ESG has become a key consideration in business around the world. The need for ESG arises from climate change issues, investors’ and lenders’ expectations, and stringent regulatory requirements. Businesses are beginning to formalize ESG-related initiatives due to tangible, regulatory and reputational risks. Globally, investors and their stakeholders are increasing the use of ESG parameters to screen investments, resulting in private equity real estate investment managers placing greater emphasis on benchmarks. on nature and sustainability.
India is following its commitment under the Paris agreement in terms of reducing energy consumption and increasing the use of renewable energy. This commitment is coming faster than expected, resulting in increased demand for ESG compliance, especially in Real Estate which contributes over 40% of carbon emissions. As developers and facility managers continue to work in line with green buildings and legal compliance, we are already seeing a significant shift in investments mapped towards ESG readiness. Similarly, with the increasing involvement of IFMs (Integrated Facility Management) in making decisions that make Real Estate ‘ESG ready’, there is a promising change in the way business is done in this ancient industry. .
Understanding ESG & IFM
In the real estate sector, ESG is a framework that affects every phase, right from the purchase of land to operations. ESG criteria are a set of principles that a business must operate on, and are used by socially conscious investors to evaluate potential investments. ESG covers a selection of geographies that enable sustainable development, using sustainable materials for construction, efficient infrastructure for sustainable operations, ethical management, and full disclosure of information. Regarding the operational phase of real estate, most of the buildings are old or functional. This is where a large chunk of work quickly produces results. This is the main area where Facility Management (FM) plays an important role.
With tons of commercial and real estate operations active in every market, the need to manage and maintain buildings better has never been a more pressing concern. With an unprecedented paradigm shift due to the onset of Covid 19, the development of people-centered technology is also changing the way facility management companies approach those customer-centric experience.
Technology and its role
The emergence of sustainable/green buildings has led to an evolution in the curation of the built environment. Today’s facilities management industry is critical of identifying bottlenecks and developing sustainable solutions in response.. As Peter Drucker rightly said, “we can’t manage what we don’t measure.” The use of sensor technology and cloud integration allows real-time monitoring of utilities’ consumption thus providing data to enable analytics and benchmarking. In obtaining data, stakeholders can benchmark their portfolio by maintaining global certifications from GRESB, IWBI, etc.; In addition, stakeholders can then take informed steps to plan their investments towards ESG readiness. Energy management, water management and waste management continue to be major concerns in the Indian landscape. With India promising renewable energy generation of 500 GW by 2030 and Net-zero by 2070, it is imperative that facilities invest in tangible results within the ESG framework.
Conclusion
Progress for tomorrow depends on the foundation laid today. The world is evolving, requiring real-time attention and action for improved business results. It is the facility management industry empowered to build strategic pillars to execute operations with a strong data-led and future-ready approach. ESG goals are subjective to many factors such as business environment, environmental landscape, political landscape, topography, social landscape, financial landscape, etc. While ESG will create rapid change and push businesses towards best practices that benefit everyone in the ecosystem, maintaining it in a structured and scientific approach is essential to succeed.
Disclaimer
The views expressed above are those of the author.
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