ESG (Environmental, social, and governance) factors are becoming increasingly important in the world of commercial real estate. As investors and stakeholders become more focused on sustainability and ethical business practices, commercial real estate firms are finding that ESG considerations are no longer optional – they are essential to long-term success.
In this article, we will explore how ESG factors are likely to impact commercial real estate in the coming years, and what steps firms can take to adapt and thrive in this new environment.
ESG: Environmental Considerations
The environmental impact of commercial real estate is significant, both in terms of energy consumption and carbon emissions. As such, investors and stakeholders are increasingly demanding that commercial real estate firms take steps to reduce their environmental footprint.
One of the keyways that commercial real estate firms can improve their environmental performance is by investing in energy efficiency. This can include measures such as installing energy-efficient lighting and HVAC systems, as well as incorporating renewable energy sources such as solar and wind power. In addition, commercial real estate firms can also focus on reducing waste and water consumption, as well as improving the sustainability of their building materials and construction practices.
By taking these steps, commercial real estate firms can not only reduce their environmental impact, but also save money on energy and operating costs. In addition, firms that prioritize sustainability are likely to be viewed more favorably by investors and stakeholders, which can translate into increased demand for their properties and higher valuations.
ESG: Social Considerations
Social considerations are also becoming increasingly important in the world of commercial real estate. As investors and stakeholders become more focused on issues such as diversity, equity, and inclusion, commercial real estate firms are finding that they need to be more intentional about creating a welcoming and inclusive environment for tenants and employees.
One of the keyways that commercial real estate firms can address these social considerations is by investing in the communities where their properties are located. This can include initiatives such as supporting local businesses, providing affordable housing, and investing in education and workforce development programs.
In addition, commercial real estate firms can also focus on creating a more diverse and inclusive workplace. This can include measures such as implementing hiring and promotion policies that prioritize diversity, offering training and development programs for employees, and creating a culture that values and respects all employees.
By taking these steps, commercial real estate firms can not only improve their social impact, but also create a more attractive and welcoming environment for tenants and employees. This can lead to increased demand for their properties and a stronger reputation in the market.
ESG: Governance Considerations
Finally, governance considerations are also becoming increasingly important in the world of commercial real estate. As investors and stakeholders become more focused on ethical business practices, commercial real estate firms are finding that they need to be more transparent and accountable in their operations.
One of the keyways that commercial real estate firms can address these governance considerations is by implementing strong corporate governance policies and practices. This can include measures such as having an independent board of directors, establishing clear codes of conduct and ethics, and having robust risk management and compliance programs.
In addition, commercial real estate firms can also focus on improving their transparency and reporting. This can include providing regular updates on ESG performance and progress, as well as engaging with stakeholders to understand their concerns and priorities.
By taking these steps, commercial real estate firms can not only improve their governance and ethical practices, but also enhance their reputation and attract more investors and stakeholders.
In conclusion, ESG factors are likely to have a significant impact on commercial real estate in the coming years. As investors and stakeholders become more focused on sustainability and ethical business practices, commercial real estate firms will need to be more intentional about addressing these considerations in their operations.
If you are interested in learning more about the commercial real estate market in Phoenix or other markets, feel free to reach out to us at ICRE Investment Team anytime. We’d be happy to help supply you with information on any relevant properties or markets, alongside any connections in lending, investing, or consulting that you might need!
