ESG not just about capex – talk to tenants to cut carbon 10-15%

Investing in ESG is an investment in the future liquidity of assets and capital gains according to Daniel While, Primonial’s director of research and strategy.

There was a regulatory tipping point in 2020 which made ESG part of investors’ mainstream due diligence and ESG will reflect in future values, he said.

Primonial’s approach to ESG is “best in progress”, he added. “We don’t believe in systematically building new offices. From an environmental point of view that would be a mistake because 60% of carbon is produced at the construction phase,” he told Real Asset Insight’s Richard Betts.

The answer, he said, is to improve existing stock. “There’s plenty of action that can be taken on the insulation of the building, on the source of energy, case by case.”

But improving building performance is not just about capital expenditure, he added. Just by having conversations with tenants, reductions in energy consumption of 10% to 15% percent can be achieved.

While also said that as Primonial typically holds assets for five to ten years, it would be all too easy to commit to a 2050 goal. However, the company fixes annual objectives to ensure progress. “We believe in really improving the stock and that’s how we’re going to reach the targets we have.”

Click on the video to watch the full interview or listen to the podcast below.