It’s clear that many renters expect property owners and managers to upgrade their ESG credentials – but why have property managers often viewed ESG with skepticism?
Myth #1: ESG Is Only For Large Institutional Property Owners
Some property owners managers can often be wary of the cost of implementing ESG initiatives compared to larger institutional property owners. A survey found that 83% of building owners expect an increase in renters’ demand for sustainable and environmental-friendly buildings as a result of COVID-19. In the coming years, it will benefit all property owners and managers to offer amenities that meet renter needs.
Myth #2 ESG Requires Making A Lot Of Upfront Capital Investments, Which Are Not Immediately Profitable
ESG policies discourage businesses from relying solely on financial metrics and encourage broader social and environmental metrics in their decision-making. Buildings with high ESG scores, on average, experienced lower costs of capital compared to buildings with poor ESG scores in both developed and emerging markets during a four-year study period.
Myth #3: ESG is a fad that will soon fade away
ESG investing has been around for decades and continues to grow. ESG-related strategies have shown consistent inflows and asset growth over the past decade. Take a look at the figure below.
Source: Bloomberg Intelligence
In a recent report, Bain & Company argues that ESG should be a core part of what differentiates companies from competitors. On the regulatory front, ESG is no longer a ‘nice-to-have.’ More than 35 stock exchanges around the world have already issued (or are in the process of issuing) ESG reporting guidelines.
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