The importance of ESG for real estate companies
ESG (Environmental, Social, and Governance) criteria have become a strategic pillar of the real estate sector, not only because of increasing regulatory pressure, but also because of their relevance to relevant stakeholders such as customers, institutional investors, funders and society as a whole, as well as their ability to build superior and deferential positioning.
Today, ESG management is essential for real estate companies that not only seek economic success, but also have a positive impact on society and the environment.
What is ESG?
ESG factors refer to the joint management of environmental, social and governance aspects:
- Environmental (E): How the company directly and indirectly affects and manages the environment, understood as climate change management, circular economy or water resources, among others.
- Social (S): How the company’s relationships impact its main stakeholders, especially team members, customers, suppliers, affected communities and society in general.
- Governance (G): How the company is managed, including good governance practices, transparency, regulatory compliance or shareholder rights, among others.
Why is ESG crucial for the Real Estate sector?
Here are some of the reasons why sustainability is highly relevant for real estate companies:
- Decarbonisation and energy efficiency: the real estate sector in Europe is responsible for 40% of energy consumption and 36% of the greenhouse gas (GHG) emissions that contribute to climate change. Establishing a credible decarbonisation plan and implementing practices such as energy efficiency measures, certifying buildings with environmental criteria or using materials with lower embedded carbon not only reduces the environmental footprint, but can also generate significant savings in the long term. Currently, companies that do not comply with and meticulously communicate the management of ESG aspects, especially climate change, could be accused of “greenwashing”, which could have a negative impact on the reputation and brand of the company concerned.
- Circular economy: the real estate and building materials sectors alone are responsible for the consumption of more than a third of the world’s natural resources. Buildings should include circularity criteria in their design, understood as those that seek to reduce the consumption of resources and waste generation, increase the useful life of materials and components, and try to recover the maximum amount of resources used during the demolition phase to avoid disposal in landfills and give them a second life.
- Customer acquisition: Both corporate clients and end-users are increasingly committed to sustainability. They prefer buildings that reflect their ESG values and, in the case of corporations, contribute to their own sustainability strategy. A strong ESG approach, both at the corporate and asset level, enhances brand and reputation, boosting the marketability of properties for sale or lease and increasing occupancy and loyalty rates for the latter.
- Attracting and retaining talent: Integrating ESG criteria into business strategy increases the attraction of talent, especially Generation Z, who value sustainability significantly. In addition, ESG aspects improve people’s experience at work, reinforce ties with the company and pride of belonging, while strengthening the company’s employer brand, which is a differentiating element in the labour market.
- Access to Capital: Investors and financial institutions are prioritising investments in companies that demonstrate a clear commitment to sustainability. This can translate into better financing conditions and access to capital.
- Regulatory Compliance: Increasing regulatory pressure seeks to drive ESG management to transition today’s economy to a more sustainable one. While this is a challenge, real estate companies must be prepared to ensure compliance so that their reputation and competitiveness are not negatively affected.
ESG at Gmp
For Gmp, ESG aspects are a strategic pillar of the business, transversal to the whole company, which seeks to generate sustainable value in a transparent way for our stakeholders and society.
Our commitment to sustainability is deployed through the ESG Strategic Plan 2024-2028, which consists of 11 strategic areas developed in 69 actions. Visit our website to learn more about our ESG strategy.
