The sustainability trend coming to an office near you
It lends a whole new meaning to the concept of hot desking
3 min
Everyone is talking about environmental sustainability these days. From growing our own food to opting for less plastic packaging, there is an increasing desire to embrace practices that have as little impact on the environment as possible.
One of the last sectors to seriously consider the way their behaviours are contributing to waste is the office.
Prior to COVID, most offices were refurbished every five to seven years, in line with leasing arrangements. However, quality office furniture can come with warranties of 10 or more years. What to do with used – but still useful – furniture at the end of a lease has been a challenge.
The result is 35,000 tons of furniture from Australian offices ends up in landfill every year.
Designer furniture retailer Living Edge is calling on businesses to end the waste with a shift from one of purchase to leasing. This would result in the furniture supplier taking responsibility for the product over a lifetime.
Sustainability strategist at Living Edge, Guy Walsh, said while it has been a slow burn convincing businesses, interest has gained pace in a post-COVID, hybrid-working environment.
“We have been talking to the market about the life cycle model since 2016,” Mr Walsh said. “But in the last 12 months, we have seen an increase in interest, how it works and the sustainability benefits.”
He puts this down in part to the number of businesses committing to sustainability targets, sometimes without a plan for how to achieve them.
“The big organisations are all making their sustainability pledges and they are working out how to deliver them later,” he said. “You can’t just make claims anymore – you have to provide evidence. We can pull a report out and demonstrate the outcomes, which can be useful for external and internal communications.”
With many workers reluctant to return to the office full time, Mr Walsh said the need for a floor full of office furniture has also changed. A leasing model offers flexibility.
“One of the things COVID created was uncertainty, which requires more agility (from businesses),” he said. “We have promoted that concept around the life cycle model, which has a lot more agility than a traditional model.
“If the world changes, as it has in recent years, you need a strategy for what to do with those assets. One top of that, through a sustainability lens, change can often result in waste.”
Living Edge is the main distributor for Herman Miller, which has built its reputation on the high quality, ergonomic task chairs favoured by big business.
Mr Walsh said the chairs, such as the Aeron, come with a 12-year warranty. Under a leasing arrangement, businesses could return their chairs to Living Edge where they will be triaged according to useability under their LivingOn scheme.
“The top outcome is it gets refurbished and reused by the original purchaser,” he said. “The next option is we refurbish it and we resell it as a ‘second life’ chair. The next option is to recycle the parts. The last, and least attractive option is that it goes to landfill.”
It’s good news for commercial landlords, as well as tenants but it does require a different approach from the standard office fit out. One concern is how to ensure furniture is identifiable by the supplier as theirs. The other is a structural change in how budgets are created and managed.
“One of the big barriers traditionally is that furniture falls under capital expenditure but a lease model would put it under operational expenditure,” he said. “You are moving the cost from a one-off figure to ongoing. It is purely the legacy of how furniture has been bought for office spaces.”
While the model is still in its infancy both here and in Europe, Mr Walsh said there are already signs that it is the way of the future.
“We have heard examples of it happening in Europe but to my knowledge, we haven’t seen that ‘lift off’ moment,” he said.
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Competitive pressure and creativity have made Chinese-designed and -built electric cars formidable competitors
4 min
China rocked the auto world twice this year. First, its electric vehicles stunned Western rivals at the Shanghai auto show with their quality, features and price. Then came reports that in the first quarter of 2023 it dethroned Japan as the world’s largest auto exporter.
How is China in contention to lead the world’s most lucrative and prestigious consumer goods market, one long dominated by American, European, Japanese and South Korean nameplates? The answer is a unique combination of industrial policy, protectionism and homegrown competitive dynamism. Western policy makers and business leaders are better prepared for the first two than the third.
Start with industrial policy—the use of government resources to help favoured sectors. China has practiced industrial policy for decades. While it’s finding increased favour even in the U.S., the concept remains controversial. Governments have a poor record of identifying winning technologies and often end up subsidising inferior and wasteful capacity, including in China.
