People change property, but property empowers people. It was a strong message to come out of the characteristically upbeat girls and guys at Knight Frank as it released its 2020 outlook for London real estate. And of course, there are reasons to be cheerful – even we (and we all know just how cynical us journos and our hard-data focused analysts can be) found evidence of green shoots after a less than stellar 2019.
I know I’ve said it before, but this really is something real estate needs to hear. You do have the opportunity to empower. And you do have a phenomenal power to do.
This week, Great Portland Estates put its money where its mouth is and signed up to an ESG-linked revolving credit facility. A facility that forces it to make real behavioural change, not just across its business but its entire supply chain – and hopefully across an entire industry.
It’s the kind of action we need to see if the industry is serious about ESG. The professionalisation of climate action, the business of taking action, of being responsible, being accountable, and being transformational.
While reusable coffee cups, banning straws, bags for life and going vegan are all great individual actions we can take, for real change to occur we need to think much bigger. It needs to become a business imperative. This is not an option. This has to become business as usual. Changing the way that all firms operate to deliver on the massive shifts that we need to make is the only way we will really deliver on ESG.
And I have to doff my hat (or cycle helmet in my case) to GPE for the structuring of this facility as climate wins whatever they do. If the REIT fails to hit all three of its KPIs, the margin on its facility moves up by 2.5 basis points. If it outperforms on all three, the margin goes down 2.5bps. But regardless of the direction of that move, the value of that shift is given by GPE to a climate change-related charity. The only way for GPE to ‘escape’ that donation is to hit its KPIs bang on. And, if it does that, our planet still wins. I personally think it’s a genius move, and I really hope more follow suit.
Talking of following suit, deputy editor Tim Burke asked a whole host of real estate experts this week if the sector could – or perhaps more importantly would – ever follow in Goldman Sachs’ footsteps and refuse to take work from any company with a board made up entirely of white men. “Well, yes it should,” went the responses, “but…”. I’m paraphrasing, but you get my drift.
It would be difficult for real estate, as a peek through the Parker Review shows that of the 38 property companies featured in the 256 firms it looked at (all in the FTSE 350) just six (well done Barratt, SEGRO, Rightmove, Big Yellow, CapCo and McCarthy & Stone) showed any ethnic diversity within their boards. That’s 84% of FTSE 350 property companies failing to meet the target of one director of colour on their board. Add to that property’s performance when it comes to women on boards, then you’ll understand the “but”.
I’ve got my own “but” of course, which is: “But EG is here to help”. Last week we soft launched the second series of the Future Female Leaders programme (see next week’s issue for more) and are already working on series three, which I would love to be a programme that helps our industry address its ethnic diversity issue.
People really do change property, but property (and perhaps the property press too) really can empower people.
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
