ESG programs for real estate
In today’s world, environmental, social, and governance (ESG) is a core pillar of value creation for organizations of all sizes. Due to an evolving set of expectations from stakeholders and pending regulatory requirements, ESG is no longer a discussion—it’s a necessity.
In light of the pressure to tackle climate change, real estate investors and developers are reconsidering ESG performance indicators to futureproof their investments, reflected in the emergence of ESG policies and increased reporting.
ESG issues specific to real estate
Every industry has different driving forces behind the development of ESG programs. The following issues are material to the real estate industry
Upcoming regulation on public companies to disclose and report on their Scope 1, 2, and 3 greenhouse gas (GHG) emissions will put pressure on landlords to provide data to their tenants in order for them to map out their carbon footprint, and report on energy consumption.
Renewable energy is an increasingly popular asset class with occupiers, landlords, and developers prioritizing the energy efficiency of their buildings. Additionally, the Government of Canada has published its Clean Growth Strategy to support businesses in reducing their energy use.
Tenants are demanding higher standards from their landlords in relation to air quality, water quality, natural light, and access to green spaces and cycling facilities. This is driving change across the real estate industry.
To comply with the Paris Agreement, the global average building energy intensity must shrink by at least 30% by 20301. The real estate sector must rethink its business model to comply with tightening building regulation.
1. https://www.canada.ca/en/environment-climate-change/services/sustainable-development/strategic-environmental-assessment/public-statements/pan-canadian-framework.html
1. https://www.canada.ca/en/environment-climate-change/services/sustainable-development/strategic-environmental-assessment/public-statements/pan-canadian-framework.html
Implementing a sound real estate ESG strategy will be important and will open up financing and financial market access for the sector.
Investing in an ESG program is more important now than ever. Landlords need to be aware of the increased pressure to measure and report on ESG metrics and demonstrate impact on issues that matter. Forming an effective, sustainable ESG strategy and leveraging technology to support your ESG journey will optimize growth and set your organization for long-term success.
Benefits of investing in ESG programs for real estate:
Early integration of an ESG program strategically positions your organization for long-term success
Access to capital, including government incentive programs specific to the agriculture sector.
Operational efficiency and innovation
Integration of ESG aspects into common cost allocations.
Tenant acquisition
Regulatory compliance
Partnership opportunities and community impact