ESG Investing  

We shouldn’t make excuses for delaying action on ESG

Jessica Pilz

Jessica Pilz

There was a time when I believed that ESG issues would perhaps not be given the focus they deserved.

For a good decade, a small corner of the UK real estate industry fought valiantly for its seat at the table.

Despite our efforts, ESG never received the same attention as other investment drivers and was instead associated with phrases like ‘tick-box exercise’ or ‘nice-to-have’.

I must admit that prior to heading off on maternity leave in early 2017, I felt relieved to step away from the constant battle; despite the hint of change that lay ahead.

When I returned from an extended maternity leave in early 2020, I saw a significant shift in how ESG was perceived by the UK real estate market.

I think this fundamental shift in attitude stems from a combination of factors, including the climate warnings issued by noteworthy organisations like the Intergovernmental Panel on Climate Change (IPCC), the ambitions set out by the Paris Agreement, the introduction of new regulation by the UK Government and the EU, investor pressure, occupier demands and even the global pandemic, which has brought the importance of health and wellbeing starkly into focus.

This change in attitude within the real estate sector has forced many to revaluate how they integrate and treat ESG within their organisation and it’s been a welcome change to see many new names sit alongside the leaders who have been pioneering this space for the last decade - though credit must be given to those who have diligently driven forward the ESG agenda.

Despite the acceptance of ESG, I think there are still things we need to be careful of and areas that need improvement.

Driving influence and change

If we are to see real change, I don’t believe ESG should be used as a competitive advantage.

While this may have been the case initially, investors now understand the value of ESG and expect the integration of such issues within all areas of investment decision making, regardless of any perceived green premium.

The consideration of ESG factors sits alongside all other investment drivers and property owners and asset managers should use their success in this space to drive and influence change.

The operation of the built environment accounts for 30 per cent of the UK’s emissions, so it’s imperative that we work together as an industry to reduce these levels.

Secondly, while there has been an evident shift in attitude, there is still a way to go in terms of education. Many of the growing pains associated with ESG, such as collecting tenant utility data, are still significant challenges today.

Deciding to embrace ESG does not take these challenges away and those who are just starting now will have some way to go if they want to catch up to the leaders.