ESG in real estate can become more impactful if decision-makers “get braver” about collaborating, sharing their learnings and trialling initiatives, according to industry experts.
During a panel session at MIPIM hosted by EG, speakers observed that the broader industry is still struggling to move the discussion on to discussing “how” environmental, social and governance principles can be met, from just “why” they should be met.
For Hala El Akl, senior director of ESG and operations at Oxford Properties Group, the main stumbling block to this is a “discrepancy” between landlords and occupier approaches.
The panel
- Hala El Akl senior director of ESG and operations, Oxford Properties Group
- Gareth Atkinson director, Civic Engineers
- Cees van der Spek public affairs and global corporate relations director, Edge Technologies
- Katie Whipp head of UK business, Deepki
“Often we are still talking about certifications [with occupiers], whereas we are more focused on using science-based targets to achieve decarbonisation, identifying a path and corrective measures,” she said. “This is the biggest challenge, because it’s going to be in education to align on what success or best practice means.”
Get on the same page
El Akl said real estate must seek to resolve this by playing its part in identifying shared definitions around ESG that “often do not exist” between owners and occupiers, to create a “shared language”.
“Working on that convergence is key and it cannot happen without collaboration, but that needs to happen in parallel to acting,” said El Akl. “We can’t wait too long for this data, this language, to be completely shared – we still have to act… because of the urgency of the challenge.”
Gareth Atkinson, director at Civic Engineers, said clearer correlations between ESG and profitability will help unlock the next part of the conversation.
“We have got to make green choices profitable because that is going to be what turns a lot more people’s heads who are still asking ‘why’,” said Atkinson. “Then we have cracked it.”
Atkinson stressed that positive financial value will naturally follow ESG performance. “The financially driven goal would probably come out of it if you took a decent approach to ESG anyway, because people will want to be part of an environment and place where you are seen to be doing the right thing,” he said.
Get braver about sharing
Katie Whipp, head of UK business at data firm Deepki, observed that real estate is too concerned about getting its ESG strategies wrong. She urged businesses in the sector to be more open around their successes – and failures.
“We are not going to get it right, we are all going on the same journey,” said Whipp. “It’s [about] joining forces, going through all of it together and making sure skills and experiences are shared.”
Whipp added: “Be brave and take initiatives forward. Don’t feel the need to hold back. Get sharing, get collaborating. We will get there quicker if we all come together. If we keep working in our own little pockets, it will take longer and 2030, 2050 could be impossible.”
Meanwhile, Cees van der Spek, public affairs and global corporate relations director at Edge Technologies, said governments – particularly local governments – must also foster collaboration by driving initiatives that encourage ESG-focused investment into public realm and infrastructure as well as real estate.
Get out of the ‘E’ comfort zone
Speakers also noted the “environmental” branch of the acronym tends to draw the most focus, with Whipp calling it real estate’s “comfort zone”. However, industry discussion around the “social” and “governance” factors continues to be two aspects that the sector is immature on in terms of data sets, metrics and reporting initiatives.
Whipp said it is likely the industry is trying “too hard” to quantify these aspects, when the solution might be to “step back and look at the whole picture”.
“It’s an area where we have got to be bold, to trial initiatives,” said Whipp. “There is so much localisation that when you start to look at the ‘S’ element, you can’t have a cookie-cutter approach to your social strategy.”
For Whipp, significant strides have been made in the relationship between investors and local communities, particularly in the wake of the pandemic.
“Historically investors are seen [to implement] the most cost-effective solution, without necessarily playing to what’s most valuable to those who occupy the buildings, but I think we’ve seen a huge step change in terms of that ecosystem – that parallel relationship where the investor knows that value is more than just ROI,” said Whipp.
“It’s more than pounds and pennies. It’s that retention, it’s that satisfaction – it’s a much bigger piece.”
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