COMMENT The EG Awards always brings together the very best in the real estate industry and this year was no exception. More than 700 real estate professionals came together to celebrate the very best that the built environment has to offer – the best deals, the best advisers, the game-changers and the future talent blazing a trail in the industry.
EG asked me to present an award to the winner of the sustainability category, for which I was very honoured to have judged award entries back in the summer. Judging the award submissions gave me insight into how different businesses are trying to improve sustainability, either through their own business practices, or across their portfolios. When you consider the built environment contributes 40% of UK greenhouse emissions and 36% of global energy consumption alone, progress in this area is both urgent and essential. This is, of course, just one thread in the tapestry of ESG strategy that businesses in the built environment are busy weaving.
Understanding the challenges
Earlier this year, DWF produced a report exploring the challenges for businesses within the real estate sector and surveyed senior real estate executives from across the world. Many are at a crossroads – balancing the needs and desire to improve or embed ESG strategy with commercial realities and technicalities of the sector. Some companies are ahead of curve; these are businesses that are looking ahead and have a view of what their future customer needs will be. They understand what those needs and requirements will mean to the construction, development and investment of properties within their portfolio.
Historically, there has been some pushback within the sector in the drive to adopt ESG strategy, but it is good to see evidence that the tide is turning and businesses understand the importance and value of ESG policy. Businesses excelling in this space are able to articulate the purpose of their vision and know where they want to be within the market. They understand that ESG strategy will have a material impact on their funds, their customers and their investors.
Businesses in the built environment need to consider the practical steps that will enable them to integrate their objectives and vision. They need to align their ESG policy with how this will influence their investment decisions, their owners and the way they screen deals. DWF has been on this journey and has had to engage with its own investors, stakeholders and employees. Therefore, we understand the challenges those businesses are facing and the changing requirements that need constant review and measurement.
For many businesses, a change in narrative is needed, and an understanding that ESG is not just a cost, but a risk that needs to be managed and an opportunity. If firms fail to address these issues and requirements now, they could become marginalised. Ultimately, they could find themselves limited to the types of investors who want to work with them, the types of tenants they can attract and future talent.
One aspect, for example, is social value and how the locality of a new building or project can influence important investment decisions. This is particularly relevant in the public sector, with some local authorities placing social value paramount when looking at procurement, joint ventures and proposed build sites.
Seizing on the opportunity
ESG presents built environment businesses with an opportunity, linking evolving governmental targets, simple business best practice and customer expectations all under one roof. In addition, this comes back to the issue of commerciality. Businesses acting now will be well placed to take advantage of the wide and deepening interest in ESG issues, and their ability to satisfy their shareholders, other stakeholders, and ensure they remain attractive to investors, talent and clients.
Through our experience, we have been able to work with our clients to educate, provide thought leadership, and address some of the hesitancies that businesses might have around embedding ESG policy.
Melanie Williams is head of built environment sector at DWF
