There is no longer any doubt that ESG is the most important topic for real estate right now and although questions remain, it looks certain that this year words will need to turn to action, says Richard Stephens.
As the editor of an English-language media title in central Europe for whom real estate is a key industry, there are two topics uppermost on my mind at the moment: ESG and Mipim. The future of ESG is of far more consequence for the real estate market – and for the world – than the future of Mipim, but 2022 will be pivotal for both.
First ESG. It’s the topic which has very quickly become the most talked about in the market, and rightly so. The future of our planet trumps everything. Every person, company and industry has to play their part – and the western corporate world, whether it likes it or not, has to engage fully.
Unlike with CSR, there are serious regulations coming. But a lot of uncertainty remains: what does it actually entail for businesses? What are the costs involved? How can companies engage effectively on each of the three aspects: environmental, social and governance? How to avoid ESG becoming an exercise in PR-led greenwashing?
Getting serious about ESG
According to the recent Colliers report ESG: At a Tipping Point: “The need for a global standard is escalating quickly and new rules are being set across the world. The fact that new EU regulations will require non-EU domiciled investors with assets in the EU to report and disclose in line is a key driver of change.” In other words, it’s getting serious.
The costs will be enormous, but down the line the savings will be too – often coming far quicker than expected. And in a world where tech advances are rapidly downgrading many professions and rendering others obsolete, there will be a raft of new career opportunities: “Estimates point to the need for thousands more ESG specialists, and for far greater skills and training across industry disciplines including investment and asset management, project management, capital markets, leasing, surveying or valuation. This is in addition to the new skills required in construction, engineering, architecture, design, planning and development,” says the report.
2022 looks set to be a seminal year for ESG in real estate. Of course there are many individuals and companies at the vanguard of the movement within the industry for whom ESG is already comprehensively implemented in their operations – they were the pioneers and they will be the first to reap the benefits. But for the vast majority of businesses this will be the year when the talking stops and the action starts.
There are definitely sceptics, of course. The opinions of Tariq Fancy, the former global head of sustainable investing at BlackRock, are well known. A diplomat I talked to recently claimed that ESG is a fig leaf behind which multinationals will simply try to cover their ravenous pursuit of profit above everything else, while Greta Thunberg would probably say something like: “About ****** time!” (and she would be right).
Critics and sceptics are an important part of getting it right, but the real estate market is huge and diverse, and it’s hard to move it fast, especially initially – but it’s definitely moving in the right direction.
All eyes on MIPIM’s return
Concerning Mipim, the previously imperious real estate event in Cannes to which many of the movers and shakers of the industry flocked without question at the beginning of spring each year: well, all eyes will be watching it closely to see how the upcoming edition in March fares.
Will it be a case of “the break has done it good”, with people refreshed and hungry to meet in person again? Or will it be a case of “out of sight, out of mind”, with decision-makers feeling that they missed it one year and it didn’t do them any harm?
I for one believe it to be an important forum for inter-market dialogue, but if recent events have chipped away some of its hubris, that won’t be such a bad thing. See you in Cannes!
Richard Stephens is founder & editor of Poland Today