Savills : How ESG is changing the landscape of children’s nurseries in the UK?

The Government has set a vision for the UK's education sector to be the world-leading in sustainability and climate change by 2030. To meet this target, the nursery sector must play an active role in taking action to support the delivery of the 2050 net zero strategy.

Under the UK Government's sustainability and climate change strategy, there's a requirement for nurseries run by local authorities to have a minimum of one person trained as a sustainability leader by 2025. This will be achieved through the roll out of carbon literacy training which will help develop climate action plans to both mitigate and adapt to climate change, increasing resilience of the sector. Currently this impacts roughly 2 per cent of the market, but it's likely the private sector will need to follow this approach too.

Under this new legislation, we expect to see a growing necessity for nurseries to provide wellequipped outdoor play spaces; the trend of 'forest schools' is evidence of growing pressure from parents for the provision of education in nature. First introduced in the UK in the 1990s, forest schools originate in the Scandinavian education model which focuses on inspiring a deep and meaningful connection with nature. After the Covid-19 lockdowns, with limited access to the outside parents saw the necessity of immersing their children in nature. In a study of 200 forest schools, two-thirds said demand for their services had increased since the pandemic. This has implications on the locations and site-types nurseries and early years centres consider, with direct access to nature and woodland rising in demand.

A number of initiatives have been launched to support ESG in the nursery market. The World Organisation for Early Childhood Education launched an Early Childhood Education for Sustainable Citizenship Award to support education on sustainable development in early childhood. Similarly, the Green Early Years Choice Champions Organisation (GECCO) provides support and guidance to parents, educators and carers on how to promote sustainable behaviours and decision-making among children. GECCO was founded by a director of Tops Nurseries, spearheading the transition to sustainable early years. Tops Nurseries are the first B-Corp certified nursery group in the UK, with an impressive target of achieving net zero by 2025.

In recent years the market has experienced major consolidation, with the largest 10 operators now accounting for just over 13 per cent of the market. This move away from the traditional, owneroperator nursery model is having implications for ESG. With many more institutional investors now involved in the sector, there is growing pressure from stakeholders on ESG considerations. Nursery operators should look to develop robust ESG strategies aligned to a reporting framework and also provide services that improve wellbeing and community cohesion, delivering social sustainability.

One issue still faced by the sector is staff retention, with many able to find similar or better paying jobs in less demanding services. It is important that operators and investors begin to focus on staff wellbeing - a key part of the social aspect of ESG, imperative for improving the sector's resilience.

Given the growing attention by investors, pressures from parents, the Government and third party organisations, it's safe to say ESG is growing opportunity in the nursery sector, and can be viewed as a tool for post-pandemic recovery. The sooner operators transition the more they can stand out to investors and parents in a competitive market.

Further information

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