The metrics of ESG in Relation to Real Estate

ESG, Supply-Chain Innovations, and Green Energy

  • Investors could obtain long-term performance advantages when portfolio construction and investment analysis include ESG factors,
  • When considering the metrics of ESG in regards to making real estate investments, investors are looking for sustainability (green buildings) and social change opportunities (positive social impact) within real estate.

There is an expanding evidence showing that when portfolio construction and investment analysis include ESG factors, then investors could obtain long-term performance advantages. The metrics of ESG can be integrated into the investment process and influence people’s decisions on which equities and bonds to purchase. When companies and investors incorporate strong ESG practices, they gain the potential opportunity to acquire vast amounts of capital, build a more reliable brand, and allow to open up the occasion for companies to encourage sustainable growth in the long-term.

ESG issues permeate our society, and investing in companies that are taking care of these issues is a great way to expedite the change. It is essential that the passion for making change grows throughout all of society if we want to live in a better world, and ESG investments are bound to grow in the long-term.

When considering the metrics of ESG in regards to making real estate investments, investors are looking for sustainability and social change opportunities within real estate.

The awareness that real estate can have a huge positive social impact is growing, for instance the construction of affordable housing, social housing, rehabilitation of public areas, or care centers.

The idea of green buildings is also growing and being implemented in order to reduce emissions and build responsibly. Sustainability has grown absolutely vital for real estate investors. ESG is only going to spread even more, continuing to influence the real estate valuation. In turn, ESG will be shaping real estate investments.

ESG is therefore here to stay and will increasingly shape and influence real estate valuation, and therefore real estate investment, as investors wish to allocate their commitments under this banner.

Handling ESG issues is vital for any successes in the long-term, as the market is constantly changing and becoming more competitive. There are several European operators who released a highly detailed plan on exactly how the will attain a net-zero portfolio.

One way they are discussing doing this is through operational emissions located within every single building that is under their authority. Tier 1 consists of direct emissions, and Tier 2 consists of power-related emissions. The companies are not only striving to increase their investments into the smart energy management technology, but also in the midst of producing renewable energy. One other effective thing to do is to strengthen the supply chain engagement (indirect emissions), helping the suppliers when switching to low-carbon materials or methods.

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