ESG Investments to Gain Popularity in Real Estate 

As the environment becomes more of a priority among the public, environmental responsibility has become a priority for businesses and organizations as well.  The looming effects of climate change are pressuring businesses and corporations to take action.  Oil and gas companies in particular are facing increasing pressure from their stakeholders to make climate conscious decisions.  For the real estate industry, this mounting pressure remains relatively nascent.  The real estate industry accounts for 40 percent of the world’s total carbon emissions.  On the other hand, investments in the environment’s favor are still small.  

Buildings have a clear measure and impact when it comes to producing carbon emissions.  For instance, the U.S. alone has 600 commercial buildings that have a net zero energy certification.  However, there is much more to this when it comes to sustainability.  In a statement by senior manager of energy efficiency at Ceres Dan Seligman, “There’s a huge spectrum of sustainable behavior within commercial real estate…Commercial real estate has an inherent complexity in that three different entities control the property. You have the owner or owners. You have the tenants who occupy the space and pay their own energy bills, and then you have the property managers who run the building. It takes cooperation from all of those entities.”  Essentially, identifying exactly where the most energy is emitted and how to become more sustainable is a challenge for many businesses.  Technology and software tools can assist these businesses in reducing energy waste.  

Outlook

Expectations for many companies are rising when it comes to environmental sustainability.  Companies like Fifth Wall — a certified B corporation — is helping set the sustainability precedent for the real estate industry.  According to Cofounder Brendan Wallace, “The B Corp accreditation is the highest standard for a company like ours, and if we’re going to say the real estate industry needs to commit to sustainability, I want to make sure we’re walking the walk.”  Unfortunately, for the real estate industry, there is a lack of technology and funding to follow the precedent other companies are setting.  

Some real estate companies are making progress.  Nonetheless, it is not enough.  The traditional business model has worked well for the industry up until now.  It is now time to catch up.