All content on this page is correct as of July 20, 2020
In the wake of the Covid-19 pandemic and the Government enforced lockdown, retailers have begun to re-open and companies are considering what changes need to be made to ensure their employees can safely return to the workplace. Now is a perfect opportunity for businesses to take stock and make long-term changes to help tackle the climate emergency, create a space that is beneficial to the wellbeing of their employees, and make cost savings at the same time.
Responding to Covid-19
In the short-term, businesses are applying measures to protect employees and customers / clients from the spread of Covid-19. In an office context these will involve ensuring desks are spaced 2m apart, setting up hygiene stations and one-way systems, increasing the frequency and diligence of cleaning and installing plastic shields for receptionists or any other front of house staff.
The social distancing requirement will generally result in fewer staff attending the office each day, so actively encouraging and supporting increased home working, where possible, is likely to continue for some time. For many this is seen as one of the more positive outcomes from the current crisis as home working can improve employees’ sense of wellbeing (although this is a hotly debated topic particularly when striking a balance between working in isolation and part of a team) but there is also a reduction in carbon emissions due to decreased commuting. In addition, there is also a cost saving for employers as fewer employees in the office will use fewer resources – from electricity to tea bags!
For more insight on the response to Covid-19 in the retail and education sectors, please see our previous articles:
A New Purpose for Companies
With a greater awareness of climate change, and the way that this influences consumer and employee behaviour, Bates Wells have proposed an amendment to s.172 of the Companies Act 2006 (which sets out that the default purpose of companies is to benefit their shareholders) by way of the draft Company Purpose (Amendment) Bill. This bill is based on a triple bottom line approach which would require a business to be operated not just for the benefit of its members, but also wider society and the environment. As a certified B Corp we already adopt this model on a voluntary basis but the proposed legislation would set a minimum standard for all businesses. These requirements would be audited and reported annually in a similar way to how company accounts are currently published.
For similar purpose driven businesses, which put society and the environment at the core of its commercial strategy, real estate should be a key focus. A relatively small number of changes can have a big impact on its carbon footprint. And the longer-term cost savings that this will result in can be used to further the purpose of the business for the benefit of all stakeholders, not just shareholders.
What Can We Do?
Buildings account for around one-third of global greenhouse gas emissions and devour 40% of the world’s energy. They consume energy and resources during every phase of their lifecycle – from construction and operation, to upkeep and redevelopment. Equally buildings are central to every element of people’s lives – their home, workplace, education and leisure.
The goal of purpose-driven businesses is to create a positive, healthy, light and safe working environment and implement a wellness programme in their offices. A sustainable building has a positive impact on the environment and wellbeing programmes have a positive impact on an organisation’s people.
The following simple changes can make a particular impact:
Implementing these changes will require a shift in the landlord and tenant relationship, and some negotiation between them to work together. Bates Wells is developing a suite of documents for both landlords and tenants which have bespoke clauses that deal with rolling out impact initiatives, such as ‘greening up your building’ and wellness programmes.
We walk the walk and have worked with our landlord and other tenants in our own building to create these changes. We have adopted Green Purchasing behaviours to ensure that our supply chain is sustainable. We continue to look for any small changes we can make, from moving to glass milk bottles instead of plastic, and reducing deliveries to only two days per week to save on travel carbon emission. By the beginning of 2020 Bates Wells was successfully carbon neutral, and we had reduced our carbon footprint by more than 50% in the three years to and including 2018.
Green Loans and Impact Finance
With the growing focus on sustainability and responsibility, impact finance should be at the heart of any discussion about financing real estate investment, development and refurbishment.
The past few years have seen a significant increase in the availability of ‘Green Loans’ and ‘Sustainability Linked Loans’. Bloomberg data identified that worldwide green and sustainably linked loans exceeded $99 billion in 2018. Green loans finance “green projects” such as sustainably accredited buildings and community buildings. Under sustainability linked loans, borrowers can benefit from a discount on their interest rate in return for meeting specific sustainability covenants for the duration of the loan. Discounts and sustainability covenants have been standardised to some extent by the Green Loan Principles in 2018, followed by the Sustainability Linked Loan Principles in 2019.
This is an important environmental and economic shift, giving a long-term financial incentive for businesses to become more sustainable.
Bates Wells works with a group of social and ethical lenders. In the current environment, we are finding the demand for ethical lending is increasing remarkably, particularly in relation to real estate developments and investments. This means that we have a good understanding of the changes which can be made to premises to drive forward your impact agenda.
If you have any questions on the above, or would like to know more about how we can assist you in making these changes please contact Karli Hiscock, Christina Tennant or Amy O’Gorman in our Real Estate team.
This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.
All content on this page is correct as of July 20, 2020.