EDITOR’S COMMENT This is not an option, is something I hear more and more frequently when it comes to sustainability in real estate. It’s a powerful line and one that I would expect absolutely everyone in a sustainability role to be spouting. But now, more often and more loudly, this line is coming right from the top of the business. From chief executives. From those people who have shareholders to answer to. From those whose job it is to make money for the business.
When they start saying that this is no longer a nice to have, but is a financial imperative, then you start to believe. And when they say those words at the same time as they are preparing their businesses for a recession then it really starts to hit home. This is not an option. This is business sustainability in its truest form.
As Great Portland Estates chief executive Toby Courtauld told me this week: “The sustainability ambitions of business have been a moral question for a very long time. They have gone from being morally right to now being morally right and absolutely economically essential.
“That is driving so many businesses to be considering their futures in a sustainability context much more aggressively than ever before.”
And for GPE that aggression – not that anyone could ever accuse GPE or Courtauld of being aggressive – will show through in its investment strategy.
If buildings in its portfolio are unable to meet the standards it has set itself as part of its responsibility to the planet, then those buildings may not have a place in the GPE portfolio going forward.
It is the necessarily aggressive approach to making sure that the environment in which we develop can exist, I suppose. And for Courtauld, it is the only approach if GPE is to continue as a business that can serve its customers.
“Increasingly our consumer, our customer, is going to demand that we do it,” says Courtauld, “and we will begin to see the occupier community differentiate between good space and bad space from a sustainability and wellbeing contribution standpoint. There’s no doubt we will begin to see investors draw that conclusion as well once our customer is drawing that conclusion.”
GPE, of course, is able to make these kinds of decisions. It has the strength of balance sheet to be able to remain focused on ESG despite the looming recession.
But even at Hammerson, which undoubtedly faces big pressures outside of sustainability, with the current shutdown of physical retailing and subsequent drop off in rental income, the necessity of investing in ESG is unequivocal.
It could be excused for taking its foot off the gas, but as chief executive David Atkins says: “We just cannot divert away from what we are doing. That would absolutely be the wrong thing to do….It is the right thing to do from a business point of view, because it is saving money for us and our retailers particularly, and ultimately will provide returns for our shareholders.”
Now is a moment in time when all business has the opportunity to change forever. To realise that the way we were is not the way we have to be.
Two months into lockdown, many of us have learnt many lessons. We discovered what really matters to us. We figured out how to run our businesses in different ways. We cannot forget those lessons.
The world, as Marks & Spencer’s fresh new slogan tells us, will never be the same again. Neither should we.
Read more about ESG on EG’s Sustainability Hub >>
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