Environmental, social and governance (ESG) causes are carrying more weight with business owners as the shift from shareholder to stakeholder capitalism, and the resulting demand for responsibly managed businesses, continues to gain momentum in the market.
In the real estate sector, the importance of sustainability is underscored by the fact that the total value of real estate globally exceeds $200 trillion, making it the world’s most important and largest asset class. It’s more valuable than all stock, shares and bonds combined. Real estate consumes 40% of the world’s energy and we spend 90% of our time indoors. Bottom line, what happens in real estate affects virtually every aspect of life and business in the world.
As they respond to this new reality, real estate professionals are also assessing the impact of the new work-at-home economy forged in response to COVID-19. The future is a moving target as companies try to envision post-COVID-19 real estate trends, integrate ESG into their operational strategy and redefine and communicate long-term value.
Safety and wellness will be top real estate priorities post-COVID-19
The trend toward ESG is part of a bigger movement that is redefining how businesses are valued. Whereas in the past, as much as 83% of a company’s value could be found on its balance sheet, intangible assets are now much more relevant to a company’s bottom line. Engaged employees, happy tenants, a diverse board, a strong brand — all these metrics will influence a company’s valuation. Feelings carry considerable clout in how decisions are made in business, a truth which is magnified in this time of uncertainty.