grey water system and collect rainwater. Another area of our industry’s considerable environmental impact is waste management. At Skanska, less than 5% waste from construction sites ends up in landfills, the vast majority is re-used. We also look after greenery. Our offices are not built on green fields, we build on brownfield (already urbanized) parcels, striving to protect the existing flora during the construction process and develop it so that it serves the users of our buildings and the local communities.?

*The scopes are defined according to the Greenhouse Gas Protocol. Scope 1 includes direct emissions from sources owned or controlled by Skanska, such as boilers, furnaces and vehicles. Scope 2 includes indirect emissions from the generation of electricity, heating and cooling purchased and consumed by Skanska. Scope 3 includes indirect greenhouse gas emissions from sources not owned or directly controlled by the organization. For more details, check out Skanska Group’s 2021 annual and sustainability report: annual-and-sustainability-report-2021.pdf (skanska.com) ?

S for social impact?

In 2020, the global coronavirus pandemic hit. Thanks to the huge efforts of medical and sanitary forces, vaccination and strict health and safety rules after two years of fighting the pandemic humanity has won the battle with the virus. One of the results of this global health crisis was employers paying closer attention to their employees’ safety, health and wellbeing, not only physical but also mental, as the pandemic has left a mark also in this area of our lives. Employees also experienced a significant mindset shift. According to the latest edition of JLL’s report: “Workplace preferences barometer”, working in a company that ensures their health and wellbeing ranks second among employees’ work priorities. It’s not only about preventing health-related work absence or creating conditions supporting effective work, but also about the ability to attract and retain talented people with skills that are material for the company’s functioning and business growth.?

At Skanska, we treat health and safety very seriously. “Care for life” is one of the fundamental values of our organization. On construction sites and at the office – we apply the highest safety standards. We care for the health and wellbeing of not only our employees but also those employed by our subcontractors and tenants, as well as of individuals who visit our offices. We build and fit-out our buildings to ensure optimal temperature, lighting and acoustics, supply clean air and increase comfort by creating ergonomic workstations, spaces aligned for various tasks and workstyles and indoor and outdoor greenery. At the same time our projects support the needs of individuals with disabilities. We also make sure that the surroundings of our buildings are friendly for the local communities – we create pocket parks, plan pergolas, place benches and tables to sit and rest but also to work in the open air. We create infrastructure that supports physical activity (e.g. basketball courts, bike repair stations, exercise bars).?

G for governance?

Getting back to the key developments from the last 2-3 years: when at the beginning of 2022 we began to see the light in the pandemic tunnel with market sentiment and investment appetite starting to improve, we faced another tragedy: the war in Ukraine. The business world was striving to respond to this humanitarian crisis offering financial and in-kind help with many companies taking the strategic decisions to withdraw from Russia. The international community responded to the aggression on Ukraine with a number of sanctions put on the invader, compliance with which is one element of good corporate governance.?

According to a definition by PWC, corporate governance is “a set of basic rules, practices and processes that create the framework for managing and controlling company operations.” Corporate governance at Skanska is built on the foundation created by our values, one of which is “Act ethically and transparently.” The framework for ethical and transparent acting is set by our “Code of Conduct,” which describes the behavior we expect from Skanska’s employees. It includes the expected behaviors towards co-workers, clients, communities we operate within and other stakeholders. It touches on such topics as fair working conditions, diversity and inclusion, data protection, fraud prevention, anti-bribery and corruption, anti-money laundering, sanctions compliance and fair competition.?

Planning, designing, constructing, fit out and maintenance of buildings are processes that engage a number of experts in various areas. We work with many suppliers and contractors, we have a big value chain and a significant impact on other organizations. Acting ethically and transparently in our organization, we expect the same from companies we work with. These expectations are described in our “Supplier Code of Conduct,” which is a mandatory appendix to each contract we sign.?

On a very practical level, applying the rules of ethics and transparency in our company helps us operate in line with the law as well as supports building good reputation and attracting employees and business partners who have similar values to ours.?

More details??

If after reading this article you feel there’s not enough examples of concrete solutions or information on office projects supporting tenants and investors in delivering ESG strategies, don’t worry as they will be included in subsequent articles that I’m planning to publish soon. The next one will focus on the hot topic of energy efficiency, while the following will cover solutions addressing various ESG aspects used in projects developed by Skanska office unit in Central and Eastern Europe. Stay tuned!?