There is no question that real estate could have a transformative impact on some of the most profound societal issues. The only question is, does it have the will?
“With Covid-19 it is becoming more apparent that there are haves and have nots,” says Bharat Mehta, chief executive of the Trust for London charity, as well as a board member of Home Group, one of the country’s largest social landlords. “It has revealed what space is available or unavailable to people, whether in offices, or at home, whether they have access to external spaces and so on.”
And this is especially true of London, says Mehta. “And I think real estate has a part to play in that.”
Inequality and other societal issues are woven into the very fabric of our city, and the fabric of our city is created by the real estate industry. Because of this, it has the power to change the city for the better.
To achieve this, Mehta says, we need companies with a sense of purpose. The concept of purposeful businesses has been slowly gaining traction over the last five years. For Mehta they are enterprises that really care about staff welfare, the deal that they are providing for customers, the environment and inclusivity.
For Jenny Herrera, chief executive of the Good Business Foundation, this requires effort, not just warm words. Companies need to be prioritising these issues, “not just saying that they do”.
“I don’t think this will happen by itself. It needs to be intentional.”
But a purposeful real estate cannot be magicked out of thin air, and nor can it hope to achieve anything alone.
Collaboration and co-operation
“What Covid-19 has shown is that there is no single sector that can address these issues,” says Mehta. “When the chips are down, it needs everyone to work together.”
Government, both at a local level and national, the voluntary sector and the private sector will be needed simply to get London back on its feet, he says. And when that happens, they can strive to make things better.
Of course, such collaboration already exists. “Placemaking already requires a lot of co-operation between local authorities and the private sector,” says Shoosmiths partner Paul Alger.
For Enfield Council programme director Peter George, who is in charge of the 10,000-home Meridian Water project, Covid has shown “the speed at which we can all work collectively when required and when under pressure”.
In other words, we have proven that we can do it to tackle a pandemic. So can we, and will we, do it to tackle inequality and environmental crisis?
For Herrera, we can and will. “This whole rhetoric of Build Back Better is really positive. Everyone is looking at how we can help one another.”
But Mehta is concerned that, for all the rhetoric, building back better is not guaranteed. “The trajectory seems to be ‘let’s get back on our feet’ in exactly the same way. Let’s get back to ‘normal’,” he says. “Personally, I feel the genie is out of the bottle and we need to think slightly differently about what we might want our cities to be.”
Before the pandemic, real estate companies were getting on board with CSR, and many have policies on diversity and inclusion, as well as the environment. “But, broadly speaking, a lot of organisations were paying lip service to that,” says Alger. “They were creating check-box exercises whereby they could present these statistics to would-be clients or would-be customers saying ‘look, aren’t we good’.”
Mehta is all too aware of this. “What tends to happen is that multi-sector and civil society organisations will quite often be used as ‘candy’ to secure contracts, then left high and dry.”
Part of the reason is simple. “Real estate as a sector has never been very good at this,” says Alger. “It’s like the legal sector, it’s very old-school. Change has been quite gradual over the course of a century.”
This is partly because of the make-up of the industry. “Compared to comparable industries, real estate is really poor when it comes to equalities and diversities within their own workplace,” says George.
The experience of the pandemic might just change that.
“When the pandemic first hit I was thinking ‘Maybe this will make everything go backwards?’” admits Alger.
But the opposite appears to have happened. “If anything, it has brought that agenda to the fore,” says Alger. “Our clients are really starting to make more of an effort on the diversity/inclusion front, the environmental, sustainability, everything.”
The good thing is that sustainability and inclusivity are now fully on the agenda. “The trend is upwards,” says Alger. “Whether it is going happen quick enough is another matter.”
Even Mehta agrees. “There might have been some ducking before, but there seems to be a greater sense of social responsibility creeping through in everyone’s life, from a personal point of view to organisational.”
Carrot, stick or both?
Real estate still needs to improve, though. Herrera’s organisation, the Good Business Foundation, was set up by audio king Julian Richer. It has encouraged organisations in numerous sectors and of all sizes to commit to societal improvements including diversity and inclusion, paying fair taxes, the environment and ethical sourcing. Its members hail from all sorts of industries, from financial services to retail to hospitality. But none from property. “They need a bit of nudging.”
Or something more forceful than a nudge. George says that not only can the public sector lead by example, it can also use its buying power to force others to improve. “The public sector should stop rewarding companies who do not value equality and diversity with public sector money,” he says. “One way to bring about change is to provide financial incentives. That could give boards and chief execs reason to reflect.”
And it is not just the public sector that carries a big stick. Institutional money is ultimately responsible to investors, who get reports every year. “If their money is not being ethically invested or placed into the right types of investment it’s going to bite back on those organisations,” says Alger. Social responsibility will not be a luxury. “It will become necessary.”
Herrera acknowledges the power of the stick, but argues that change also needs to come from within. Real estate needs to recognise that “a diverse workforce is going to be a better workforce anyway.”
Whether the industry has caught on yet, the wider public certainly have. “Public opinion is such that if a business doesn’t carry on ethically or doesn’t recruit a diverse staff it will be ostracised,” says Alger. “Everyone is under so much scrutiny these days that they will have no choice.”
The real question then is whether the property industry wants to lead, or be led.
“We need to push ourselves a bit further,” says Herrera. “To not just give lip service, but to actually make things better.”
