Insights 15th March 2023 esg

Enlightened investors are committing to specialist ESG expertise to bolster property management teams, but the rest of the industry must follow suit, writes Vicky Cotton, ESG Director at Workman and Chair of the Better Buildings Partnership’s Managing Agents’ Partnership.

As 2023 moves towards Q2, talking about ESG goals no longer makes the grade. Action is the buzzword. Enlightened property owners are committing to specialist ESG resource to work with their property management teams. This industry trend of appointing more ESG professionals is driving positive action in real estate.

How ESG specialists elevate property management teams

ESG targets are now a priority for investors, shareholders and lenders, requiring specific skill sets and resources to achieve portfolio-wide objectives.

Leading investors recognise the need for specialised expertise in ESG, with separate service specifications and fee arrangements. The BBP’s MAP and Core Provisions also highlight the requirement for additional expertise in property managers’ ESG responsibilities.

Ever-expanding ESG objectives require dedicated expertise

To fully capitalise on ESG opportunities, the industry requires a wider range of specialised expertise. Increasing demands include achieving Net Zero carbon assets, adopting smart technologies, promoting occupant health and wellbeing, enhancing biodiversity in urban environments and involving communities in commercial property. Even under the ESG umbrella, the disciplines of carbon reduction, biodiversity, energy efficiency, health & wellbeing and social impact are vastly different. Accordingly, they each require dedicated professional knowledge and experience. Although investors have different ESG objectives, most are now explicitly specifying what they need from an ESG service and appointing specialist expertise required to meet their objectives.

ESG experts in tandem with property management teams

Instead of stretching property management teams too thinly by adding the expectation of achieving ESG goals to their remit, many are harnessing separate ESG teams to drive their ESG strategies.

While property management, building consultancy and on-site teams continue to be very much involved in implementing ESG initiatives within individual properties, ESG specialists working in tandem can be assigned to develop and implement client strategies, policies, objectives, and priorities at a portfolio or even a fund level.

This means that while property management teams focus on delivering certain aspects of ESG activities within their day-to-day property management service, collection of ESG data and procuring site services in accordance with ESG polices for example, the ESG teams interpret and drive client policies into tangible action at asset level.

ESG teams ensure consistency by aligning services

Their role is to align services to the clients’ ESG requirements and ensure a consistency of approach across portfolios. Tasks often include; creating asset-specific sustainability plans to coordinate property management teams as to how ESG strategies should be implemented at property level, engaging with occupiers to understand further ESG opportunities, establishing the correct data flows across portfolios to meet client reporting requirements, measuring and reporting progress at portfolio level according to individual client requirements, and collaborating with stakeholders to deliver initiatives and obtain required certifications where required.

The breadth of different ESG services now provided by the Workman ESG team demonstrates the range of expertise now required outside of property management; data management & analytics, energy audits, Sustainability and Net Zero Asset Plans, Fitwel certification, ESG Project Advisors, to name a few. These are only expected to grow, given the need for better data and more transparent reporting, as well as tightening legislation, for example on MEES.

In the meantime, we continue to train our property management teams to understand the ESG fundamentals and how they apply those to the properties they manage.

But, rather than expecting property managers to also be ESG experts, the industry must follow those well-advised investors who have already acknowledged that the rate of change required to meet the industry’s aspirations requires dedicated specialist resource.

Only in this way will the world of real estate finally reach the critical mass of ESG action that will make a difference.

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