Environmental, social and governance (ESG) considerations among global real estate investors and their stakeholders have gained traction over the past few years due to the increasing attention on climate change, heightened by the Covid-19 pandemic. While profit remains a crucial factor in real estate investing, ESG has played an increasingly significant role in the investment decision-making process.
In mitigating climate change impacts, many countries have announced their aim for carbon neutrality, with nearly 200 countries committed to the Paris Climate Agreement. The property sector, which accounts for approximately 38% of global carbon emissions, has received its fair share of attention. Countries have adopted many different green regulations and policies to help reduce buildings’ carbon emissions. International organisations, such as the United Nations, have also published data on real estate sustainability to help investors incorporate ESG factors into their investment decision-making and portfolio management.
The increase in the importance of environmental accountability among investors and tenants has raised green building certifications among asset managers and developers globally. According to the International Green Building Adoption Index, 18.6% of space in 10 markets across Australia, Canada and Europe was certified ‘green’ in 2018, compared to 6.4% in 2007.
Growing body of supportive evidence: