The Environment part of ESG has received more attention than the Social aspect but that’s set to change, delegates heard at Real Asset Media’s ESG, Resilience and Driving Sustainable Returns Investment Briefing, which took place online yesterday.
The direction of travel is clear. Around $32 trillion of capital has been raised for impact investing, around 20% of the total global market of $158 trillion AUM.
Over 1,000 property companies, REITS, funds and developers representing over 100,000 assets and more than €4.5 trillion AUM participated in GRESB (Global Real Estate Sustainability Benchmark).
‘Benchmarking is definitely an issue’, said Damian Harrington, Director, Head of EMEA Research, Colliers International. ‘Some progress has been made on the Environment part of ESG, but there is still a big gap in hitting targets and no clear robust benchmarking of which ESG factors really matter to a company’s performance’.
In Europe, ‘around 25% of real estate assets now have strong ESG credentials’, he said. However, there has been even less progress on the Social component, how the company treats its employees and whether it does good via its products, services and interaction with wider society.
‘We have focused more on environmental topics in the last few years but now undoubtedly the social aspects will move up the agenda,’ said Clemens Brenninkmejer, Head of Sustainable Business Operations, REDEVCO. ‘There will be more of a focus on health and wellness’.
Looking ahead at the impact of the epidemic on real estate, it will be felt differently in different sectors. COVID 19 has highlighted the importance of healthcare, as the countries that have a stronger capacity have dealt with the crisis better and have come out of it sooner.
The office sector is likely to see some permanent changes, after what Harrington called ‘the biggest working from home experiment ever’.
A Colliers survey found that 21% of respondents thought their productivity had increased since working from home, while 60% thought it had not changed and 19% believed it has decreased.
Another interesting finding from the survey is that the vast majority of respondents believe their work/life balance had improved since working from home: a 62% share in the first week of lockdown, which actually increased to 76% after four weeks, a sign that new habits are being formed.
‘People will go back to the office, because they miss the social aspect of meeting colleagues and clients, but they will want to continue working from home one or two days a week,’ Harrington said.
The workplace will become a different environment, with new office density strategies, better digitisation, smart lockers and visitor check-in codes, an emphasis on cleaning and disinfection, more cycling and shower facilities.
‘EPC ratings will be a must-have and good air quality will be demanded more and more,’ he said. ‘Occupiers will insist on what employees need, so developers, landlords and property managers will have to provide it’.