The new year represents a time for organisations to identify windows of opportunities to redefine business strategies for success. There are a number of factors to consider in shaping a sustainable, resilient and inclusive workplace. Many enterprises are future proofing their real estate portfolios to create flexible and tech-enabled workspaces that will increase productivity across the board, often by transitioning to a flexible workspace at a central business district of the city that they operate in. Moreover, the issue of reducing an enterprises’ carbon footprints is increasingly becoming a top priority on their agendas, there are additional approaches that can further contribute to this goal. In essence, the workplace is often seen as part of an ecosystem for collaborations and co-creations, a quality space where people can be together to connect and be creative in a sustainable manner that leaves the earth intact for many generations to come.
In this regard, Compass Offices’ progressive model rests on a sustainable and inclusive approach to the physical and digital workspace, one that incorporates the latest technologies and environmentally friendly approaches to the mounting of its business centres. As flexible workspace continues to be a key tool for businesses of all sizes with high levels of flexibility and limited upfront expenditures, Compass Offices has consistently expanded its footprint across the APAC region to serve its expanding portfolio of large corporate and Fortune 1000 clients, as well as the SME and entrepreneurial community.
How to Make Sustainability Practical?
The role of workspace continues to evolve over time and climate risk has emerged as a critical topic of global discussions. Globally, businesses strive to reduce carbon emissions for both public relations and commercial purposes. There are a number of practical steps in managing climate change and related risks. For many, the process of implementing positive change in light of on-going climate related risks often begins with transiting to a flexible workspace, pinpointing additional climate-related hazards and related strategies. Finally, embedding climate risk management into a business’ organisational structure. Talken together, these practical steps can inform more effective decarbonisation initiatives.
Why it matters?
After all, understanding the impact of climate change on the workspace can affect the processes of office selection, the management or exit timing. Interestingly, the identification, mitigation, and reporting of climate related risks are classified in two categories, namely physical and transitional. Physical risk occurs where climate change-induced weather events become hazardous to a business’ operation or assets. In contrast, transitional risks are issues that arise as a business adapts to a lower-carbon future. For instance, the extent of disclosing ESG performance as a viable metric. The transparent disclosure of associated risks has become an increasingly regulated task and a thorough understanding of how integration and compliance might impact the viability of a business entails a number of considerations.
The TCFD & IFRS recommendations
The ability to adequately address climate-related risk relies on an understanding of the ever-changing regulatory environment. At the forefront of global discussion is the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Albeit the TCFD has fulfilled its remit and disbanded. Nonetheless, it serves as a useful reference. While the standards are mostly voluntary, they are increasingly adopted by many companies and embedded within regulatory policies. It synchronises with new standards set under the International Financial Reporting Standards (IFRS), and the International Sustainability Standards Board (ISSB) established in 2021. It is also worth noting that globally, many regulators are replacing voluntary guidelines with mandatory reporting – with new regulatory regimes coalescing around a globally recognised standard.
A Recap on Ways to Mitigate Climate-related Risks
1. Transition to a Flexible Workspace – Compass Offices’ progressive model rests on a sustainable and inclusive approach to the physical and digital workspace, one that incorporates the latest technologies or environmentally friendly approaches to the mounting of business centres across APAC.
Compass in Action
Multi-national Conglomerate
Compass Offices was engaged to help a global finance organisation with its overseas BPO by substantially reducing its energy bills. A relocation with modern facilities and metrics that does not comprise employee well-being with the added benefits of a lower electric bills for the 24-7 BPO.
Compass in Action
SME and Entrepreneurial Community
Compass Offices was engaged to support workplace transition for a local enterprise. Compass Offices collectively bargains on behalf of clients in envisioning business-ready workspaces that support companies and their employees in realising their objectives with the latest technology and business amenities.
2. Assess Additional Climate-related Risks – This requires a thorough identification of the threats, costs and impact on a business’ operational processes over time. This data can be ascertained by creating a baseline of climate risks through the use of digital analytics tools that analyse climate-risk data such as CoreLogic and the Climate Risk Tool Dashboard generated by the UNEP Finance Initiative. For instance, a business can input a street address of one of its operations and model the physical risk and impact of climate change.
3. Translate Each Climate Risk into a Financial risk – Model the impact of a physical risk on the existing assets, liabilities, revenues, and expenses. The use of data-driven tools and dashboards can offer a glimpse into the relationship between a physical climate risk and its financial impact, thereby enabling preemptive resolution. For instance, this process may enable a business to ensure the viability of an asset by implementing an upgrade that was not initially planned for.
4. Undertake Pragmatic Due Diligence – The costs of unforeseen costs (from Step 3) can have a bearing on acquisition, valuation or disposal decisions. The proactive integration of climate-related risk evaluations into the daily activities and operations of a business, alongside established processes can significantly reduce unforeseeable risks. It also allows for the development of strategies and planning. For instance, an asset requiring capital improvement can be built into long-term capital budgets without the need for immediate and unplanned expenses.
5. Monitor and Repeat – Establish reviews and working groups to monitor the trends and changing climate risks and policies. The aforementioned steps will ensure that a business is well-prepared when a climate-related situation calls for intervention. Simultaneously, it is important to engage all categories stakeholders, not just the ones with a financial interest – to build collaboration in conduct regular reviews to keep pace with the changing regulatory frameworks.
After all, as stakeholders increasingly expect climate risk reporting and actions, an enterprise-wide framework or approach is no longer just a decent thing to have but a necessity. As flexible workspace becomes a key tool for businesses of all sizes with high levels of flexibility and limited upfront expenditures that positively contributes to the matter at hand, Compass Offices remains at the forefront of adopting to the latest and translating research and data into actionable strategies, so that its clients stay abreast of changes in the workspace. The global movement towards mandatory climate risk reporting is also driving new tendencies, adoption of which makes good business sense.