Capitalizing on ESG Opportunities in Real Estate

By Nurit Altman and Lindsay Patrick
Published August 16, 2021 | 19 min read

For many owners and operators of real estate, ESG is moving to the forefront of decision making and driving strategy across their businesses. But for others who are just beginning their ESG journey, there are still questions about how to adapt their organizations to bring important items like climate change, diversity and governance into the day-to-day operations of their organizations. In this inaugural episode of The Real Pulse, Lindsay Patrick, Managing Director and Head, Strategic Initiatives and ESG, joined host Nurit Altman, Director, RBC Capital Markets Real Estate Group to discuss ESG and how owners and operators can capitalize on the significant opportunities it presents.

 

Key takeaways

1

The real estate sector plays an important role in reaching a net zero emissions economy.

2

Real estate owners and operators who are at the beginning stages on their own path to net zero should consider a three step process – identify who within the organization is responsible for governance of climate matters, benchmark their current environmental performance and determine the investment pathways aligned to positive environmental impacts that will also create value.

3

The “S” in ESG is a value driver for real estate. As the social impact of real estate becomes more quantifiable, for example in the areas of health and wellness and inclusive communities, financing structures are evolving to become more inclusive of these social factors, and we expect to see more capital available for project that incorporate these solutions.

4

Diversity and Inclusion continue to be top of mind for real estate executives who are building the next generation real estate company to be inclusive. To improve diverse representation, leadership should focus less on industry experience and think more broadly about the skills and the capabilities that are required for future, including potentially ESG expertise which could be additive to overall corporate strategy.

5

ESG policy vs. regulation? There is a balance to be found between setting stable policies to encourage investment in ESG areas and regulation which potentially could have the opposite effect. ESG policy stability is a critical factor for the industry, especially as real estate firms invest long-term and building codes are likely to continue to evolve to include enhanced environmental standards.

6

ESG data issues seem like an alphabet soup? We expect progress on the standardization of ESG measurement tools including the potential launch of an international sustainability standards board, which would provide greater clarity on calculating metrics and required disclosures. However, don’t wait to get started as existing frameworks and standards like GRESB, SASB and TCFD are excellent tools and are well understood by investors.

Find out more about RBC Capital Markets Sustainable Finance Group here and for all our ESG insights, click here.




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