But in the case of EVs, Chinese industrial policy had a couple of things going for it. First, governments around the world saw climate change as an enduring threat that would require decade-long interventions to transition away from fossil fuels. China bet correctly that in transportation, the transition would favour electric vehicles.
In 2009, China started handing out generous subsidies to buyers of EVs. Public procurement of taxis and buses was targeted to electric vehicles, rechargers were subsidised, and provincial governments stumped up capital for lithium mining and refining for EV batteries. In 2020 NIO, at the time an aspiring challenger to Tesla, avoided bankruptcy thanks to a government-led bailout.
While industrial policy guaranteed a demand for EVs, protectionism ensured those EVs would be made in China, by Chinese companies. To qualify for subsidies, cars had to be domestically made, although foreign brands did qualify. They also had to have batteries made by Chinese companies, giving Chinese national champions like Contemporary Amperex Technology and BYD an advantage over then-market leaders from Japan and South Korea.
To sell in China, foreign automakers had to abide by conditions intended to upgrade the local industry’s skills. State-owned Guangzhou Automobile Group developed the manufacturing know-how necessary to become a player in EVs thanks to joint ventures with Toyota and Honda, said Gregor Sebastian, an analyst at Germany’s Mercator Institute for China Studies.
Despite all that government support, sales of EVs remained weak until 2019, when China let Tesla open a wholly owned factory in Shanghai. “It took this catalyst…to boost interest and increase the level of competitiveness of the local Chinese makers,” said Tu Le, managing director of Sino Auto Insights, a research service specialising in the Chinese auto industry.
Back in 2011 Pony Ma, the founder of Tencent, explained what set Chinese capitalism apart from its American counterpart. “In America, when you bring an idea to market you usually have several months before competition pops up, allowing you to capture significant market share,” he said, according to Fast Company, a technology magazine. “In China, you can have hundreds of competitors within the first hours of going live. Ideas are not important in China—execution is.”
Thanks to that competition and focus on execution, the EV industry went from a niche industrial-policy project to a sprawling ecosystem of predominantly private companies. Much of this happened below the Western radar while China was cut off from the world because of Covid-19 restrictions.
When Western auto executives flew in for April’s Shanghai auto show, “they saw a sea of green plates, a sea of Chinese brands,” said Le, referring to the green license plates assigned to clean-energy vehicles in China. “They hear the sounds of the door closing, sit inside and look at the quality of the materials, the fabric or the plastic on the console, that’s the other holy s— moment—they’ve caught up to us.”
Manufacturers of gasoline cars are product-oriented, whereas EV manufacturers, like tech companies, are user-oriented, Le said. Chinese EVs feature at least two, often three, display screens, one suitable for watching movies from the back seat, multiple lidars (laser-based sensors) for driver assistance, and even a microphone for karaoke (quickly copied by Tesla). Meanwhile, Chinese suppliers such as CATL have gone from laggard to leader.
Chinese dominance of EVs isn’t preordained. The low barriers to entry exploited by Chinese brands also open the door to future non-Chinese competitors. Nor does China’s success in EVs necessarily translate to other sectors where industrial policy matters less and creativity, privacy and deeply woven technological capability—such as software, cloud computing and semiconductors—matter more.
Still, the threat to Western auto market share posed by Chinese EVs is one for which Western policy makers have no obvious answer. “You can shut off your own market and to a certain extent that will shield production for your domestic needs,” said Sebastian. “The question really is, what are you going to do for the global south, countries that are still very happily trading with China?”
Western companies themselves are likely to respond by deepening their presence in China—not to sell cars, but for proximity to the most sophisticated customers and suppliers. Jörg Wuttke, the past president of the European Union Chamber of Commerce in China, calls China a “fitness centre.” Even as conditions there become steadily more difficult, Western multinationals “have to be there. It keeps you fit.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
