3 Myths About ESG In The Real Estate Industry Debunked

Posted by: TheGuarantors on September 27, 2022

It’s clear that many renters expect property owners and managers to upgrade their ESG credentials – but why have property managers often viewed ESG with skepticism?

Myth #1: ESG Is Only For Large Institutional Property Owners

Some property owners managers can often be wary of the cost of implementing ESG initiatives compared to larger institutional property owners. A survey found that 83% of building owners expect an increase in renters’ demand for sustainable and environmental-friendly buildings as a result of COVID-19. In the coming years, it will benefit all property owners and managers to offer amenities that meet renter needs.

Myth #2 ESG Requires Making A Lot Of Upfront Capital Investments, Which Are Not Immediately Profitable

ESG policies discourage businesses from relying solely on financial metrics and encourage broader social and environmental metrics in their decision-making. Buildings with high ESG scores, on average, experienced lower costs of capital compared to buildings with poor ESG scores in both developed and emerging markets during a four-year study period.

Myth #3: ESG is a fad that will soon fade away

ESG investing has been around for decades and continues to grow. ESG-related strategies have shown consistent inflows and asset growth over the past decade. Take a look at the figure below.

https://t10589978.p.clickup-attachments.com/t10589978/68f87e80-3e75-4105-a99d-6145f453630c/Bloomberg intellegence on trending up for ESG .webp

Source: Bloomberg Intelligence

In a recent report, Bain & Company argues that ESG should be a core part of what differentiates companies from competitors. On the regulatory front, ESG is no longer a ‘nice-to-have.’ More than 35 stock exchanges around the world have already issued (or are in the process of issuing) ESG reporting guidelines.

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