Poland Week talked with Aneta Rusiniak, Director, ESG – Europe at Invesco Real Estate, about the ESG strategy implementation in the real estate sector.
Everyone is talking about ESG on the real estate market. So looking at the process of implementing ESG criteria, are we moving from talk to action?
Yes, much is being said about ESG on the Polish and global real estate market, but it didn’t start just two or three years ago. At Invesco we started our global green program 15 years ago. It all began with green certifications and a data collection program, which evolved over time into more strategic objectives, targets that are measurable and implementable but also easily transferable into real actions. Real estate professionals are still learning what ESG entails, how it can be analysed and what can be achieved by taking advantage of it. More and more practical solutions are being implemented – for example, with the right approach to data processing and gathering we are able to establish and measure relevant KPIs and with this knowledge, in turn, we can monitor and improve ESG strategies for specific assets and the whole portfolio.
Landlords will not be able to achieve their targets and strategies if they do not cooperate with all stakeholders.
What is the level of ESG implementation within different asset classes?
With different asset classes our approach needs adaptation, as there are differing opportunities and needs. The things we need to and can implement are different for office corporate tenants than retail or residential sectors, where there are smaller companies or individual customers. Corporate tenants already have their own net-zero strategies and a lot of activities on their agendas for the spaces they occupy, therefore they tend to be very cooperative in the field of ESG-related topics. It’s more difficult for small retail individual tenants, in terms of initial cost and their business efficiency, but this is also constantly changing and the understanding of the topic and its importance is definitely rising.
While talking specifically about logistics, we have a great potential to install solar panels and generate renewable energy from onsite resources, so it will be natural to focus on these initiatives. Energy efficiency improvements and technical potential open new opportunities for the whole industry. In cooperation with tenants we can really achieve significant reductions and optimizations in terms of energy usage and carbon emissions. With retail and residential tenants, we have more possibilities to work on social element, which is also an important part of our strategy. Supporting local communities, working on tenant engagement, promoting healthy lifestyles, biodiversity, these are the elements that can be successfully developed.
Hotels aim to put the comfort of their customers in first place and historically this has not always been in line with the energy efficiency of the building. However, hotel chains (which are our tenants) have started to put ESG high up on their agendas and we observe great improvement and initiatives on their side as well. Furthermore, people who are traveling also want to contribute to positive change for the planet and are ready to adjust their habits.
Are educational activities that raise the awareness among tenants that they are also part of the game needed?
Of course, engagement and education are in the first place. We cannot meet ESG goals on our own. Landlords will not be able to achieve their targets and strategies if they do not cooperate with all stakeholders. It’s very important that ESG is about cooperation.
Data is a foundation for ESG strategy, so we cannot achieve any targets without having complete and good quality data.
What’s the role of data in the process of implementing ESG?
Data is a foundation for ESG strategy, so we cannot achieve any targets without having complete and good quality data. This is a challenge for everyone, for the whole industry. So very briefly, what is ESG data? We talk about qualitative and quantitative data, which will be translated into carbon emissions in a given building. It can be divided into landlord and tenant controllable data, that is data on the common spaces and also on the space occupied by tenants. It can be either produced on site or purchased. The challenge is, of course, that we rely on third parties in terms of data collection. Property managers are collecting and uploading data to our platforms. They are doing it on an ongoing basis for every tenant and asset, across the whole industry, therefore they are constantly learning and adapting. It can be a very challenging process as some tenants are not willing to share their data, thus it all comes back to education and cooperation. We can speed up this process by adding green clauses to lease agreements and thanks to that improve the number and quality of collected data. As the saying goes, what you can’t measure you can’t manage.