ESG can lead to a fundamental transformation of today’s business environment but for that to happen the approach of both landlords and tenants must change, according to the participants of the ESG panel at Prague Property Forum 2022.
One of the hottest topics currently being discussed in commercial real estate is ESG. All stakeholders want to know what the future way of doing business will be in accordance with ESG. In the future, we will be solving many tasks in connection with ESG: we will have to decide which assets we buy, how we invest in improving them and how we can prioritise asset management, explained Oana Stamatin, ESG Chief Officer at Colliers, the moderator of the discussion.
At the same time, it is important to be aware of the legal perspective on this issue. For example, it is a well-known fact that lawyers like to work with unambiguous standards, but ESG is not one. ESG is a very diverse set of rules of European law, which are of different nature and have different legal binding forces. Unambiguous regulations are, for example, still completely absent in Czech law. This poses a major challenge in interpreting ESG standards, said Jakub Adam, Partner at Taylor Wessing. The focus of ESG regulation is, in his opinion, mainly on the financial market. And this is pragmatic, Adam says because the pressure exerted by regulators on banks regarding ESG is then passed on to other players in real estate transactions. Indeed, more mature EU economies are ahead of the curve in implementing ESG requirements. But even in CEE, the situation has fundamentally changed in this respect compared to the recent past. As a result, ESG can lead to a fundamental transformation of the business environment. It motivates continuous technological innovation and adaptation to the changes brought about by climate change. This will require a change in the attitude of property owners and landlords, but responsiveness will also be necessary on the part of tenants.
While Jakub Adam focused mainly on the social (S) and governance (G) aspects of ESG, Angelus Bernreuther, Head of Investor Relationship Management of Kaufland, looked at the environmental (E) element of ESG in detail. “It is necessary to understand that ESG is not only a trend but also our responsibility to act and act together with the entire real estate industry. It's not about a single asset but about our entire portfolios and how we operate them and how we expand them in the future,” mentioned Angelus Bernreuther and continued. “As a group, we have already joined a science-based targets initiative and we have pledged to reduce our carbon emissions to the 1.5-degree aim of the Paris treaty. Therefore, as a whole company, we will reduce our carbon emissions by 55% by 2030. One of the main steps for us was introducing renewable energy to our operations in March this year.”
Adam Targowski MRICS, Group Head of ESG at CTP agreed that reducing CO2 emissions is an important part of ESG –– while emphasising the importance of energy efficiency. He also added that a top priority for CTP is to produce energy from renewables which is already a reality in several locations thanks to photovoltaic panels.
