By Callum Adamson, CEO and Co-founder, Distributed
The Covid-19 pandemic has made many of the world’s issues more visible than ever. While extreme weather events continue to rage on as a consequence of climate change – presenting very tangible examples of global imperfection – the wealth gap also presents a monumental issue. In fact, the highest earning 1% owns 43% of the world’s financial resources.
This huge imbalance is already causing significant issues for the growing human population. For example, major commercial hubs like London are becoming too expensive for workers to live in. Yet many must make difficult circumstances work because opportunities to enter the skilled labour market are so concentrated in specific urban centres. Until the Covid-19 pandemic helped us see things a bit differently, this issue was exacerbated by most businesses making office attendance compulsory for employees, meaning they had no choice but to live within a commutable distance. This proximity bias concentrates emissions output and spending power, while simultaneously reducing quality of life.
One of the biggest learnings from the pandemic is that it is possible for workers to be as productive from home – or wherever they choose to operate remotely – as they used to be in the office. Businesses rooted in physical offices were forced into a state of panic in March 2020, only to realise that their employees were more than capable of working as they had been previously. Many employees capitalised on this opportunity and departed urban centres in their droves, to be closer to family members and save on the housing costs associated with living in cities.
As the dust has settled on the new working order, many businesses, like PwC for example, are allowing their employees to work remotely whenever, and wherever, they want to. A more widespread recognition of the feasibility of a distributed workforce brings with it an exciting opportunity to address the proximity bias that inherently contributes to global inequality.
The carbon cost of commuting
A significant proportion of businesses’ carbon footprints can be attributed to commuters – in the US, they account for more than 98% of each employee’s carbon footprint. Approximately 10 billion kg of CO2 could be saved by those who are able to switch to walking, cycling, or using public transport – equivalent to London’s emissions for almost four months. That could be even more if we didn’t have to commute at all!
Thankfully, we are already seeing many firms reduce the days they require staff to travel to the office. But fully remote teams can take this further. If we are to meet the IPCC’s recommendation to cap global temperature change at 1.5C, we need to curb our emissions to net zero by 2030 – and implementing fully distributed workforces could play a key role in doing so. In fact, our study in partnership with USC Marshall found that these structures result in 4.16x less greenhouse gas emissions than an equivalent 300-person team over a year. With such a clear correlation between commuting and pollution, what are we waiting for?
Remote working makes for a distributed economy
A primary cause of steep inflation in housing and living costs over recent years has been workers moving to cities to obtain high-paying office jobs. In turn, this creates a supply-demand bubble entirely fuelled by proximity-based hiring practices. For many, this effectively prices them out of a career and a higher salary. This challenge is only exacerbated when we look at this from a global perspective. Skilled workers in developing regions, across the likes of South America and Asia, have far more limited opportunities to enter more lucrative labour markets. Yet, these regions are home to some of the most talented individuals in the world.
In contrast, allowing people to work anywhere would enable people to balance loyalty to their regional roots with career aspirations. Remote working doesn’t necessarily mean working from home, either, which again excludes those who might not have a sufficient working environment or internet connection but could access one in a hired office or local café.
In terms of addressing inequality, cultivating distributed teams around a country – or even the world – means they spend their money there, too. This contributes to better wealth distribution; our study with USC Marshall also found that on average, every British pound paid to a distributed team member creates £2.14 in purchasing power across the world. The benefits of wealth distribution are not limited to those receiving the wage, but extends to their local communities, too. By working with a dispersed employee base, we could invigorate smaller economies outside of large cities and the western world.
Investing in the global economy rather than in concentrated pockets would also improve infrastructure such as education and healthcare where it wasn’t possible before. While the solution is far more complicated, this can help to rebalance global inequality and contribute to lifting populations out of poverty in the long term.
More than a matter of convenience
Despite these potential ESG benefits and considerations, most motivations for remote working strategies are based on solving their own skills shortage and to offer flexibility to existing employees. Businesses are quickly re-evaluating their hiring and workforce strategies in response to this well-publicised staffing crisis, with many seeing the potential of remote teams to access the right talent.
But if they want to recruit from the 100 best universities worldwide, they will have to look beyond key employment hubs in the UK and US. Countries such as Switzerland, China, Singapore, Denmark, South Korea, Canada, Australia, and France boast some of the most highly educated graduates – many of whom have been given the freedom and opportunity to access high salaries without moving to more traditional commercial hubs. Ultimately, this means that proximity bias and outdated views on remote working are restricting businesses from a fantastic pool of global talent.
Although trends in population movement may be driven by business needs and evolving worker expectations, the impact could be far greater. It is far from an all-encompassing solution to inequality, but the pandemic has shown that remote work is not only more environmentally and economically sustainable – it is also realistic. Exploring a remote workforce to create opportunities for worldwide talent, instead of just a local workforce within a commutable distance to an office base, could yield significant benefits not just for businesses, but for people and the planet too.