Environmental, social and governance (ESG)

ESG is a generic term used by investors to refer to Environmental, Social and Governance factors that can affect a company’s ability to create long-term value.

Why does it matter

ESG’s increasing importance can be attributed to a convergence of many overlapping factors, including:

  • The rise in public concern for environment and social equity, reflected by an increasing desire from the public that organisations and investments are ethical.

  • A better understanding by investors of the risks posed to the underlying investments from ESG issues.

  • Greatly increased legal and regulatory burden on organisations which presents significant operational and logistical challenges needing to be addressed at all levels of the organisation.

  • Many consumers, counterparties and investors are now self-motivated to “do the right thing”. 

 

Deal Sourcing

Identifying material ESG issues during screening, due diligence and in the planning of developments and major renovations.

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Investment Decision

Communicating material issues to the investment committee and assessing their impact on valuation.

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Ownership

Including EGS issues in the management of the assets, use of external property managers and engagement with tenants.

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Sale

Adding value when the asset is sold.

 

 ESG compliant property market

  • Assets under management in funds abiding by ESG principles surpassed $1 trillion for the first time in 2022, with 91% of investors agreeing that non-financial performance is critical to decision making. 

  • 60% of global investors stated that they have already adopted ESG criteria as part of their investment strategies 

  • 58% of employees consider a company’s social and environmental commitments when deciding where to work 

  • Prime central London offices rated “Excellent” by BREEAM enjoys a 10.5% premium on sales prices compared with equivalent unrated buildings.

 

Investors adopted ESG criteria

  • New York
  • Las Vegas
  • San Francisco
  • New York
  • Las Vegas
  • San Francisco

 Benefits

Reducing Costs and Liabilities 

  • Operating costs: installing more energy-efficient equipment reduces costs.

  • Liabilities: better knowledge of a building’s environmental condition reduces the chance of unforeseen litigation.

  • Obsolescence: staying ahead of regulatory requirements reduces risk of falling foul of more stringent regulations.

Increasing Revenue 

  • Less incentives: tenants prefer buildings with higher ESG performance which reduces the need for incentives.

  • Reduced voids: more satisfied tenants are more likely to renew their lease.

  • Higher rents: higher rents can be charged for properties with green certifications.

 How we deliver

  • Develop client brief

  • Sustainably report (information gathering)

  • Feasibility study

  • Agree scope of works & budget

  • Agree client governance process

  • Tender and procurement

  • On site delivery

  • Implement post completion strategy