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Wellness and ESG

The lobby of the glassed-in office building
A few years ago, the Global Wellness Institute estimated that the global market for wellness was worth about US$3.7 trillion. This encompassed a range of sectors from fitness to beauty to nutrition and ever since (the figure is from 2015) the size and popularity of the wellness concept has grown around the world.

Real estate has always made up a substantial subsection: the market for workplace wellness is currently estimated at around US$49.81bn and according to Allied Market Research is forecast to continue growing at a CAGR of 5.9% until 2027, when the figure will be nearer US$67bn.[1] The wider wellness real estate market has been growing at 6.4% annually since 2015 and is now estimated at around 197bn.[2]

This strong growth rate has been driven by an occupant demand for buildings that are able to measure all the parameters of a healthy environment and improve them to maintain optimal indoor conditions. These parameters include air temperature, humidity, air quality (typically using CO2 rates as a proxy for ventilation effectiveness), light levels, light quality, and so on. In combination these things should keep occupants healthier, happier and more productive.

There are a number of certification schemes to encourage the adoption of wellness technology, including WELL, Sustainalytics, and the Living Building Challenge. And there are standards like BREAM and LEED. In facilities management there has been a growing focus on end user experience as the ultimate goal of any “smart” building, because the singular focus on efficiency – so popular among architects and buildings systems designers over the last few years – must deliver tangible benefit for occupants. John Mlade, director at YR&G, talks about this:

Over the past few decades we’ve spent a lot of time and effort trying to reduce energy use, and there are very good reasons for that. But look at it from the point of view of a building occupier. Energy might represent 1% of their expenditure, with another 10% or so going on rent and leases. The rest, the vast majority, goes on employee salaries.[3]

In other words, energy saving represents a substantial benefit for building owner-operators, but for the businesses that rent office space there is even more to be gained from increased workforce productivity and satisfaction, from worker attraction and retention, and from the social sustainability that comes with healthier buildings.

This is where ESG comes in. S stands for social, the relationship that a business has with people, in the workforce and in the wider society. There are a number of investor benefits to wellness, hence the increasing size and popularity of the market. WELL certification for example looks not only at light, noise, air and water quality but less obvious areas like paternity and diversity policies, exercise facilities and wearable tech that monitors occupant health. In some certification schemes this may make the difference between the social score of a business being gold, silver or bronze, and this in turn makes them a more or less attractive proposition for investors.

As mentioned above, there is an efficiency gain that results from a healthier working environment. In some cases though, the crucial benefit will be not only worker attraction, satisfaction, and retention, but investor attraction as well. And here a strong ESG score continues to be of central importance.


[1] https://www.alliedmarketresearch.com/workplace-wellness-market

[2] https://globalwellnessinstitute.org/what-is-wellness/what-is-wellness-lifestyle-real-estate-communities/

[3] https://www.the-possible.com/office-building-wellness-well-certification-fitwel/

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