ESG in Commercial Real Estate

Establish sustainable practices to ensure environmental preparedness, social consideration and stewardship, and criteria for governance that satisfies stakeholders, users and benefactors.

See It In Action

According to the CBRE 2022 survey, 85% of investors said protecting the environment is a primary goal of their ESG Strategy.

60%

60% of CBRE respondents to the 2021 Global Investor Intentions Survey stated “that they had already adopted ESG Criteria as par of their investment Strategies.”

105%

LEED certified buildings result in 105% of average rents versus non-LEED certified structures.

56%

56% of investors surveyed cited the need to protect the value of real estate assets.

Environmental factors relate to a company’s environmental impact. Examples include a property’s carbon footprint, style of construction and building envelope, water usage, and preparedness for climate-related risks.

Social considerations focus on how a company manages relationships and creates value for stakeholders. Examples include the revitalization of urban areas, community infrastructure support and reducing income inequality through capital allocation and stewardship.

Governance criteria reflect a company’s philosophies and management practices. Examples include effective board composition, Diversity, Equity and Inclusion (DEI) policies, transparency practices and business ethics.

Building Practical ESG – Training for Effectiveness

Understanding ESG opportunities and navigating the complexities of implementing ESG strategies are the first steps and neither need be overwhelming or confusing. Often the initial process is to gain an understanding of yours and your stakeholders desire to establish processes that ensure both broad acceptance (ownership, investors and workplace). Next, a purpose-built plan can be actioned to meet your direction.

At Building Practical ESG we focus on establishing a baseline and working with your team(s), to clarify your vision and facilitate training and development ensuring that your desired outcomes become company culture. We don’t just advise. Rather we teach and guide so that required ESG values are entrenched within your organization.

The benefit is simple. Long term satisfaction for stakeholders, investors, operators and customers.

Predict And Prevent Risks in Commercial Buildings

Environmental Risks

Depending on its location, a property may be at risk of wildfires, flooding, and other severe weather caused by a changing climate,
In addition, buildings that lack sustainable features and have a heavy carbon footprint will be susceptible to rising utility costs, higher insurance premiums, and government penalties resulting from a failure to meet environmental standards
"Eventually, less non-sustainable investments will become obsolete.

Social Risks

When addressing social risk factors, the most important thing to consider is how well a property serves its community
Buildings and their operations that are deemed (or in the future are likely to be deemed) unhealthy, dangerous, eyesores, or otherwise out-of-step with their community’s social priorities are at risk of devaluation, especially compared with the increasing number of buildings and properties aiming for social awareness.

Governance Risks

Improper property governance can result in poor operational management, which can then negatively affect a building’s condition and cause declining property value,
A lack of high-level transparency can lead to internal corruption, litigation, and reputation damage, causing stakeholders to withdraw and values to plummet,
Lack of governance may cause the government to step in and apply stricter and costly regulations.

Why Introduce ESG Training and Strategies

74x

Within the next 3 years, 74% of occupants will have green lease clauses in their leasing agreements. This will cascade throughout the operational supply chain. Service providers, materials suppliers and lenders will require green certifications to meet these requirements.

Occupants in Energy Star buildings consume a minimum of 8% less energy than those in standard non energy efficient buildings. Over a 12 year period this equals a whopping 100% improvement in energy savings and it is all profit.

25%

*RAI case study – Toronto office tower. ‘The property was built in 2016 to far exceed building code requirements with energy and water efficiency-focused features. As a result, it achieves operating costs (excluding realty taxes) approximately 25% below competing properties. This reduction has allowed the borrower to remain competitive while charging a higher net rent. In the event of market turmoil and falling rental rates, the borrower’s cash flow stream will likely remain more resilient than its competitors’.

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