CMS’ real estate and real estate finance teams recently hosted a panel discussion exploring some of the trends, opportunities and challenges facing the real estate sector in the environmental, social and governance (ESG) sphere. ESG factors are becoming increasingly important for our clients and we wanted to understand the drivers, the difficulties encountered by the industry and find out what the market is doing to embrace the opportunities.
As panel members, we welcomed Josien Piek - Head of EMEA at GRESB, Edward Dixon - Head of ESG at Aviva Investors Real Assets, Tim Clare - European Head of ESG at Anthesis and David Hirst - Executive Director, Chair of UBS Asset Management, Real Estate & Private Market’s Sustainability Workgroup. Our audience largely comprised real estate investment, development and advisory professionals from across the sector.
We invited our guests to participate in a survey of which 68 attendees responded. The full write-up from the panel discussion can be downloaded below.
Key takeaways from our survey
- Awareness of ESG, in particular climate change related issues, has permeated the real estate industry and the majority of professionals see it as high priority or working its way up their corporate agenda.
- GRESB is currently the most popular ESG benchmarking system for the real estate sector.
- The urgency for climate change related action is acknowledged; however, there are several challenges to translating this understanding into action.
- Lack of understanding, cost/impact on returns and short term thinking are perceived to be the biggest factors preventing prioritisation of ESG.
- Time is ripe for government intervention.
Key takeaways from our panelists
- Forget the apparent complexity - develop an ESG strategy that works towards preparing your business for a future where ESG issues have increasing impact on the bottom line.
- Boards are considering ESG from a risk point of view.
- Advisory teams should be playing a bigger role in influencing clients to prepare and implement their ESG strategies.
- GRESB is an investor lead initiative which currently hosts US$4.5 trillion assets worth of data.
- Investors that choose to ignore ESG “cost” now will pay in the future because the agenda will not go away, even if there is another financial crisis.
- When considering ESG it is helpful to explore common frameworks, such as the 17 UN Sustainable Development Goals.
- Tenant engagement in ESG is key.
- Regardless of the size of the asset, best practice is to bring all stakeholders together to forecast how demands on and of a building are going to change during its lifetime and design accordingly.