Embedding ESG within corporate strategies is imperative for future proofing businesses and real estate assets, staying ahead of the curve, and avoiding pitfalls in a complex and dynamic market. It’s essential to evaluate existing policies and anticipate the future direction of travel, as ESG compliance alone becomes insufficient.

Key considerations when aiming to hit the moving ESG target include:

Agile thinking

Meeting the challenges of hitting moving targets involves dealing with shifting priorities and foreseeing further ratcheting up of policy requirements. Changes to regulation, such as alterations to the National Planning Policy Framework (NPPF) in December, highlight the growing emphasis on ESG and decarbonisation. Fixed milestones like the Paris Climate Agreement and carbon budgets provide some long-term stability and predictability. The nature of ESG demands decisions that balance current evidence, future policy changes, and awareness of global agreements.

The challenge of conflicting reporting metrics

Navigating conflicting reporting metrics across geographies poses a significant challenge. With EU taxonomy already established, companies await clarification on the UK’s approach. Juggling varying reporting standards from the EU, US, and UK can prove daunting for global enterprises. While policies offer a foundational framework, corporate commitments are increasingly becoming the beacon guiding progress. Therefore, while policy serves as a crucial benchmark, companies are empowered to surpass it to achieve their strategic goals, controlling their progress and aims in a dynamic regulatory environment.

Influencing and shaping policy

Companies can and should be actively engaged in shaping emerging public policy, which is often the subject of multiple rounds of consultation, providing the opportunity for participation in formulating future frameworks. This needs to be constructive engagement that recognises the need for clear policy objectives, but ones which are sufficiently flexible to allow multiple solutions to be engaged to achieve the right outcomes. While policies set a minimum benchmark for compliance, developers, promoters, and landowners have the option to demonstrate courage beyond compliance by establishing their own rules and regulations that prioritise ESG objectives.

Embedding robust ESG measures into proposals ensures competitiveness in the planning process. Clients recognise that policymakers are increasingly informed about what constitutes good practice and sustainability. Therefore, providing comprehensive data and analysis to support claims of sustainability is essential. Assertions are no longer themselves sufficient; businesses must substantiate claims with evidence and a commitment to ESG principles.

Pushing beyond the boundary

Clients are increasingly challenging themselves to think in new ways and push beyond conventional boundaries.  The key question is how can a project secure  a competitive advantage and differentiate itself from the competition in a complex market? In this context, ESG serves as a framework for integrating good business objectives and sensible practices into real estate operations. Beginning with the ‘G’ in ESG, with good governance as the cornerstone, businesses can work to ensure that social and environmental objectives provide a strong underpinning that guides a project from inception through to implementation.

Looking forwards, what is the role of real estate?

The real estate sector must be influencers rather than followers on ESG. It is estimated that 40% of global emissions stem from real estate and that 80% of all buildings that will still be standing in 2050 are those that are already constructed. The most significant challenge are therefore the buildings that form our cityscapes right now. The property sector must address this  by exploring retrofitting or regeneration initiatives, or in some cases a combination of both approaches, as avenues through which we can make a difference. We must seize these opportunities to shape a better future.

Further information

Contact David Jackson or Marylis Ramos

Real Estate Insights Podcast: Savills Earth Series 2: Hitting the moving ESG target