ESG (Environmental, Social and Governance) has become a global priority with many businesses striving to reduce their environmental impact and to be more socially conscious. This is particularly true for real estate, given our industry’s significant carbon footprint and social impact.
Real estate is carbon intensive and, according to Forbes, contributes approximately 40% of global greenhouse gas emissions. This is because of the materials used in construction and the energy used in utilities.
While real estate owners can do much to reduce their direct emissions (Scope 1), and indirect emissions from purchased energy (Scope 2), so much of the emissions associated with real estate owners come from the activities of the businesses and people who occupy real estate (Scope 3).
For real estate owners on the ‘Pathway to Net Zero’, engaging with occupier customers to win their support is critical. However, RealService has found there can be a major disconnect between landlords and occupiers when it comes to the CSR agenda.
Occupiers believe CSR is important
Research by RealService has found that while three out of four occupiers think the CSR agenda is ‘important’ or ‘very important’, only one in four feel that their landlord or managing agent is engaged well with them on it.
While there are exceptions, it’s seen by many occupiers as being foisted upon them and, despite the fact it’s surely a route which should be travelled together, for the most part property owners and their customers seem to be taking different paths, at different speeds.
Speaking at the recent Better Buildings Partnership (BBP) Owner and Occupier Forum, Howard Morgan, RealService founder and Honorary Professor at UcL Bartlett School of Sustainable Construction, challenged the industry to think differently about the engagement challenge.
He asked: “What if we started thinking of ESG as a service rather than an imposition?”
Customer experience mindset
He suggested that by adopting a customer experience (CX) mindset and learning from outside our industry, we could increase our prospects of bringing our customers with us.
By way of example, Howard cited award-winning energy provider, Octopus Energy, who have recognised that no-one likes submitting a meter reading. For those without Smart Meters having to send utility meter readings each month is a pain, especially when the gas meter is outside, it’s dark, freezing and you’ve forgotten the password for the website.
Thinking outside the box, Octopus have applied some CX thinking to the problem and come up with their ‘Spin the Wheel’ game. For each reading per month, the customer can spin the wheel and possibly win anything from £1 to £512 in energy credits. They say 10,000 people have a spin every month and they have a remarkable 69% approval rating from their customers.
While not suggesting that the gamification route is the only answer, this example shows what you can achieve if you adopt a customer experience mindset when engaging with customers on ESG initiatives.
If we analyse what Octopus are doing, they are implementing the CX ‘holy trinity’ of:
- Getting the basics right,
- Making it easy for the customer and
- Creating a positive emotional connection
Research carried out by RealService for the Better Buildings Partnership shows that customer expectations are high. We heard comments like:
- “Our expectations of landlords is to build the most sustainable buildings possible, and that they commit to operating and continuously striving to operate in the most environmentally friendly way.”
- “Landlords need to make it as easy as possible for occupiers, from a time and capacity point of view, especially those without their own sustainability teams.”
If the real estate industry is to respond to these challenges, Howard emphasised the importance of ESG and CX professionals working together rather than in silos. While the two disciplines might be seen as quite different – objective v subjective, science-based v intuitive and rational v anecdotal – Howard stressed that the two could be a powerful source for good.
Commenting on the session, Laura Noctor-King, the BBP Head of Sustainability Engagement, a collaboration of leading property owners who are working together to improve the sustainability of commercial buildings, said: “The session sparked a very lively discussion and points the way to the need for further research into who are, and what motivates, our occupier customers.”
To sum up, ‘ESG as a service’ is an innovative way of thinking about customer engagement which focuses on delivering quality experiences rather than imposing initiatives upon customers without first understanding their needs or wants.
The Better Buildings Partnership is a collaboration of leading property owners who are working together to improve the sustainability of commercial buildings.
The BBP Owner Occupier Forum brings together senior real-estate decision makers representing both property owners and occupiers to collaborate with the objective of enabling the transition to a more sustainable real estate sector and delivering net zero carbon buildings by 2050.
RealService is a customer experience consultancy with the tools and knowhow to help you put your customers at the heart of your real estate business.
If you would like to better engage your occupiers in ESG – or find out how engaged they really are – please contact Howard.Morgan@real-service.co.uk.