The ESG & RE Story: Impact on Occupiers, Investors & Developers

March 12, 2022

By Anshuman Magazine

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With ESG implementation evolving from a peripheral balance sheet issue to a key component of investment decision-making, there is a visible shift in how organizations are looking to drive value & stay competitive. The past few years have fuelled ESG adoption by organizations in India to meet new regulatory processes and investor-occupier attitudes as sustainability remains at the top of the minds of government bodies and all stakeholders.

In our latest ESG report, we’ve tried to understand the pulse of what are investors, occupiers & developers thinking about ESG prospects—Do they believe that effective implementation would help preserve future asset value and enhance the brand image? How are the occupiers planning to imbibe wellness & sustainability as they formulate their return-to-work strategies? And from a developer’s perspective, where do ESG elements fit into every stage of the property lifecycle?

Let’s deep dive & try to understand the futuristic trends and strategies that will emerge as ESG compliance for RE gains steam.

Investors continue imbibing ESG metrics…

Investors are headed towards the change, not just to comply with regulatory and environmental protection requirements, but also to preserve the value of future assets and improve brand image.

According to CBRE’s 2021 Global Investor Intentions Survey, close to 60% of respondents said that investors have already adopted ESG for their investment decision-making strategies, exhibiting a stronger focus now than ever before.

Some of the top considerations of investors include setting energy-saving and net-zero goals, effective risk & cost management to enhance resilience, benchmarking & reporting, use of green construction material, widening gap between green and brown rental premiums, health & wellness in building design & operations, technology advancements, and corporate social responsibility initiatives.

Occupiers are the main drivers of green real estate…

The demand for sustainable projects will determine the extent of transformation in the sector. The Energy and Climate Intelligence Unit (ECIU) suggests that almost 21% of the 2000 largest companies (USD 14 trillion sales) worldwide have already committed to net-zero targets.

As a result, climate risk profiling of prospective locations, selecting sites certified for sustainability, supporting easy and sustainable commute, creating clean and renewable energy, developing responsible material sourcing strategies, considering health, wellness, and DEI, conducting sustainability audits, and embracing flexible workspaces, have become the key priorities of occupiers in decision making.

Developers are embedding ESG consideration at every stage

Many Indian real estate developers have pledged to comply with ESG norms, following the sustainable initiatives of international asset owners and developers. While ESG is playing a prominent role in how companies operate, developers are trying to meet the shifting attitudes of investors and occupiers to create value.

Real estate developers are embracing ESG in every possible way. Some major initiatives are shifting to energy-efficient lighting, controls, and chiller plants, and getting LEED or Greenmark certification for their properties. To cover the Social and Governance factors of ESG, they are embedding their strategies with employee wellness through touchless systems, enhanced air quality and ventilation, executive-standard washrooms, smart security & visitor access controls, premium design & artistic features, and more.

ESG adoption is experiencing an upward curve, and it's only going to increase by creating a win-win situation for organizations as they are able to address global concerns, meet regulatory requirements and generate profits through long-term cost-saving with energy-efficient projects, and gain an edge over non-certified developments. Furthermore, as regulatory policies around ESG continue to tighten, adopting green-compliance policies and the rapidly evolving regulatory environment is going to become a necessity, not just a choice, for real estate professionals.

To know more insights, download our latest ESG report: