What's driving ESG investments in 2023? This question was attempted to be answered by the participants of one of the panel discussions at the CEE Property Forum 2023 conference, which was held last week in Vienna. We write about some of the answers they found in the summary below.
A panel hosted by Tjidsger Wierda, Partner at Walvius Group was to take stock of the industry's efforts in introducing ESG directives into new real estate investments, including social inclusivity, and responsible governance. Participants did not spare the industry any tart words - in their view, the time for waiting and inaction has passed and decisive action is required immediately. „
Who’s gonna pay for it? The question should be, who’s gonna pay for it if we don’t pay for ESG right now? We can already see troubles all over the world - climate rising, social unrest, inflation. We have to pay these costs now, not in the future, because in just a few years they will be much, much higher”, said Daniel Schreiner, Principal ESG Asset Management at Deutsche Investment. He was seconded by Ionut Bindea, Chairman of the Board of Directors and CEO of ROCA Industry: „I don`t pay any attention to goals set for example, for 2050. I focus only on these set for 2030 because it`s something that can be achieved by me and my generation. Everything else is something that our children and grandchildren will have to deal with.” Fortunately, responsible strategies are getting more and more common each year. Alena Líškay Králíková, ESG Manager at Crestyl said: „ESG may sound new to the world, but lots of developers have already been building with responsibility and efficiency in mind. And they are willingly paying these extra costs, even if the market doesn`t force them to. My colleagues are getting green certification for residential buildings, even if their customers do not ask for it, These developers are paying quite a lot for something that will not bring the additional profits. This is clear proof of long-term thinking, with their children and grandchildren in mind.”
The spread of such attitudes is influenced by growing public awareness and political imperatives, but one of the best incentives to implement ESG principles remains, of course, profit. „It's not possible today, from a cost perspective, to draw a direct correlation between your ESG investment and your valuation at the end of the year. But what we do have is the performance of existing office buildings from a rental perspective. So we can already see that there is a higher and higher occupancy in office buildings that are more energy efficient, and have more ecological solutions implemented. That demand is driven by the corporations who have CSR policies and they want to be associated with creating sustainable environments,” said Ryan Wray, Managing Director and Principal at Avison Young - Czech Republic.
The panel addressed also the ever-present ESG issue of green environmental certificates, which have become increasingly controversial over time as insufficient measures. „I think the major problem with a green certification is its temporary nature. It is awarded in a certain period, or even a moment in time. And it does not have an expiration date. It would be great to have a deeper review, some kind of annual extensions of these certificates. It would show, how well have you performed this year, what were your efforts and what your capex is”, said Marcell Mihályfi, Partner and Head of Office Asset Management at Adventum International. A similar view was taken by Zsolt Hintenberger, Managing Partner at Realiscon: „We definitely need to some more frequent assessments of our assets. A lot of things change in a very fast manner, for example, social connectivity, like public transportation and the services that are available near our buildings. It all has a significant impact on them. If we could have a more holistic approach, then we can be successful.”
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