Whilst the Government is encouraging individuals to go back to their offices and workplaces, the general trend is for those workplaces to be occupied at a fraction of their full capacity, with individuals working there a couple of days a week when possible. For many people working in retail and manufacturing, this isn’t an option due to workplace management needing to accommodate additional risk control measures. Similarly, many in the FM sector have been working on site for many months as part of the necessary and critical roles that FM provides. But in the service sector, this leads to peoplebased challenges.


Working from home in the summer

For those working at home, the summer months have been challenging with temperatures hitting above 30ºC for many days. This has made the ability to concentrate for long periods of time difficult in a country where poor building design has led to overheating of homes and flats. This has corresponded with a massive increase in the number of air conditioning units being purchased for homes to provide some respite during these warmer days – representing an increase in energy use in these short periods.


The new challenges of winter

But the bigger challenge will come during the winter months stretching from November through to early spring. During these months, the temperatures will drop significantly. The requirement for heating increases and, with the majority of UK housing being poorly insulated and falling below the EPC C grade, this means a highly inefficient winter is approaching for those working from home. This doesn’t even incorporate the additional challenges of wellbeing, as the lower levels of sunlight are known to have psychological affects on individuals who will be working in isolation for longer periods of time.

The existing housing stock across the UK is known to be poor, with badly insulated properties requiring constant heating to maintain an operable temperature in which to work productively. Whilst the extremely warm weather is more difficult to predict but only lasts for a week or two at a time, the winter weather is more predictable and lasts for several months. The role of organisations to support their workforce is therefore critical and, if not managed, may lead to staff and morale issues that affect productivity. There are a range of challenges that individuals and organisations will face:

  • Cost – Lower temperatures require more heating and higher energy bills. Whilst there is a cost saving from reduced travel, there is a question of how this is managed from the increased winter costs. For some, travel is a higher expense, but for others, energy will be.
  • Wellbeing – Shorter days does have an impact on wellbeing and greater need for engagement. Closed windows may also affect air quality in the working environment. How does a company manage this?
  • Governance – Working from home can no longer be considered a temporary emergency activity and a more considered approach to risk assessments and health and safety is required. Muscular/skeleton issues, sight issues, activity levels will all affect the individual and their productivity.
  • Carbon – The increased level of gas heating predominantly will have a significant impact upon carbon emissions and should certainly be included within an organisations carbon footprint. It remains to be seen whether transport emissions savings offset heating savings in a carbon capacity.

What are organisations doing?

Organisations are taking different approaches. There are many real estate directors strategising the fate of their property portfolio over the coming year:

  • Some companies, such as banks, are looking for staff to work in regional retail locations. This could help to re-engage corporate culture while offering potential to reduce health and safety travel risk.
  • Others will be consolidating their portfolios over the years ahead, and will continue to encourage their teams to work from home permanently.
  • Some have arranged rota systems within their portfolio to encourage team working and communication in a socially distanced environment.
  • Forward-thinking organisations that have already identified risks of home working have invested in staff home offices with furniture upgrades for their teams.

There is a need for organisations to be more proactive and identify those individuals who are at risk from their chosen working environment during the coming months. Counter intuitively (at this moment in time), they may require some individuals to not work from home for health and wellbeing reasons as we consider health implications beyond the all-consuming risks of COVID19. Either way, open two-way communication lines with individuals that may suffer is needed to ensure that health from a physical perspective and a mental perspective is considered.

This is a complex issue that incorporates health and safety, wellbeing of individuals, productivity of a company, staff morale and corporate culture. A well thought out approach is needed as the winter draws in. Should you have any questions about the content of this post or any of our other services, please don’t hesitate to get in touch.

If the COVID crisis has taught us anything, it’s the importance of business continuity planning.

Those who had prepared ahead of time for circumstances that might prevent staff from accessing their offices will have been easily able to pivot to working from home, adapting plans that had been written with quite different risks in mind. While we can’t necessarily be prepared for all eventualities, risk management is essential for resilience and organisations with robust plans are likely to fare better when the unexpected happens.

In this blog post we identify some key areas for climate risk management to consider if you have not done so before, followed by a simple three step approach to get your company engaged on the issue.


1. Climate Risks are closer to home than you think

The recent extreme weather in the UK has highlighted a number of the potential risks posed by climate change over a remarkably short period.

