Will Remote Work Be the New Normal? Exploring Three Scenarios for a Post-COVID World

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Mark Chadwick Managing Director, Sustainability Solutions ENGIE Impact EMEA
Neetu Mysore Manager, Sustainability Solutions - UK & Ireland
Sustainability Transformation
Corporate Sustainability

COVID-19 has fundamentally altered the workplace. We’re embracing new daily routines, growing intimately familiar with our colleagues’ children and pets, and exploring new ways of collaborating remotely. As organisations across the world consider returning to the office, many are embracing the idea of a radical shift in their approach to remote work. Previously, work from home (WFH) programs have been adopted in order to attract and retain talent and maybe save money. Now they’re vital to protecting the health and safety of employees while keeping businesses operating. But in the future, organisations are considering additional benefits: the ability to reduce emissions, foster productivity and increase resilience. With these benefits growing increasingly clear, organisations are no longer asking ‘if’ they should adapt to remote work, but instead, ‘how?’ In recent months, we’ve taken a close look at both the environmental and economic impacts of various WFH models, which we’ll share in this article.

What has COVID-19 taught us about our ways of working?

COVID-19 has taught us that businesses can significantly improve their environmental performance by incorporating flexible working policies into their long-term strategy without workforce disruption. Uncomfortable journeys on crowded public transport and dashes through bustling city streets for meetings that could have been conducted remotely are proving unnecessary. In the UK alone, ‘homeworking’ has the potential to reduce carbon emissions by over three million tonnes a year across the whole country. While cuts in spending of an average of £75 per week by not commuting or buying lunch in city centres are simply another bonus. Operationally, real estate and energy prices are major contributors to the total expenditure of a business, which begs the question: Is having an expensive office space really necessary?

What’s been the real environmental impact of remote work?

During the COVID-19 response, energy costs and carbon emissions in the short and medium terms have reduced, with many companies announcing new strategies to cement this change by operating partially in a WFH model. This has led to questions about what to do in the longer term, and how best to do it.

According to an ENGIE Impact study, the average carbon footprint per employee is approximately 1.3-1.5 tCO2e over the course of one year.

But using a proprietary WFH calculator, we estimated that during the lockdown, companies only partially balanced these emissions through reduced office energy and emissions. Organisations need to evaluate the impact of working from home compared with their operational footprint to ensure that overall energy and emissions are reduced.

The COVID-19 response has resulted in a significant drop in energy and direct carbon emissions generated directly by buildings and facilities, leading to a decrease in what’s called Scope 1 and Scope 2 emissions. Indirect emissions, like those driven by employee commuting and business travel (known as Scope 3 emissions), have also significantly decreased. However, this is not the whole story. While some businesses will have seen a 20-30% decrease in operational footprint, how might they account for the footprint of employees working from home? Actions such as boiling the kettle, heating the home, using multiple screens all have energy and costs associated. A UK-based price comparison service and switching website estimates households where people are working from home will use 25% more electricity and 17% more gas per day, adding up to a potential yearly increase of up to £195 per household or £16 per month for customers on Standard Variable Tariffs.

If there is a planned move to increase working from home, organisations should consider whether to include these emissions in their operational boundary. In this case, there are options to offset these emissions or even offer employees a green tariff. Considering the full environmental impacts of the changes while addressing employee concerns along the way can keep organisations honest in their sustainability ambitions and increase employee acceptance of the new ways of working.

Before making long-term decisions on work-from-home policies, it’s important to evaluate and stress test under various scenarios what the new normal will look like.

