ESG disclosures
The demand for data comes from all sides. It informs management, investors and lenders about how a business is behaving in a time when climate change and social equality are defining issues.
Data is also increasingly important in meeting the requirements of regulators for evidence of ESG performance and corporate claims of sustainability. And other stakeholders, including tenants and employees, are becoming more sophisticated about the information they seek, as they try to achieve their own targets or make sustainable choices.
How can ESG disclosures impact developers and property owners?
Reporting obligations
Real estate and construction businesses are subject to a number of regulations around ESG disclosures.
When creating an ESG data strategy, it is vital that businesses identify both the regulations that apply to them now and those that may affect them in the future. GRESB is an organisation that provides ESG data for the real estate and construction sectors by collecting, validating, scoring, and independently benchmarking ESG data. Many businesses operating and investing in these sectors use GRESB’s voluntary disclosures as part of their business operations and investment decisions.
Businesses that cannot readily collect and manage the necessary data will be at a material disadvantage in compliance and may face penalties.
Regulation
There may be various considerations here. For example, developers building mixed-used developments may need to issue a non-exclusive licence to accommodate a number of different property owners.
Executive remuneration
Linking ESG outcomes to executive pay is now widespread, as companies use their reward structures to hold senior leaders to account for their sustainability initiatives.
The accurate measurement and benchmarking of ESG data is a key issue when drafting ESG pay and bonus conditions, just as it is when reporting.