  1. During August 2020 an extended dry spell, extremely high temperatures followed by excessively heavy rain have all taken their toll, with different parts of the UK having suffered wildfires, floods and landslides. Sadly in Scotland a landslip led to loss of life through a train derailment; meanwhile Hammersmith Bridge in London had to be closed due to damage caused by extreme heat.
  2. With the shift to home working during the extreme temperatures many people struggled to stay productive working in non air-conditioned homes. Building stock in the UK is not designed for these longer periods of extremes and even artificially cooled workplaces can become uncomfortable when temperatures exceed design specifications.

These examples show just home productivity and business operations can be affected by the impact of climate change right now; and these risks are only expected to increase in the future.


2. Regulatory requirements

While Streamlined Energy and Carbon Reporting legislation already requires large companies to report on their carbon emissions, disclosure on climate risk exposure and mitigation won’t be mandatory until 2022. However, managing climate risk is not just a regulatory issue but a strategic one. Failure to take appropriate measures in a timely fashion could leave an organisation exposed to both direct and indirect business risks. Climate change can no longer be considered a long-term risk; it is directly relevant to today’s business decisions.


3. Breaking down climate risks

In its 2017 risk assessment, the UK’s Committee for Climate Change identified almost 60 individual risks and opportunities, with the focus primarily on physical risks. Physical risks are those directly relating to changing climate and weather patterns, such as flooding, other storm events, extremes of temperature and the impact of associated damage to infrastructure. These break down into acute physical risks, eg storms and heatwaves, and chronic risks, such as gradually rising sea levels caused by melting sea-ice or water stress due to changing weather patterns. During the writing of this piece, a report was published in Nature Climate Change in which scientists confirmed Greenland and Antarctica are melting at rates matching the IPCC’s “worst-case scenario” predictions.

From a commercial perspective it is also important to consider transition risks: changes to policy or trading environment in response to climate change, for example the introduction of new carbon taxes, altered customer behaviours or disruptive technologies. The CCC is now in the process of updating the UK Climate Change Risk Assessment, with a new report due to be published in summer 2021. Its findings, together with the policy developments needed to deliver on the UK government’s commitment to net zero emissions by 2050, are bound to lead to increased regulatory measures on decarbonisation.


4. Materiality

Materiality is fundamental to understanding and managing climate risks, since individual risks can have very different impacts on different types of organisation and in different locations. The standard methodology for assessing materiality is to plot the probability of each risk occurring against the severity of its impact, viewed from the perspective of the organisation and its stakeholders. This exercise requires scenario planning to model the potential severity of different climate change impacts since we cannot be certain about the frequency of extreme weather events or the rate at which chronic physical risks will manifest; equally uncertain is the pace at which policymakers will apply the necessary policy levers to decarbonise the economy which create transition risks.

Recently introduced FCA guidance for financial institutions recommends that they consider environmental, social and governance factors before deciding whether to insure, invest in or lend to a corporate customer. Therefore, organisations that manage these risks better will encounter fewer obstacles to growth. Furthermore, there is evidence of growing customer preference for companies that can articulate how they are adapting their strategy and business model in response to climate change. Therefore, having a coherent climate risk strategy can not only improve resilience, it has the potential to become a genuine source of competitive advantage.


5. Recommended approach

If you haven’t yet considered climate risk in your risk management approach, it is not wise to wait until something happens before adding it to your risk register. As climate risk is an evolving issue, the register needs to be reassessed and updated at least annually. You can start right now with these three steps:

  1. Use the Committee for Climate Change’s Synthesis Report to identify the climate risks that might impact your organisation
  2. Conduct a materiality assessment to determine which of risks are most significant for your business operations, by plotting likelihood of the risk occurring against its potential impact
  3. Prepare for the most material risks by putting in place contingency plans to mitigate against them.

Contact Acclaro to find out how we can support you to minimise the impact of climate risks on your businessinfo@acclaro-advisory.com

Acclaro Advisory - The Carbon Balance of Working from Home - A Woman Using her Laptop at a Home Desk

There’s plenty of news about the environmental benefits of lockdown. Pollution levels have dropped, skies are clearer and the roads are teeming with bicycles and pedestrians rather than the usual rush hour jams. Although we all face struggles with the isolation and uncertainty brought on by COVID, many people relish the newfound freedom to work from home.

