The climate and cost of living crises are issues the world can’t ignore anymore. Add to it the double whammy of corporate misdeeds and income inequality; it is no wonder that environmental, social, and governance (ESG) factors have gained prominence in businesses.
ESG reporting is transforming how organisations do business. Compliance is no longer a 'nice-to-have' feature. It is critical in determining a company's long-term success. Non-financial factors such as environmental impact, the ethical treatment of workers, and accountability in operations are principles that contribute to creating a more sustainable world. It also strengthens the value proposition to stakeholders, customers, and investors alike.
In a recently published study1 by the Coldwell Banker Richard Ellis Group (CBRE), over 500 commercial real estate professionals emphasised how prominently ESG initiatives figure in their strategies.
For executives, ESG compliance can help improve a brand’s reputation, attract investors, and maintain profitability. It can also reduce operational risks, increase efficiency, and generate cost savings for workers. Building a positive workplace culture, in turn, helps retain top talent.
Data: the fuel of the digital age
67% of respondents stated that their focus on ESG grew exponentially in 2022. This rising attention to ESG is partly due to increasing energy costs and new government regulations.
75% agree that property values rely on considerations such as on-site renewable energy generation and innovative technology to track and optimise energy use. However, more quality data is needed to ensure real change.
One of the primary challenges is the lack of standardisation in ESG reporting, making it tricky to compare and evaluate companies across sectors. 53% cited that the absence of quality data greatly hinders implementing their ESG goals. Businesses often struggle to measure and quantify the impact of their initiatives, so demonstrating their value to shareholders proves difficult.
This is especially true in emerging markets where guidelines are often unclear, creating confusion for those looking to adopt ESG principles. To compound matters, many are under the misconception that overhauling systems is excessively expensive and may not yield immediate returns, deterring people from making investments in sustainable practices.
Despite these teething issues, the CBRE report lays bare the influence certain ESG-related features have on property values and transaction choices. 84% of respondents mentioned efficient energy consumption and carbon net zero targets as significant factors. Nearly half admitted they would angle for a discount or refuse a purchase entirely if adequate facilities were not in place. Correspondingly, about 40% of those surveyed would pay a premium for green-certified buildings with better resiliency to benchmark building performance.
Building Futures: a possible blueprint
So, what are the practical ways forward? Considering the challenges and the market’s needs, industries can adopt several strategies to strengthen their ESG ratings. While lowering greenhouse gas emissions remains the most critical ESG goal, concerns such as health and well-being, pollution, reducing resource wastage and vulnerability to controversies are meaningful to those who make real estate decisions.
Therefore, first and foremost, organisations must establish clear goals and objectives to develop a robust reporting framework. This will enable them to observe, measure and maintain the impact of their ESG initiatives. Secondly, they must collaborate with industry peers, workers, and non-governmental organisations (NGOs) to share best practices and form a standardised model for ESG reporting. This will help create a level playing field for companies throughout varied geographical regions, providing stakeholders clarity on how these metrics should be judged across the board.
Most importantly, transformational technologies such as artificial intelligence and the Internet of Things (IoT) can become integral tools in improving ESG metrics in buildings and factories. The public is slowly cottoning on to the fact that IoT is more than just a fancy term for your toaster being connected to the Internet.
Cloud-based platforms like Ecolibrium’s SmartSense™ offer clients a holistic view of their entire carbon and energy usage, assets and building-systems infrastructure in one dashboard. Real-time data provides actionable insights that improve operational efficiency, lower carbon footprints, and create a smarter workforce.
In today’s fast-paced world, utilising emerging technologies to the best of their abilities is the best bet organisations have towards realising their ESG goals.
After all, you cannot manage what you do not measure.
12023. Strengthening Value Through ESG. [online] CBRE Group.