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The hidden cost of back to work

Many years ago, when I was a rookie reporter, a senior FT editor proffered some great advice: only read the local media when you travel. Last week I duly practised that tip while voyaging through Utah and Montana, and became fascinated with a story that was prominent in the regional papers — the bitter fight between seven states to agree on water usage cuts for the Colorado River.

This saga, which has garnered only moderate national attention, should be watched closely; it offers lessons for the rest of America (and elsewhere). It is also a timely reminder that since the first impact of climate change is often felt at the local level, the regional media can play a crucial role today in communicating green issues. It is thus encouraging to see that a clutch of American philanthropic initiatives has recently emerged to fund more local climate journalism. Check out, say, the group One Earth Fund, for one sign of this important trend.

Meanwhile, in today’s newsletter we have a story about the (partial) end of working from home — and what it means about the battle to rein in carbon emissions from buildings (an important area that is often oddly neglected in public debates). And see below for an update on corporate efforts to support refugees, plus an important twist in the long-running transatlantic battle around the Inflation Reduction Act. (Gillian Tett)

Office busy bees put spotlight on buildings’ emissions

For the first time since the start of the pandemic, offices in big US cities are now more than half full again, according to Kastle Systems which makes building key cards. The threat of lay-offs surely has something to do with it, but the reality is that busy bees are back in the hive.

Though building emissions do not get the same buzz as carbon from oil and gas companies or cars, non-residential buildings and their construction account for about 12 per cent of total energy sector emissions, according to the International Energy Agency.

Regulations are increasingly being written to attack the buildings’ emissions. Here in New York, both New York City mayor Eric Adams and governor Kathy Hochul have proposed funding to reduce carbon emitted by buildings. On February 1, Hochul unveiled a budget for 2024 that would require new buildings to have net zero carbon emissions. For existing buildings, dirty heating pumps for space and water would be phased out, she said.

While regulations set a floor for building construction, tenants are also demanding cleaner abodes. Citigroup last year started a retrofit of its Canary Wharf skyscraper. Rather than demolish its offices and start again, Citi said it would emit less carbon by working within the current building. When it is finished, Citi said it expected the building would emit zero carbon.

Citi’s decision to retrofit its office to have lower carbon emissions underscored a trend across commercial real estate, said Guy Grainger, global head of sustainability at JLL, a large commercial property company. Companies might prefer smaller office buildings after the peak of the Covid-19 pandemic, he said, but they increasingly wanted to showcase low-carbon offices to their employees — and at the same time, show investors and regulators that their carbon footprints were shrinking. JLL estimates that 80 per cent of today’s office buildings will still be in use in 2050.

One of the emerging trends in sustainability construction was timber, Grainger said. New timber-framed buildings in Europe could go up to 10 to 15 stories, he said, and “they look absolutely stunning”.

Environmentalists and regulators tend to focus on scope 3 emissions, carbon from a company’s supply chain and the use of its products and services, which often represents the bulk of corporate carbon footprints. But buildings were “the elephant in the room that we have not been talking about” when discussing carbon emissions, Grainger said. What lies behind the walls around you should not be shrugged off. (Patrick Temple-West)

The businesses helping refugees find their feet

The exodus of Ukrainian refugees following the Russian invasion is just the latest tragedy in a surging wave of displacement in recent years. By the middle of last year, the number of forcibly displaced people had reached 103mn, according to the latest estimates from the UN — more than double the figure from a decade ago. And while governments and multilateral agencies rush to respond to the crisis, could businesses play a meaningful role?

That’s the question addressed in a new report from the consultancy Refugee Integration Insights, ranking large companies on their efforts to help refugees find their economic footing. It looked at 1,807 companies from 35 countries, giving particular weight to businesses’ efforts to hire refugees or help them start businesses.

Some interesting patterns emerged. Consumer goods companies were strongly represented in RII’s top 50 performers, including Unilever, which came out top overall. As RII chief executive Sindhu Janakiram pointed out to me, such companies often had suppliers in crisis-hit regions, giving them an interest in supporting regional stability. Unilever, for example, had run projects to protect health among refugee communities, as well as entrepreneurship training.

Many of the top performers had rolled out specialised training to give refugees a head start in the jobs market — thousands of refugees have benefited from training in hospitality from Hilton, call-centre skills from customer support group Teleperformance, and coding from IT company SAP.

Fifteen of the top 50 companies were from Germany — seemingly reflecting the impact of “Us Together”, a co-ordinated effort among German companies to help refugees integrate after the country welcomed a huge number of Syrian asylum seekers in 2015. These included Deutsche Post, which has hired more than 16,000 refugees.

Companies hiring refugees were often rewarded with an unusually high rate of employee retention, Janakiram said. “This is not an act of charity,” he said. “It can mean accessing a pool of resources that is untapped and underutilised.” (Simon Mundy)

Smart read

The battles around the Inflation Reduction Act continue to run and run. Last month, US senator Joe Manchin travelled to Davos to tell European politicians that America did not intend to snub Europe with its IRA, or steal business away. Now, however, German and French leaders say that American officials are trying to lure away their green business leaders — and are angrily demanding that Washington stop this. What next?

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