ESG, Resilience and Driving Sustainable Returns Real Asset Live

‘The drive towards sustainable investing has shifted’

ESG factors have an increasingly significant impact on real estate values, experts agreed at Real Asset Media’s ESG, Resilience and Driving Sustainable Returns Investment Briefing, which took place online.

‘The drive towards sustainable investing has shifted in response to coronavirus,’ said Christiane Conrads, Head of German Real Estate Desk, PwC Legal. ‘ESG has gone up companies’ agenda recently, becoming the second issue ranked in terms of importance after liquidity’.

The reason is that companies are under increasing scrutiny for any decisions they take that have an impact on employees, customers and society.

‘Having a clear and comprehensive ESG strategy is very important and beneficial,’ Conrads said.

‘The virus has taught us to pay more attention to the social element and to the importance of data gathering from a social point of view,’ said Douglas Edwards, Managing Director, Head of Equity Raising & Client Service, CORESTATE Capital Group.

The response to a snap poll done among delegates was overwhelming: 83% of respondents said they believed there would be a higher focus on ESG and sustainability issues post crisis, while 13% thought it would stay the same and only 4% felt these issues would become less important.

‘Benchmarking is definitely an issue’, said Damian Harrington, Director, Head of EMEA Research, Colliers International. ‘Some progress has been made on the Environment part of ESG, but there is still a big gap in hitting targets and no clear robust benchmarking of which ESG factors really matter to a company’s performance’.

In Europe, ‘around 25% of real estate assets now have strong ESG credentials’, he said. However, there has been even less progress on the Social component, how the company treats its employees and whether it does good via its products, services and interaction with wider society.

‘We have focused more on environmental topics in the last few years but now undoubtedly the social aspects will move up the agenda,’ said Clemens Brenninkmejer, Head of Sustainable Business Operations, REDEVCO.  ‘There will be more of a focus on health and wellness’.

The last few years have been all about relentless urbanisation and the emergence of city centres, but Covid 19 is likely to will change our cities and determine how and where we choose to live.

‘Will high-density, busy cities stay on top or will greener, smaller towns be more in demand?,’ said Thomas Veith, Partner, Real Estate, PwC. ‘The same applies to buildings. Are tall skyscrapers viable if only one person at a time can use the elevator?’

The epidemic is also likely to change the investment landscape. As supply chains change and near-shoring intensifies, some places and economies will become stronger and investments will follow.