The real estate industry has a significant impact on the environment, society, and economy of a country. With global warming, and increasing carbon footprints, there is an urgent need to adopt meaningful Environmental, Social, and Governance (ESG) policies into the industry’s business models. And in the 21st century, businesses have been shifting towards ethical and sustainable practices.
To succeed in implementing ESG practices across businesses is more about creating tangible and practical plans and then implementing them with a focused approach rather than having mere intentions about climate change, disclosures, and diversity. In fact, the markets are indicating that it is the fiduciary duty of investment professionals to understand how the environmental and social attributes of their assets are related to their current value and future investment performance.
Even though the challenges related to climate change are long-term risks, the fight to decarbonize buildings is a reality. Studies show that approximately 40% of global carbon dioxide emissions are produced by the real estate sector, with 70% of these emissions resulting from building operations and the remaining 30% from construction. Because of high inefficiency across sectors, buildings provide ample opportunities to bring in cost-effective emission reductions.
To adopt sustainable practices more effectively, real estate developers need to consider every stage of a project’s life cycle, from planning and construction to operation and maintenance. This is where facility management (FM) plays a crucial role in terms of ESG considerations. It is easier to decarbonise buildings through operations. Energy consumption is a significant contributor to greenhouse gas emissions. The adoption of energy-efficient technologies such as carbon-free and renewable energy provides an adequate opportunity to minimise environmental impacts in existing establishments.
Future buildings, on the other hand, will require energy-efficient designs or infrastructure, no on-site conventional source electrification, and 100% RE or iREC in cases where renewable energy is not feasible. We see 60–70% of emissions being targeted this way.
Another essential aspect of FM is waste management. FMs are helping buildings implement waste reduction and recycling programs that divert waste from landfills. They can also ensure compliance with regulations and standards related to health and safety, such as the Occupational Safety and Health Administration (OSHA) and the Environmental Protection Agency (EPA).
Governance considerations are essential for long-term sustainability. In addition to environmental concerns, FM companies are also considering the social and economic impacts of their operations, which involves promoting diversity and inclusion, ensuring employee health and safety, and contributing to the local community through CSR, DEI, social equity, and volunteerism.
The writer is MD & CEO, Embassy Services Private Limited.