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For a decade or more, investment decisions in financial markets have been informed by environmental, social and corporate governance (ESG) criteria. The clever people who help make such decisions have long understood that ESG credentials correlate with long term financial performance. An active disclosure culture helps keep organisations ‘honest’. Multiple corporate scandals which resulted in eye watering drops in valuation we’re predicted by ESG screening. The net effect being, companies wanting to attract investment need to think and act more responsibly. This has helped pave the way for a new generation of more purposeful businesses, plus spawned the reinvention of several longstanding household names. In short, much good has come from the ESG revolution!

Meanwhile in Construction and Real Estate little has changed. We continue see myopic and single-minded approach to value creation and realisation. An industry famed for ‘smash and grab’ approach to value, realised by a fixation on capital cost, minimum compliance and adversarial conduct. Little wonder we are still faced with an industry crippled by a lack of resilience, innovation, solvency and skills.

So here’s the thing…..   Intuition tells us social and environmental parameters do correlate with long term financial performance in Real Estate. Yes, we are lacking an evidence base to support this, underpin investment and help inform decision making. We are seeing institutional investors wanting to demonstrate social impact, whether reluctantly to placate responsibly minded pension savers, or because they see value. Either way, it is happening!

To effect real change and to deliver value there needs to be reliable screening guidelines which can steer responsible money on the right path. This is especially true in development. Designer are playing a multimillion-pound game of battleships, without an opponent! The desire to realise value on short term horizons is inconsistent with long term value and true social betterment. The challenge of predicting future social trends has never been more difficult, and important!

We need to work together to establish a reliable, evidence-based approach which gives weighting to ESG parameters, specific to Real Estate. Good data does exist for aspects such as; sales, leasing, occupancy, energy performance, use class, engineering, etc. Future change factors such as net-zero transition are being mapped out with increasing certainty. Social impact is being quantified with greater consistency. Corporate governance policies are widely disclosed. Once refined and aggregated this broad dataset would start to identify trends which could help guide decision making.

Data science based predictive analysis has revolutionised many industries (not to mention won elections and referendums against them odds!) Will it now be pivotal in enabling sustainable development in Real Estate?