What PropTech Brings to the Table Amid the ESG Investment Surge
The trend toward corporate responsibility has spread to the business in recent years. We’ll tell you what it is, how it affected the real estate industry, and how you can meet your ESG goals.
What is ESG?
ESG - Environmental, Social, and Corporate Governance - refers to the three central factors in assessing an investment's sustainability and social impact of a company or business.
ESG principles were first presented in 2004 in the UN Report - “Recommendations by the financial industry to better integrate environmental, social and governance issues in analysis, asset management and securities brokerage”. Now this direction has spread to many areas of business and is gaining more and more popularity due to the sustainability importance at the corporate level
These criteria are not only handy in attracting companies to the sustainability issue. They also help to better determine the future financial performance of companies since an increasing number of investors consider its impact on the environment and society when making decisions about investing in a particular company.
According to Deloitte, many jurisdictions are finalizing rules on the mandatory financial disclosure requirements for issuers on climate risks and greenhouse gas emissions and standardized disclosure of ESG information.
Why Should Companies Track ESG Compliance?
Solid ESG initiatives can boost stock liquidity
Individual and institutional investors are ready to entrust their capital to companies operating ethically and sustainably. As a result, ESG popularity is among the main trends affecting the performance of stocks, such as inflation, interest rates, and global issues.
ESG programs contribute to company’s competitive value
Now more and more investors prefer working with conscious companies realizing the necessity of sustainability and social impact and making more advantageous funding or lending offers to them. According to Statista data, in 2020, the S&P 500 ESG index began to continuously surpass the S&P 500 by four points on average. Also, such programs increase the brand image of a company.
ESG compliance is the guarantee of cost reduction
By implementing components of ESG programs, companies of any size can monitor such essential indicators as logistics and waste processing costs and energy and water consumption, which is especially relevant for real estate companies. Along with cost management, ESG programs also deliver operational efficiency, lower risk of fines/penalties, better risk management, and enhanced innovation.
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What ESG Metrics to Track in Real Estate?
What is ESG in real estate? Investors in real estate are increasingly focusing on sustainable development. Governments and developers in many countries apply the ESG standards to real estate. Compliance with ESG in Real Estate shows that this asset class remains relevant even with sustainable development guidelines. In addition to the benefits of ESG real estate investing, there is a growing awareness that real estate can have a significant social impact, either by rehabilitating public spaces (indirectly focusing on the merits of existing real estate), affordable housing, social housing, and care centers or by investing in new buildings with an environmental focus, in particular in “green” buildings.
The Major ESG Metrics That Real Estate Companies Track:
Energy Efficiency
Energy efficiency monitoring is the basic metric all real estate owners (and investors in real estate asset managers) should measure to achieve commercial real estate ESG components. For example, Urban Land Institute analyzed that enhancing energy efficiency increases property values in Class B and C offices.
Carbon Emissions
The carbon footprint measures the total emissions of carbon dioxide (CO2) and other greenhouse gases from a company's / building operation in a year. Worldwide, the building sector accounts for almost 40% of global energy-related carbon dioxide emissions from the construction and operation of buildings. The company's carbon footprint calculation also becomes an increasingly important criterion when making financing, cooperation, or support decisions.
Indoor Air Quality
This metric gained extreme importance in the COVID and post-COVID era when airborne illnesses attracted more attention from individuals and companies. In 2020, household air pollution resulted in approximately 3.2 million deaths yearly. Special tech tools can measure ongoing building execution across various pollutants.
Occupancy Rates
High-performing buildings are not only energy-efficient or clean-aired but also occupied since unoccupied real estate brings financial losses to the company and adversely affects the environment.
Employees and Tenants Turnover
Real estate is, first of all, about people. Thus, the social PropTech ESG component is also essential to track. Estate owners and investors must consider fair treatment of personnel, diverse hiring, timely payments and payment of taxes, as well as occupancy control, favorable lease management, etc. So, this technology significantly contributes to PropTech cost reductions.
Get inspired by our recent blog post about latest PropTech projects in Axon!
How Can Axon Meet Your ESG Goals?
You can’t manage what you don’t measure.
At Axon, engineers develop data management software for collecting and analyzing ESG data, managing ESG technology solutions and delivery processes, and PropTech solutions to improve the tenant experience.
PropTech data management software extracts different types of data and converts them into a single storage container, such as a database. Then, real estate owners and investors may use it when reporting on PropTech ESG performance and compliance.
We offer various tech solutions to increase the experience of ESG in Real Estate:
1. Environmental
Building Energy Management System - BEMS
ESG software providers invented the technology providing building owners and operators with the maximum energy efficiency while reducing building operating costs by integrating dedicated and connected hardware, software, engineering solutions, installation, and site-wide services.
With BEMS, it is possible to manage a building and energy consumption by analyzing data from HVAC, fire suppression, security systems, and the power distribution network. Such consumption and emission analytics enable accessible data exporting for reporting frameworks such as GRESB.
You can also integrate disparate real-time information and provide access to them through a web interface with powerful graphics and trending visualization, an advanced reporting system, and mobile applications.
2. Social
Integrated Workplace Management System - IWMS
This software platform facilitates company management through the use of workplace resources. This is an example of social component of ESG. Standard IWMS features that support property management include strategic planning, order book management, and all workplace-related processes, such as occupancy rates and employees & tenants turnover management. IWMS components can be implemented together as a single end-to-end implementation or customized to meet the team's needs.
With IWWS, tracking the company’s performance and collecting all relevant data from key staff and suppliers is easy. Thus, generating sustainability reports will be faster and more efficient.
Tenant engagement apps
ESG PropTech goals in commercial real estate can be achieved with tenant engagement apps. They contribute to the elimination of the complexities while managing your real estate leases.
The software facilitates maintenance and communication with tenants and enables property managers and realtors to track lease data, automate renewals, manage additional applications, and store invoices and legal documents while managing leased assets. Tenant engagement apps are handy software to create an effective coworking environment between companies and tenants.
Dive in the specifics of creating an excellent tenant experience app!
3. Corporate
Property Management System - PMS
PMS supports real estate, hotels, resorts, and similar properties in their day-to-day operations. This typically includes management and administrative tasks, such as payment processing, tenant billing, tax accounting, and performance analysis.
This system can assist you in attracting, screening, and administering renters, controlling and meeting their maintenance needs, and conducting an account for all relevant costs and revenue. In addition, the PMS can include various invoice templates by providing the ability to customize the presented style and information, vast options for built-in analytics, and payment automation methods.
This ESG-friendly software helps companies track, visualize and evaluate their operational activities. Collecting all this information simplifies reporting and mitigates risks and returns.
Construction Technology - ConTech
Construction technology covers all the digitally connected processes within the construction sector. The ConTech solutions involve wearable technology, augmented reality, assisted reality and virtual reality, and artificial intelligence and predictive analytics. With predictive analysis, it is easier to make forecasts in ESG commercial real estate planning and get ahead of mistakes in achieving ESG goals. For example, you can pre-evaluate labor load or eco usage of equipment, comparing data to the working tools (and see whether the contractors use a crane or hammer, etc.).
Are PropTech Solutions ESG-Efficient?
Our custom real estate ESG software enables clients to collect their ESG data, get a holistic view of asset performance, establish action plans, improve energy efficiency, and facilitate stakeholder alignment in the transition to zero carbon. Feel free to contact Axon specialists and share your ESG goals!
