Is ESG relevant to private property investors?

September 15, 2022 |

In this article, first published by, Heather Cunningham discusses how Environmental, Social and Governance (ESG) has become the new mind set.

Maybe it’s just me, but the conversation I am hearing from my property clients puts ESG at the centre of their strategy and agenda. It seems there is a huge awareness that real estate can have a significant social impact – and that mind set is here to stay.

This is not “box ticking” but is led by a genuine desire to make a difference.

It is easy to see that the institutions are aware of investors desire for impact investing and are keen to show their ESG commitment.

But in my view, it is family companies and other private investors who already have a well-established, purpose-driven mindset – one where social concerns have always been important.

We have seen those commitments increased even further in response to Covid-19 and the ever-growing awareness of climate change, inequalities, health and communities.

And, as younger generations have an increasing say in family businesses, their values are reflected in the strategy for real estate investment and development.

There is more trust in the ESG commitment of family business than in public companies and rightly so given their longer-term approach.

Clearly there are some changes which are altering legislation and standards – for example the phasing out of gas boilers and the impact on housebuilders. But there is more to this than just meeting standards.

It is more a question of purpose which has become particularly acute as younger generations bring their increasing awareness and ambitions to the fore.

So, what are the “real life” examples I have come across recently:

  • Focus and redirection into investment in social housing, including for key workers, homeless and care provision.
  • Focus of design around community, inclusion and green spaces.
  • Rehabilitation of public spaces, indirectly attributing value to existing real estate.
  • Environmental focus on new buildings and repurposing of existing buildings to increase sustainability, improve air quality and focus on occupiers’ health.
  • Research into appropriate replanting of forestry and impacts on biodiversity and soil erosion and chemical usage.
  • Selection of building materials with a green agenda at the forefront.
  • Setting an equitable wage for all workers and a clear focus on health and safety.
  • Advanced technology and data collection around buildings’ usage.
  • Installing electricity charging stations on retail parks and working with tenants to put solar panelling on buildings.

Why am I writing this as an Accountant and Business Adviser who deals with a whole range of property businesses? Ultimately because it is key to business sustainability.

We understand the long-term value that ESG can bring. And so do the new generation of people buying and renting properties as well as those companies and agencies contracting with property companies.

There is a changing landscape out there and those grasping the mood will see the benefits – not just in profit, but also in purpose.