How will ESG investing shape your future?

Institutional investors are raising the stakes when it comes to assessing company performance using Environmental, Social and Governance (ESG) factors. This is at a time when the rules for capital markets are being rewritten, and the social and economic impacts of the COVID-19 pandemic continue to play out on a global stage.

Research from the 2020 EY Climate Change and Sustainability Services (CCaSS) Institutional Investor survey (pdf) suggests that ESG information has never been more important, with the majority of investors surveyed (98%) signaling a move to a more disciplined and rigorous approach to evaluating companies’ non-financial performance.

The research also showed that investors surveyed had become increasingly dissatisfied with the information they received on ESG risks when compared with 2018. A concerning finding as 91% of respondents also said that non-financial performance played a pivotal role in investment decision-making. This has led to strong investor appetite to see ESG disclosures underpinned by appropriate governance structures, reviews and controls.

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As part of the recovery from the COVID-19 pandemic, capital markets are reflecting on the potent impact that environmental disruption can have. The failure to consider environmental and social risks adequately, due either to their perceived longer-term impacts or the reduced likelihood of occurrence, has left many wondering how well prepared capital markets are to such shocks.

Commercial Real Estate and specifically offices and their culture will need to better evaluate how they can provide both a safer and friendlier working environment for both employees and staff and many potential enterprise tenants at large city office spaces are considering “safe work environments” when deciding on leasing new spaces.

Lucie Martincová, ESG Consultant of PwC Czech Republic, says:

Without a doubt, the adoption and clearly communicated stance on how ESG criteria and carbon conscious policies are incorporated into a company’s business strategy is becoming absolutely paramount. While the public is driving demand for social responsibility, the corporate world is responding. We are seeing an increasing number of companies pledging for carbon neutrality. Having green and socially responsible office spaces are one of the inevitable steps towards achieving such goals and it is becoming the new normal. More and more organizations are requiring office buildings to be cleaner, greener, and more efficient, knowing such actions will lower costs, increase employee satisfaction, and bring positive recognition together with acquisition of new talents,

This can be also achieved through implementation of PropTech solutions that minimize contact with surfaces in the building’s common areas (like buttons around elevators, access, parking and reception), gather information about visitor's health and make being in the building as pleasant and safe as possible. At the same time, building managers have a channel for quick communication with all users through digital signage or messages sent directly to the mobile app.

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