Three possible work from home scenarios:

  1. Scenario 1: Gradual Pre-COVID Return. In this scenario, only 10-15% of employees work from home. While this approach is low risk and conservative, it will have minimal impact on organisations' carbon emissions and energy spend and poses a significant risk should another catastrophic event occur. In this scenario, we would also expect business travel to return to pre-crisis levels, perhaps with a modest reduction that reflects changing attitudes to travel.
  2. Scenario 2: Mindful Return. In this scenario, the average worker comes to the office 2.5 days a week. According to industry and academic research, 2.5 days a week is the recommended number of days to work from home before negatively impacting relationships with co-workers and knowledge transfer. This offers significant opportunities to consolidate floor space, exit expensive leasing contracts and optimise existing buildings to meet the organisation’s Net Zero or decarbonisation targets. Under this scenario, Scope 3 WFH and commuting emissions should be included in an organisation’s footprint but the overall net impact on energy and carbon emissions is projected to decrease.
  3. Scenario 3: Majority WFH. In this scenario, 70-80% of a company’s workforce works from home full-time or part-time. This is often attractive to organisations with digital business models or those with more introverted staff and can measure productivity easily. Under this scenario, the organisation will see considerable energy, carbon, and real estate savings but this structure must be appropriate for the organisation, its customers and workforce. This model can even be adapted to individual departments rather than fit in with the company-wide scenario analysis.

Preparing for the new normal requires commitment from across the organisation. Once the outcomes have been assessed and a decision has been made, the next step is to identify and lock in the long-term sustainability benefits for the business while maintaining organisational culture and growth. Organisations should consider making changes now to an already disrupted workforce as employees will likely be more receptive and there is an opportunity to surpass market competitors. One lens through which to consider necessary changes is real estate.

Three considerations for real estate planning:

  1. Office location. We are seeing a greater proportion of employees working from home, which poses the question of whether offices need to be close to city centres? Could offices be moved to areas with cheaper rent or other benefits such as being near customers? As an example, could smaller collaborative mixed-use workplaces be created that allowed space for both front- and back-office workers? This change would enable back-office staff to engage with customers and better serve the community.
  2. Climate Resilience. Finding new ways of working could make businesses more resilient to the impacts of not only short-term natural disasters or pandemics but long-term climate impacts. Businesses should be prepared to ensure minimal disruption to their workforce and their buildings. From a real estate perspective, organisations must evaluate climate risk when considering investment/divestment of property. We have seen through the pandemic response that buildings are not designed to be partially shut down, resulting in wasted energy in empty parts of buildings. Finally, is there a role for organisations to be seen to do their part to mitigate climate risk? We believe that there is an opportunity to incorporate clean energy into your energy mix (e.g., procure Green PPAs or build onsite solar PVs).
  3. Transition costs. There is likely to be some time and adjustment required to make these transformational changes. However, during the ‘living with the virus’ period, employees have adapted to new ways of working and adjusted to the new ways of approaching their work. Through online communications tools and in some cases, providing remote supervision and automating areas of the business (i.e., IoT and operating data centres remotely) has enabled companies to meet client and service deliverables with minimal disruption. If companies move towards the Mindful Return or Majority WFH scenario as a long-term measure, then there will be an initial upfront cost required to enable your remote workforce. Such investments include maintaining reliable and secure network and ramping up cybersecurity measures. While you can expect to reduce expenses from real estate and building maintenance to security and other office-related expenses, these are a few key considerations that need to be evaluated before deciding.

Capitalize on the moment to lock in positive change

The chaos of COVID-19 will eventually subside. When it does, working from home will be more appealing for some and, having often been an impossible luxury beforehand, will become a possibility in the new world. With organisations moving towards working-from-home, supported by automation, enhanced digital tools and platforms, we expect to see a rise in smaller local offices or ‘hub spots.’ These hub spots would incorporate collaboration rooms, communal areas and flexible working spaces, offering an opportunity to indulge our human instinct to be together and to share experiences. Teams will be able to meet virtually when required to strategise and solve client issues instead of rushing around buildings searching for a meeting room. We’ve seen the world’s largest companies take the opportunity to optimise their businesses while still having an aggressive Net Zero target. Leaders will seize this unique moment to make bold changes that enact positive social and environmental change.

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