EDITOR’S COMMENT If you don’t know why the real estate sector needs to tackle ESG urgently and vehemently without the promise of short-term financial reward, then I should give you fair warning that there will be no answers to that question here.
In fact, there are no answers to that question in any of the content we are running in this week’s ESG special. The brutal – but necessary – truth of the matter is that we have simply run out of time to ask why.
“We are at the start of a sci-fi horror movie,” says Nicole Leblanc, former head of corporate venture capital and partnerships strategy at Sidewalk Labs. She moved from Canada to Copenhagen last year to join the ranks of 2150, an urban sustainability-focused venture capital. The horror movie she refers to in her comment on page 40 is, of course, the trajectory our planet is tearing along at an alarming rate. It is a trajectory that the real estate sector has a duty and an obligation to shift. Why? There are no answers to that here, I’m afraid. How? Good question.
For those real estate companies that have the will to act, how? is not only a fair question, but also central to the cause. Only by exploring, investigating and then collaborating and sharing findings will answers be found.
This is as true across issues of social responsibility and governance as it is in relation to the environment and climate crisis. That is why every piece of content in this ESG special poses a question that starts with the word how. Because that’s the missing piece of the puzzle – practical and actionable measures.
From “how do you assess the right tech to tackle ESG within your business?” to “how do we strengthen and scale occupier engagement?”, the content kicking off on page 28 attempts to tackle some of the key questions swirling around an industry that is ready to act, but one that is not always sure about how to take the first steps. We also consider some bigger themes as we delve into the wider issues that could play a major role in nudging that trajectory towards sci-fi disaster off course. Themes such as “how vertical farms are on the up” and questions such as “how do you fix a problem like the great redevelopment vs refurbishment debate?”
In an ideal world, everyone across real estate would be tackling a plethora of questions around how, and actioning ESG strategy solely because they want to protect the future of our planet and humankind. To be fair, some probably are. But it would be remiss not to acknowledge that real estate is an industry built on margins, bottom lines and financial returns. I have already said that real estate needs to tackle ESG without the promise of short-term financial reward. That remains the case.
But if extra motivation is required, then rest assured that the medium- to long-term financial outlook for those who ask how, not why, is likely to be significantly brighter.
Attitudes are changing. Regulation is changing. Occupier demands are changing. Inaction will be costly all round. “Over the past two years the influence of ESG on the commercial aspects of real estate has grown at a quicker pace than anyone was expecting,” says Cyrus Korat, partner at DRC Savills IM on page 43. “If certain property types are not meeting certain standards, it’s affecting values. It is affecting the conversations that building owners have with their tenants. The liquidity is falling away right here, right now.”
How’s that for an incentive?
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