Real Estate Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in the Real Estate Industry

In the real estate industry, a multitude of tasks are performed including the purchase of land, construction, renovation of buildings, and many others. In addition, this whole process has a significant relationship with ESG aspects, primarily focusing on issues related to the environment, society, and economy.

Speaking about the industry further, it has been observed that it consumes around 40% of global energy. As the sector uses a huge amount of raw materials its direct and indirect impact is connected to the environment. Moreover, it has been shown that urbanization contributes to the impact of environmental factors. This includes the high consumption of water, waste, and air pollution. The second part of the impact is the construction sector, as how a building is constructed, and where the materials come from, also have an effect on the environment.

ESG And Real Estate

The correlation of ESG and real estate is one where we can see a growing awareness among the general public of the factors which can significantly impact the real estate industry via the rehabilitation of public spaces, affordable housing, social housing, and care centers, as well as green building investments. Aside from the encouragement towards green building it also covers topics such as diversity. Moreover, infrastructure and real estate are closely intertwined. Buildings that are more sustainable are not only environmentally friendly but also increase the return on investment, improving investment performance, using new eco-friendly materials or smart technological heating and ventilation methods.

Increasing necessity of Sustainable Real Estate Industry

The pandemic has led to many transitions across all sectors which also includes the industry. The contribution of this industry to climate change is something that cannot be ignored. It has led to a shift towards sustainable housing, a type of housing that provides benefits for a long period of time. In addition, sustainable housing contributes to the development of socioeconomic conditions and the preservation of the natural environment. Moreover, countries that are known to be developing markets do face consequences like air pollution, water shortages, change in weather conditions, and many more. Opting for a greener option leads to lower risks and better returns. This is because the transitions to sustainable design, construction, operations, and green buildings impact the climate in a positive way. This further assists in the minimization of emissions, energy, waste, and many other critical sources.

Sustainable Innovations

Innovations in green building and construction can be seen across the world. From smart buildings to eco-friendly materials, there are plenty of ways to make the home more sustainable. Smart buildings are one of those instances where people are becoming more aware of their home's energy consumption and carbon footprints. One of the innovations that stood out as particularly noteworthy was smart systems, which ensure the safety of the house as well as save energy. Further, innovations involving the reuse of existing materials resulted in further minimization of waste, and innovative designs in buildings have also resulted in zero emissions being generated.

Benefits of Green Building

For the past couple of decades, sustainability and green building have been enduring trends in the industry. Besides using less water, energy, or natural resources, green buildings can increase biodiversity or generate their own energy, which makes them more environmentally friendly. Moreover, green building benefits the environment, social, economic, and health aspects of society. By using sustainable architecture, not only can water waste be reduced, but solutions like renewable energy can also be utilized as beneficial components.

Additionally, buildings that have been certified environmentally friendly produce 62% fewer greenhouse gasses than comparable buildings. The cost of maintaining a green building is lower, utility bills are lower, occupancy rates are higher, and many more benefits are achieved economically. Finally, just as the above key benefits, eco-friendly architecture has been shown to benefit human health as well, as the use of eco-friendly materials during construction leads to better health for the people living in the buildings.

Key Risk Pointers And Solutions

The industry includes more than just land, buildings, and properties; it also includes crops, minerals, and water. When analyzing the process for the real estate industry, it has been noticed that the property development process is heavily dependent upon the environment. Among the concerns, real estate transactions can result in land contamination. It is possible that this contamination of the land was caused by activities on the land, or it originated from sources off-site. One such issue is mold contamination, where the molds are toxic in nature and can cause various health issues. Moreover, radon is known to be one of the most dangerous pollutants, which is colorless, odorless, and a radioactive gas that can enter and spread via water and air.

Further, there are a number of methods that can be used to minimize such impacts, including optimizing the use of energy and using cleaner energy sources. This will further reduce emissions. Further, green transport is also a beneficial option that could benefit the environment in a positive manner. Having alternative solutions, utilizing materials in a less impactful manner, and managing waste by recycling and using other resources stands out as a sustainable option.

Growth of the Real Estate Market

In 2021, the global real estate market was worth USD 3.69 trillion, and between 2022 and 2030, it is predicted to grow at a compound annual growth rate (CAGR) of 5.2%. As a result of rising population and a desire for personal household space, the market is expected to grow at a healthy pace over the forecast period.Furthermore, the research also highlights key aspects of the real estate market.

Key Companies in this theme

    • Brookfield Asset Management Inc.

    • ATC IP LLC.

    • Prologis, Inc.

    • SIMON PROPERTY GROUP, L.P.

    • Coldwell Banker

    • RE/MAX, LLC.

    • Keller Williams Realty, Inc.

    • CBRE Group, Inc.

    • Sotheby’s International Realty Affiliates LLC.

    • Colliers

Scope of the Real Estate Industry ESG Thematic Report

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of the Real Estate Industry ESG Thematic Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the Sector, globally

    • Key insights into Infrastructure developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the Real Estate industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment