The pandemic that swept across the world. During the pandemic, office workers grew accustomed to the work-from-home format of working somewhere other than the office. But as companies such as Amazon, Meta, and IBM—which brought all their employees back to the office the moment the pandemic ended—have increased, so too has the lively discussion over whether working from home helps a company's long-term ESG strategy.
According to Forbes, in 2023, 12.7% of full-time employees worked from home and 28.2% worked in a hybrid form using both the office and home. There is also an analysis by the video-conferencing technology company "Owl Labs" that, worldwide, 16% of companies operate remotely without a physical office. The freelance brokerage company "Upwork" predicted that, if the current trend of actively encouraging work-from-home continues, by 2025 about 32.6 million people—22% of the entire U.S. labor force—will choose to work from home.
[2020 Future Workforce Report. ©Upwork]
Cutting Commutes Cut the Carbon Footprint Too
During the pandemic, when working from home was actively encouraged, positive assessments continued that working from home helps a company's ESG strategy.
On the environmental side, working from home is a way to reduce a company's carbon footprint by cutting the time spent riding cars or public transportation to commute and by shrinking the office space used on a fixed basis. According to the "Spanish Institute of Environmental Technology," working from home can reduce by about 10% the amount of nitrogen dioxide, a major air pollutant emitted by means of transportation. Between 2020 and 2022, numerous San Francisco–based IT companies are known to have switched their work format to work-from-home or to have relocated offices while downsizing. As a result, in the third quarter of last year the San Francisco office vacancy rate rose to as high as 34%.
[San Francisco office vacancy rate graph. ©CBRE Research]
There are advantages on the social and governance sides as well. 35% of work-from-home employees answered that their productivity improved, and 71% said it helps in maintaining work-life balance. Moreover, because people can work without physically gathering in one place, the breadth of hiring diversity widens, and an organization's inclusiveness and flexibility can grow. In addition, because employees can be hired across various regions, the talent pool widens and the possibility of providing more jobs increases.
Tom Wilson, the CEO of the U.S. insurance company "Allstate," said that after Allstate adopted work-from-home, the company's hiring diversity increased by as much as 30%. The U.S. Department of Labor has stated that, because the need to commute disappeared, the number of workers with disabilities employed across the United States also increased by about 28% compared with February 2020, when the pandemic began, reaching about 1.8 million.
Carbon Emissions That Occur Out of Sight
On the other hand, there is also criticism that many ESG values have been lost with the adoption of work-from-home. This is because a company cannot manage its level of environmental pollution in an integrated way, since individual employees cannot account for their own impact on the environmental side. The "Harvard Business Review" raised the possibility that, whereas commuting to a set office allows the carbon emissions from a fixed travel distance to be measured and managed, when working from home it is difficult to manage the extent to which an individual moves to change their work location or generates waste, so the degree of environmental pollution may become higher than when working in a fixed office.
There are also opinions pointing out the risks that work-from-home carries on the social and governance sides. Because people communicate remotely, cases have increased of isolated employees feeling no sense of belonging and complaining of loneliness. The point that people easily experience burnout by carrying out work only through video conferencing and messengers was also cited as a drawback of working from home. In addition, along with an analysis that the cyberattacks that increased by 238% during the pandemic are related to work-from-home, management has been shown to be worried about the security risks that arise when information is exchanged without using an internal network.
Companies Setting Out to Cut Direct and Indirect Carbon Emissions Through Hybrid Work
In its "2023 State of Hybrid Work Global Report," "Owl Labs" analyzed that companies working fully in the office reach 54%. As companies adopting hybrid work or mandating office attendance increase, discussion of how closely the work format a company adopts and its ESG strategy interact is also expected to become more active.
The "Sustainable Finance Disclosure Regulation (SFDR)," whose mandatory scope the EU recently expanded, includes both a company's direct and indirect emission sources in the calculation of its carbon footprint. Going forward, EU-based companies and companies active in the EU market will calculate their direct and indirect carbon emissions according to work format and concentrate their goals on reducing total carbon emissions.
The CEO and CTO of the British office-management software company "Kadence," together with a vice president of the real-estate company "CBRE," announced a "Hybrid Manifesto for Sustainability." Through this manifesto, they expressed the aspiration to find a way to achieve an ESG strategy without gathering to work in one fixed office, while combining working from home and commuting.
As with the goals of the companies that joined the Hybrid Manifesto, companies going forward are expected to give more thought to the need to build work environments that can simultaneously improve work efficiency and pursue ESG values, rather than maintaining traditional work systems.
by Editor N