ESG Has Become a Commodity, It’s No Longer a Selling Point

Just a few years ago, ESG dominated conversations across the real estate industry. Operators invested in certifications, sustainability initiatives, and environmental credentials, expecting them to become major drivers of demand.

Today, the picture looks rather different.

In a recent conversation, Jean-Yves Huwart, founder of Coworking Europe, spoke with Martim de Botton, CEO and co-founder of LACS, one of Portugal’s largest flexible workspace operators. With five locations, 30,000 square metres of workspace, more than 300 client companies and over 4,000 members, LACS has experienced first-hand how occupier priorities have evolved.

Martim’s conclusion is clear: ESG hasn’t disappeared—but it has stopped being a competitive differentiator.

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From Industry Buzzword to Business Reality

Only a few years ago, ESG (Environmental, Social and Governance) was one of the hottest topics in commercial real estate. Consultants encouraged landlords and operators to invest in sustainability strategies, while certifications were expected to become a major competitive advantage.

LACS followed that advice.

“We started speaking with consultants to see how we could adapt our buildings,” Martim explains. “At the time, everyone was saying this would become extremely important.”

Today, however, his experience tells a different story.

“I wouldn’t say ESG is dead,” he says. “But it’s not as important as it was announced it was going to be.”

The BREEAM Test

One of LACS’ locations in Porto provided an interesting real-world experiment. The building received a BREEAM certification, one of the world’s best-known sustainability certifications for real estate. Initially, the team expected it to strengthen their commercial position.

“We thought this would allow us to position ourselves slightly above competitors,” Martim recalls. “If a company had to choose between a certified building and a non-certified one, we believed they would choose us.”

But that’s not what happened.

“What we see at the end of the day is that price is still king.”

For most occupiers, certification alone was not enough to justify paying more.

Sustainability Has Become an Expectation

This does not mean sustainability has lost its value. Far from it. Solar panels, recycling systems, energy efficiency and responsible building management remain important parts of operating modern workplaces.

The difference is that tenants increasingly see them as standard rather than exceptional.

As Jean-Yves Huwart suggests during the discussion, ESG has become similar to reliable Wi-Fi, clean facilities or good building maintenance—something every professional workspace is expected to provide.

Martim agrees.

“I think new buildings are already getting better and better. Construction companies automatically include many ESG measures today. It’s becoming common sense.”

Occupiers Still Prioritise Value

One of the interview’s most striking observations concerns what clients actually discuss during negotiations. Despite years of industry focus on ESG, Martim says the conversations almost always come back to commercial fundamentals.

“When we negotiate with companies, what we discuss at the end of the day is price.”

Even large corporate occupiers rarely select workspace based on environmental certifications alone. Likewise, LACS has never encountered a client that required a B Corp-certified operator before considering a workspace. These credentials certainly add value, but they rarely determine the final decision.

A Sign of Market Maturity

Perhaps this is not a failure of ESG at all. Instead, it may be evidence that sustainability has already become embedded in the industry. Operators no longer promote clean energy, recycling or responsible building practices because they are extraordinary. They promote them because they are expected. The competitive conversation has shifted back towards service quality, flexibility, hospitality, location and overall value.

ESG has become part of the baseline.

Portugal’s Flex Market Continues to Grow

While the discussion challenged one of the industry’s biggest narratives, Martim remains highly optimistic about the future of flexible workspaces. LACS has built a portfolio of five large locations across Portugal and continues to enjoy a client retention rate above 87%.

Rather than chasing rapid expansion, the company is focused on continuously improving the customer experience while preparing for further growth.

“We still believe in the Portuguese market,” Martim says. “We continue to see both the market and the flexible workspace sector growing year after year.”

International expansion may eventually follow, but Portugal remains the company’s immediate priority.

Final Thought

The ESG conversation is evolving. For operators, sustainability remains essential—but perhaps no longer because it helps win customers. Instead, it has become part of the minimum standard expected from modern workplaces.

The real competitive advantage now lies elsewhere: delivering outstanding service, creating flexible products, operating high-quality buildings, and providing value that occupiers are willing to pay for.

As Martim de Botton puts it, ESG is no longer the headline selling point. It’s simply part of doing business well.