3 things you probably didn’t already know about Environmental, Social and Governance (ESG) criteria

Environmental, Social, and Governance criteria are complex – with nuances, reliance on multiple data sources, and more! Yet it’s something law firms need to develop a greater understanding of, as investors are increasingly looking to improve sustainability measures across their property portfolios.

Ahead of tmgroup’s next tm:tv session – in partnership with Landmark – on “What are the implications of Environmental, Social, and Governance (ESG) for real estate?”, we share 3 things you probably didn’t know about ESG…

1. There’s no standardised criteria

One of the key criticisms of Environmental, Social and Governance (ESG) is that nothing is written in stone, so to speak, for property professionals to use as a checklist or guide. This is particularly challenging for a risk that spans climate change, regulatory compliance, waste, consumer relations, responsible production, and much more! Some would like to see some degree of standardisation, but every case is unique and it comes down to what the investors care about at the end of the day.

2. Multiple data sources are needed to help to build a picture of ESG

That being said, the spectrum of information property professionals rely on to report on ESG matters is broad as they begin to compile an in-depth report of risk factors.

As a general rule of thumb, ESG reporting brings together 3 types of data:

Raw data – e.g. energy bills over last 5 years
Third party data – e.g. energy survey data
Wider independent data – e.g. Global Real Estate Standard Benchmarking

3. ESG is forward-facing

ESG is fundamentally about determining the value of a long-term investment. For property, this partly comes down to issues of climate change and rising sea levels that could cause the property to ultimately be washed away or be abandoned by 2050.

It also extends to whether a poor energy rating could result in higher running costs and low uptake of any rental space in the near future, or worse still big bills to cover to bring it in line with new energy standards. All of which has the potential to damage the long-term value.

Want to find out more? Reserve your spot TODAY for the upcoming tm:tv session on “What are the implications of Environmental, Social, and Governance (ESG) for real estate?”