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Proactive investors who focus on ESG will reap rewards

Real estate players should not wait for laws and regulations to make ESG compliance compulsory, but should have the courage to act and do the right thing, experts told Real Asset Insight.

Jan Petr, Head of Asset Management Germany, Schroders Capital

“Don’t be driven by regulations and don’t wait for new legislation, but be proactive, intervene to change and improve things, even if in a small way at asset level,” said Jan Petr, head of asset management Germany, Schroders Capital. “We work on this every day.”

It is a complex process that requires planning and cooperation within the company.

“After years of talking about ESG, now we need to implement it but it takes courage to go ahead and look beyond the fog that still surrounds the issue,” said Maximilian Riede, head of ESG Germany, Swiss Life Asset Managers. “We’re finding out that it takes more than just appointing an ESG manager. It’s a huge learning process for organisations, it requires a governance structure, a really systematic organisation and the right people at every level.”

Companies need to have an overall strategy as well as a detailed plan for every building in the portfolio.

“I think the amount of work required is still underestimated”, said Petr. “We’ve spent a lot of time at the operational level, setting up individual action plans and seeking to drive value for every asset, but there’s still work to be done. The strategy has been laid out, people know what they need to do, but the daily challenge is implementing it on the ground.”

Vincent Bryant, CO-Founder & CEO, Deepki

A step by step strategy

Experts’ advice is to take it one step at a time and to take advantage of the available technology to facilitate the process.

“You should have great ambitions but take baby steps, focus on one issue at a time because you cannot do everything at once,” said Vincent Bryant, co-founder & CEO, Deepki. “Focus on the parts of the portfolio that are most at risk. Now thanks to data you can have a comprehensive overview of huge portfolios with many assets in different asset classes and different geographies.”

Strong conviction and internal resources are crucial, as ESG cannot work in isolation. It should not be left to a single department or office but it must be taken on board by everyone across the company.

“The technology is there and it can add great value, but you need a practical  step by step approach in order to turn ambition into action,” said Paul Wessels, founder, Blue Module. “It makes sense because the yields on ESG-compliant assets are better, because both office and resi tenants demand it, and because regulations are getting tougher and you want to avoid the risk of stranded assets.”