‘Coalition of the willing’ needed to fight backlash against ESG

This is a crucial year for sustainability, as the backlash in the US is leading to a rethinking of all things ESG. That could lead to a positive transition, experts agreed at Real Asset Media’s Positive change in the Dutch real estate market briefing, which was held yesterday in Amsterdam and was hosted by Blue Module.

“ESG is the biggest revolution since the industrial revolution and it’s about building a better world,” said Paul Wessels, founder, Blue Module. “Now is the time to create a coalition of the willing, and I find it encouraging that veterans in the industry say they would not invest in buildings that are not ESG-compliant.”

Much has been made of many companies and banks’ very public pulling back from ESG commitments and organisations, but it is important to look at what is actually happening in the market.

“They may be pulling away from cooperation and joint initiatives, but when it comes to their own investments they choose well, so that makes me optimistic,” said Wessels.

“There is some panic over the current ESG backlash, with suggestions that re-branding to ‘responsible’, ‘sustainable’ and ‘impact’ investing might help, as if it were a marketing problem,” said Anouk Donkervoort, head of ESG and sustainability, EMEA lead climate risk, Cushman & Wakefield. “Re-branding just gives ammunition to the nay-sayers. Reform, not evasion, is the right path.”

The definition of sustainability used to be simple: meeting the needs of the current generation without compromising the needs of future generations. But now limited natural resources are being used up. It is the era of ‘drill, baby, drill’ but “at some point there will be nothing left to drill,” she said.

The companies that are now publicly scrapping their ESG objectives “are the ones that saw sustainability as a short-term way of making money,” said Donkervoort. “But whatever their motivations, even if they were showing off rather than acting out of conviction, they were doing the right thing.”

So we are at an inflection point: positive change is needed and it must be led by people with a long-term vision. Those in charge now should be pro-active and lead the real estate sector through the transition to a better system rather than shift the burden on to future leaders.

“Change ideally should have occurred yesterday, but it needs to happen now,” said Donkervoort. “We all need to take ownership of that necessary transition now, rather than waiting for the young generations to bring about change – that’s just a cop-out.”

Health and wellbeing aspects are increasingly valued and incorporated in the list of essential requirements a building must have. The focus is shifting from regulations and legislation to a more human-centric approach.

“Real estate is the most powerful tool to create social connections and it must undergo a revolution, moving from an operational mindset to thinking about people’s experiences,” said Daniele Di Fausto, founder and CEO, Global eFM. “We must start designing experiences rather than just buildings, flexible spaces that adapt to different conditions. Buildings must adapt to people, not the other way round.”