Environmental, Social, and Governance (ESG) are three factors used to measure the sustainability and societal impact of investment in a company or business.
It is not a surprise that investment is no longer a blind horse decision but it is now a more careful and informed decision that benefits people and the environment. In recent times real estate has been impactful in prioritizing sustainability. Many investors have taken into consideration sustainable living as a priority.
ESG is one such compliance practice recently adopted by several conscious investors who keenly consider sustainability on a priority basis.
Post-pandemic the importance of sustainable development and other compliances are considered by investors as a priority. ESG plays a major role in practices considered by corporate and real estate investors. Around
In this blog, we shall understand the importance of ESG based on several factors that form part of compliance. To start with let us first understand the following components that form part of ESG.
When considering ESG (Environmental, Social, and Governance) criteria from the perspective of real estate, the focus is on how these factors influence the development, operation, and management of real estate assets. Here’s a breakdown:
Environmental Factors:
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One of the important factors that help achieve the goal of sustainability in real estate is energy-efficient fittings. As discussed above more and more investors seek sustainability goals when investing in real estate these days. Energy-efficient technological advancements help achieve the target of ESG-compliant systems in the long run.
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The use of environmentally friendly and sustainable building materials is crucial. This includes materials that are recycled, non-toxic, and have a low environmental impact.
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The use of techniques to reduce water usage is the need of time. This will help in the preservation of water for a better future and good governance.
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Effective waste management practices can play a vital role in ensuring waste management on a large scale in the real estate sector. With the growth of the real estate industry, it is important to apply technology and techniques that help in the reduction of harmful waste in any industry.
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Properties that obtain certifications such as LEED (Leadership in Energy and Environmental Design) or BREEAM (Building Research Establishment Environmental Assessment Method) demonstrate a commitment to high environmental standards.
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One of the important factors to ensure financial and social welfare in real estate is affordable living. This can also be achieved by adhering to the use of sustainable and eco-friendly materials in the building of property.
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Accessibility of buildings to every individual is a very important social factor that needs to be considered by the real estate sector. This is one of the important factors that can help in achieving social reliance and completeness in the construction.
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Feedback from customers and social sectors on the real estate structure is also an important factor to be considered by the land owners. Apart from this considering and applying stakeholder requirements should also be on the priority list of the real estate industry.
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Apart from environmental and social factors governing forms an important part of ESG. Ensuring transparent reporting is also very important from the point of view of real estate. This will help investors recognize the credibility of government norms and reporting effectively and on time.
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Along with transparent reporting it is also essential to ensure the use of ethical business practices. Adopting legal compliance and anti-corruption norms as part of real estate requirements is important.
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It is also important to have diverse board members as part of decision-making to achieve efficiency in various sectors with the help of specialized individuals.
Energy Efficiency:
Sustainable Building Materials:
Water Conservation:
Waste Management:
Green Building Certifications:
Social Factors:
Affordable housing:
Safety and Accessibility:
Engagement with Stakeholders:
Governance:
Transparent Reporting:
Ethical Business Practices:
Board Diversity and Independence:
Thus, it can be concluded that ESG can play a pivotal role in achieving sustainable compliance and several other benefits to the real estate industry. It should be a priority of the real estate sector to ensure sustainable compliance.
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