Flexible working patterns have been on the rise in recent years, and there are proven health and productivity benefits from avoiding the daily commute. Companies have increasingly encouraged remote working as a cost-saving exercise, seeing benefits as the same employees occupy less space and consume less company-purchased energy.

However this energy is still being used – lights and laptops are still on and fuel is still being burned. Which raises the question: How does working from home really affect an organisation’s greenhouse gas emissions? It’s not a clear-cut answer. Working from home isn’t necessarily “better” or “worse” for a company’s carbon footprint, but it definitely is a challenge to measure, understand and report.  It comes down to a balance between emissions avoided by not going in to the office, and additional emissions generated at home.

What is the Carbon Balance of Working From Home vs Working On-site?

A video conference call taking place between a man and a woman.At an individual level, it’s a balance that can be measured. You may ditch your daily 40 mile drive, but keep the heating on an extra three hours to keep you cosy until the sun hits the kitchen window. Rather than grabbing a sandwich on the way in, it’s suddenly easier to cook a proper lunch on a stove. Many things don’t change much – a laptop will use the same power wherever it’s plugged in, and you will probably need the same number of cups of coffee to get through that last phone call in the afternoon.

Scaling this up to an organisation level becomes much more difficult. Organisations and Facilities Managers have an opportunity during lockdown to reduce energy use at low or unoccupied sites as much as possible. In many cases, however, a small number of people are still using the space, or lease agreements state that it must remain ready for occupancy, limiting the scope for savings. Control systems, zoning arrangements and occupancy patterns are all under scrutiny.

As well as trying to understand and reduce emissions, responsible businesses should be considering how to report the impact of employees working from home. It’s analogous to outsourcing services – a company should not claim a carbon reduction from moving to externally hosted servers but should bring this service in scope as part of their operations. For emissions from working from home this has been done very rarely in the past, and comes with a number of challenges.

The reporting challenge

Challenge 1: Relevance

Emissions from employees working from home are not covered by the fifteen reporting categories of Scope 3 emissions under the Greenhouse Gas Protocol. This creates an uncertainty for organisations. Should these emissions be reported? Will other organisations include them? Where should they sit?

Defining an inventory boundary is an important aspect of emissions reporting, and separating company-related emissions from a household setup is not straightforward. How can these emissions be separated from “normal” household consumption? And how should responsibility be split between multiple household members working for different organisations?

Challenge 2: Accuracy

The difficulty of defining which household emissions are attributable to the organisation makes it almost impossible to measure actual energy consumption data from working from home. Figures will therefore largely be based on estimates, necessitating a range of assumptions. A company traditionally occupying one medium-sized office building may now be spread across several hundred domestic dwellings with a plethora of heating systems, lighting arrangements and daily routines. Benchmark data and “rule of thumb” assumptions will be essential.

Challenge 3: Consistency

Reporting emissions from home working has very rarely been done in the past. But in many organisations, flexible arrangements are nothing new. Bringing a new emissions category in to scope to include these emissions creates a risk of inconsistency with previous years. Companies should consider whether restating past emissions is necessary under their internal reporting procedures.

Opportunities

A man commuting on his bicycle.Although reporting the impact of working from home is a challenge, by calculating and being transparent about emissions companies can understand the greatest area of impact and focus their reductions efforts. The following examples may contribute to emissions targets in the short to medium term:

  • Improved understanding of company building set-backs when not in use. These changes may be implemented over Christmas breaks, bank holidays or even weekends and evenings going forwards.
  • Users have become more comfortable using collaborative technology (for example team chats and videoconferencing) which should reduce the need for face to face meetings in future, saving business travel emissions.
  • More time at home, where individuals are paying their own bills, may encourage better energy efficient routines and ways of working.
  • After months of rarely going anywhere near a car, individuals may seek lower carbon methods of commuting.

The Future

There is little doubt that flexible ways of working will be commonplace in the future. At the same time, organisations will be under more scrutiny to report their impact in a comprehensive and transparent way – including emissions from working from home. Responsible businesses on a pathway to zero carbon will need to collaborate with employees to reduce emissions wherever they work. As we have seen with schemes to encourage low carbon commuting (e.g. cycle-to-work, lift-sharing and rail ticket loans), perhaps incentive schemes will arise for home energy improvements.

Wherever this transformation takes us, it will be important to embed a culture of sustainability that every member of the organisation takes home.


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