ESG stands for environmental, social and governance criteria, and it’s pivotal to the way today’s businesses operate. It’s all about measuring a company's impact on society, the environment, and how transparent and accountable it is.
E: environmental criteria is the impact a company has on the planetS: social criteria revolves around people and reputationG: governance criteria is all about how a company is managed
Over the past couple of decades, ESG has evolved rapidly, moving from the sidelines to the forefront of decision-making.
And according to Bloomberg Intelligence, global ESG assets are likely to surpass a massive $50 trillion by 2025.
In recent years, ESG investing has extended beyond financial investments and into real estate.
The appetite for tracking and prioritizing ESG factors in buildings has exploded, and there are several reasons why:
The climate crisis and the risks associated with it have driven investment in sustainable buildings
Regulators working to address this problem are enacting stricter policies and standards
Investors looking to make sound business decisions are increasingly looking for transparency and stakeholder engagement
It's clear that real estate is going to be one of the asset classes where the contrast between ESG winners and losers will be the starkest, as ESG is a measure of both impact and risk. 'Brown' assets and portfolios risk becoming obsolete, while 'green' assets will continue to increase in value.
PropTech and IoT can make it quick, easy and cost-effective for owners, managers and occupants to retrofit existing buildings and turn them into sustainable, efficient and healthy assets.
The investors, landlords and facility managers who start future-proofing their portfolios now will create solid foundations to sustain long-term value in a rapidly changing world.