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We could have started this ESG blurb sounding all knowledgeable but the truth is that this is new to us as well. So let's try and understand this together because we must. For starters, ESG stands for “Environmental, Social and Governance”, and has become an important business consideration all around the world.
Meaning that if your real estate organisation does not care for the environment, you will find lesser investors for your assets as time progresses.
Per UN reports, though global temperatures will increase by 1.5 degrees by 2030, we are still in time to avoid a catastrophic 3 degree increase if we reduce global emissions at lightning speed, on the broadest scale possible.
Buildings, during construction and operation, emit 40% of greenhouse gas emissions worldwide, and this mega contribution towards oblivion has hammered in the importance of ESGs in real estate.
Why?
This is also having a positive effect on proptech solutions in the sector.
First, major financial investors globally are getting increasingly interested in sustainability and carbon footprints. To keep investors happy, real estate builders et al, are transforming their core strategies to become more eco friendly.
Second, corporate tenants and residents are becoming more caring towards the environment and climate change than before, making builders and operators take the greener path.
Third, governments across the world are taking this seriously and policy measures globally will act like carrots (and sticks) to encourage real estate owners and operators to improve on ESG measures.
What's Changing?
Per inputs from proptech VC Camber Creek, there are three big changes taking place.
In One Sip?
A decade back, some leading companies were deploying ESG measures out of selfless reasons.
But today, with the consequence of not acting so out in the open, real forces are coming into play, pushing the real estate sector to act more responsibly towards the environment.