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The how and why of embracing ESG in real estate

Discover the importance of ESG in commercial real estate and how to implement it effectively. Explore sustainable practices, environmental impact reduction, social responsibility, tenant engagement, and the role of Chainels' tenant experience app in achieving ESG goals. Start building a better world with actionable initiatives in the real estate industry.

In recent years, environmental, social, and governance (ESG) factors have gained significant traction across various industries. Commercial real estate, in particular, has witnessed a growing focus on integrating sustainable practices and responsible investing.

However, many real estate companies still struggle to successfully implement an ESG agenda. 

Frameworks like WELL, GRESB, BREEAM & LEED, exist to help landlords take concrete actions to improve sustainability in their properties. But there are additional things you can do to help meet your ESG goals.

Let’s briefly explore the importance of ESG in real estate and how you can implement it. 

What is an ESG strategy in real estate?

We have some major challenges to overcome in our world. Inequality, loneliness, global warming—they’re all problems too big to tackle alone.

That’s why ESG has taken on new significance in this era. It’s a way for businesses to contribute to building a better world through actionable initiatives. 

ESG stands for Environmental, Social, and Governance, and these three dimensions are used to measure the sustainability and ethical performance of a company.

No one expects  real estate to solve all the world's problems. But like any industry, there’s a lot that can be done to reduce it’s impact.

An ESG strategy typically involves:

  • Environmental Factors: Every company, no matter how big or small, has some  impact on the environment. By taking note of their energy and resource consumption, greenhouse gas emissions and waste management—real estate companies can start to devising a strategies to reduce their impact.
  • Social Factors: Commercial real estate companies also have an impact on society.  Social factors encompass areas such as labour rights, human rights, employee health and safety, diversity and inclusion, community engagement, and product safety.

  • Governance Factors: Governance refers to the systems and processes by which a company is directed, controlled, and operated. Good governance practices ensure transparency, accountability, and ethical decision-making. An ESG strategy may involve implementing strong governance frameworks, adopting responsible investment practices, having independent and diverse boards, and ensuring appropriate disclosure and compliance with regulations.

Reasons for implementing sustainable practices.

  • Access to bank loans - many banks require proof of effective ESG practice in order to approve loans.

  • Aligns with end-users’ values - many modern tenants care about the environment and their own contribution to biodiversity, sustainability and social inclusion.

  • Keeping in step with the law - Certain laws enforce ESG practices. Implementing a strategy can help you stay ahead of this.

  • Attracting talent— Future employees want to do purposeful work for a company with clear objectives around ESG.

Environmental Sustainability

Real estate is not the direct cause of global emissions. However, like many other industries, it contributes indirectly through energy usage and operational practices.

Commercial buildings, like offices, retail spaces, and industrial facilities, consume a substantial amount of energy for heating, cooling, lighting, and powering various systems. 

How to reduce the environmental impact of your commercial properties.

To reach your ESG goals it’s important to have a multi-faceted strategy for reducing your environmental impact.

    • Energy-efficient lighting—working with property managers and service staff to ensure that lighting in apartments hallways and common areas are energy efficient and substantially reduce consumption.

    • Renewable energy installations—Think about how you can install renewable energy solutions like solar panels into your commercial property.

    • Water conservation measures—Use communication platforms to inform tenants on how they can best conserve water.

    • Sustainable waste management practices—You can also use communication platforms to inform tenants about recycling best practices, how to dispose of or upsell unused goods and reduce food waste in restaurants.

    • Bike rental schemes—you can contribute to a reduction in congestion and air pollution by providing alternative means of transport to your commercial tenants. For example, offer bike rental through a booking platform. 

Social Responsibility

ESG also encompasses social responsibility. Stakeholders can integrate socially responsible practices into their operations, and focus on creating inclusive spaces that promote health, wellness, and accessibility.

There is also a growing emphasis on community engagement, with landlords investing in projects that enhance surrounding neighbourhoods. 

How to implement socially responsible practices into your operations.

  • Inclusive space design – Companies can prioritize creating spaces that are accessible and inclusive for all occupants. This includes considering universal design principles, providing amenities for people with disabilities, and ensuring equitable access to common areas.

  • Fair employment practices – To reach social ESG goals, real estate companies should strive for diversity and inclusion within their workforce and adopt policies that prevent discrimination, promote equal opportunities, and ensure fair wages and benefits for employees.

  • Responsible supply chain – Landlords can assess and monitor their supply chains to ensure they meet social and environmental standards. This involves partnering with suppliers and vendors who share similar values and promote ethical practices.

  • Philanthropy and volunteering – Engaging in philanthropic activities and encouraging employee volunteering can make a positive social impact. Supporting local charities, supporting a local  community, or providing pro bono services to nonprofit organisations are some ways to contribute to society.

How to involve your tenants in the process

Engaging tenants is one of the biggest challenges involved with implementing an effective ESG strategy.

Reducing energy consumption, tackling waste, and improving social cohesion is much easier when commercial tenants take part.

It’s therefore important to have tools to clearly communicate your ESG initiatives. One such tool is a tenant experience app - an all-in-one platform that keeps tenants informed about ESG initiatives.

For example, a tenant experience app like Chainels allow landlords to open up dialogue with their tenants and gather information they would otherwise struggle to obtain through other channels like email or SMS.

You can create a feedback loop with tenants by sending polls and tenant surveys that provide value input for improving your ESG efforts with the wishes of tenants in mind.

Want to know how you can do the same? Book a demo and find out today.

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