ESG is a term that’s often used in financial markets, but it’s also relevant to the real estate industry. ESG stands for environmental, social and governance and refers to how companies are managing their impact on the environment and society. According to local law 97 experts As ESG becomes more popular, it will have an impact on investment decisions in real estate too.
What is ESG?
ESG stands for Environmental, Social and Governance. It’s a way to measure how companies are managing their impact on the environment, society and governance.
ESG has become an important part of investment decision-making by institutional investors such as pension funds, endowments and foundations. The reason is that they want to invest in companies that have positive impacts on all stakeholders including employees, customers and communities as well as shareholders and other stakeholders such as suppliers or local communities where they operate.
Why is ESG Important to the Real Estate Industry?
There are many reasons why ESG is important to the real estate industry. One of the most obvious is that it has such a large impact on the environment, both directly and indirectly, which makes it an important topic for thought leaders to consider. As one of largest consumers of energy, water and materials in today’s world, there is much work to be done by these thought leaders if we want them to survive as well as thrive into tomorrow.
The real estate industry has an enormous impact on our planet – it consumes more than half of all fossil fuels used worldwide and accounts for almost 30% of all global greenhouse gas emissions. In addition, real estate touches every part of life: it provides us with homes where we live our lives; workplaces where we earn money; transportation options when we go somewhere else (or even just down the street); shopping centers where we buy things; restaurants where we enjoy food..
The Role of the Global Real Estate Sustainability Benchmark (GRESB)
GRESB is a global benchmark for the real estate industry. The organization was founded in 2008, and by 2017 had grown to over 1,200 members, including some of the world’s largest property developers and investors. It has been endorsed by major industry bodies such as ULI (Urban Land Institute) and CDP (Carbon Disclosure Project), who are concerned with sustainable business practices.
The purpose of GRESB is twofold: firstly to encourage companies within the real estate sector to adopt sustainable practices; secondly, it encourages governments and regulatory bodies worldwide to develop policies that support sustainability in this important industry sector.
The Role of the Carbon Disclosure Project (CDP)
The Carbon Disclosure Project (CDP) is a non-profit organization that works with businesses, governments and cities to measure, disclose and manage their greenhouse gas emissions.
The group was founded in 2002 by the UK government to provide a market-based solution for climate change mitigation. It has since grown into the largest corporate climate change survey in the world with over 5300 participating companies from 59 countries.
In its most recent report, CDP found that companies around the world produced an estimated 3.7 gigatonnes of CO2 equivalent in 2017 – nearly 12% more than they did in 2016 when CDP first began collecting these data from its respondents.
Challenges in Adopting ESG Standards within the Real Estate Industry
The complexities of implementing ESG standards in the real estate industry are multifaceted. Some of these include:
- The standards themselves can be different from country to country and from industry to industry. For instance, it is more common for an industrial company to have a sustainability policy than it is for a retail company or financial institution.
- Standards are not always consistent across organizations within an industry or even within companies themselves. An employee may be hired at a company with great ESG standards but then discover that her team does not follow them as much as she would like; this could create frustration in the workplace and negatively impact productivity and morale on both sides of the equation.
- It can also be difficult to implement ESG standards if they’re too stringent—or if they’re not stringent enough! Certain practices may work well at one firm but cause problems when applied elsewhere due to differences in culture or geography (two things which are often overlooked during implementation).
The real estate industry has made great strides to incorporate ESG standards into everyday practices, but with many challenges ahead.
ESG is a hot topic in the real estate industry. It is a way to measure a company’s environmental, social and governance performance. ESG incorporates environmental responsibility, employee relations and corporate governance standards into each transaction or property development decision.
This standard has been adopted by many public and private entities because it helps them identify opportunities for improvement in their organization as well as measure their impact on society at large. But with more attention being paid to ESG than ever before, it can be difficult for companies to know where they should invest their time and resources in order to get the best results possible while still maintaining profitability levels that are acceptable to shareholders.
ESG is an important issue to consider in real estate, but it can be difficult to implement. There are many challenges that need to be overcome before ESG is adopted as the new standard for real estate companies. However, we believe that ESG will transform the industry into a more sustainable and responsible one over time