ESG Property
“Investors have an environmental policy,” Montcerisier says, “and they want to invest in property in-line with that policy.” This poses a problem for sustainable-led investors. Can they find enough assets that meet their sustainable policy and still generate the return needed? And if not, what changes can they influence?
Not just hot air Sustainable property is not just about reducing energy con- sumption or drawing power from the wind and the sun. Such a narrow focus would leave investors open to allegations of greenwashing. There is more to ESG in property than not using fossil fuels. Such factors include low water usage and recycling, natural ventilation, waste recycling and a place to re-change electric vehicles. “Architects are working to future proof properties because carbon targets are only going to get tougher,” Jones says. Construction is also crucial. Using sustainable materials and reducing the distance they travel to the site are important in reducing the wider carbon footprint of the building. “As we evolve, we need to look at the whole supply chain, the
sourcing of raw materials, labour input, governance and social aspects to get a full ESG perspective of what we are investing in,” Spafford says. Indeed, the social aspects and peoples’ wellbeing must not be overlooked. Properties should be designed with open spaces, rooms big enough for people to live sensibly in and windows that are large enough to allow more natural light into the property. The growing trend for automation and the internet of things is another element that could help make properties greener and help address wider sustainability issues. Fuelled by faster 5G internet connections, the internet of things will open-up more possibilities to control building environments for opti- mal efficiency and wellbeing, Zsolt Kohalmi, Pictet Asset Management’s global head of real estate and co-chief execu- tive officer, said in a note. There will, according to the World Economic Forum, be more than 3.6 billion connected devices used in commercial build- ings next year, while it also states that 84% of connected devices have the potential to help achieve the UN’s sustaina- ble development goals.
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