The factors that entice investors and tenants alike to commercial real estate properties is consistently evolving. For example, following the COVID-19 pandemic, CRE owners that took steps to reassure people that their buildings were safe to re-enter from a health and cleanliness standpoint were most likely to minimize their vacancies. Today, an attractive element for building owners is to have environmental, social and governance (ESG) factors in their business strategies, Property Week reports. ESG is a collection of corporate performance criteria that evaluates a company’s ability to manage its environmental and social impacts as well as its governance mechanisms. This framework is designed to be a part of organization’s strategy to help it create enterprise value.
The environmental piece of ESG has been top of mind in the CRE industry for quite some time. It’s become a more pressing issue recently as demand to address the climate crisis grows and as CRE owners look to meet the net zero targets that governments around the world have set. Developers, building owners, managers and tenants are all looking at their carbon footprint and how they can reduce it.
Meanwhile, the social aspect of ESG has become more of a priority within the CRE industry, according to Property Week. The shift occurred as property managers and developers have recognized that buildings can have a positive impact on society. For example, providing amenities that can improve tenants’ health and wellbeing can improve community engagement and boost corporate social responsibility strategies.
How proptech helps CRE owners address ESG principles
Data is one of the most critical components at a CRE owner’s disposal when they address ESG, Property Week reports. Property technology, or proptech, plays a key role in helping building owners accomplish this. Landlords and tenants can use digital platforms to see how a building is being used and how much energy is being consumed. Additionally, landlords can track a building’s environmental performance in real time and collect tenant data to create carbon emission reduction strategies.
With this data, building owners can decide if opening hours should be changed to reduce energy use, or if they should install more energy-efficient lighting in the property’s common areas. How natural ventilation could potentially reduce the building’s heating and cooling systems use can also be explored.
Proptech is also playing a role in supporting social impact initiatives and improving engagement with tenants and the surrounding community. For example, landlords and property managers can use an app to alert tenants about health and wellbeing activities, community events and charity campaigns. Meanwhile, local businesses and charities can use similar tech to promote their events and offers, which creates a sense of community around the property.
A number of businesses have made ESG a key part of their operations and property developers and managers are part of that equation, Property Week reports. Buildings, regardless of size, can make a positive impact both from an environmental and social standpoint. This fact has created new initiatives across the CRE industry. Working with proptech specialists has allowed landlords, managers and their tenants to enhance their ESG strategies so they can more effectively turn their promises into actions.