About WorldGBC Statement Foreword Introduction ESG: Underpinning the Business Case for all Real Estate Actors The impacts of climate change have already influenced real estate markets at the global scale Environmental, Social and Governance (ESG) reporting is not a new phenomenon, as these issues have long been a consideration of many companies and organisations. However, ESG is dramatically increasing in industry influence in developed markets 55 , with growing efforts to support popularity of ESG investing in all markets 56 57 . In recent decades, institutional investors and pension funds have become too large to diversify away from systemic risks 58 , forcing them to consider the environmental and social impacts within their portfolios. The UN Principles for Responsible Investment (PRI) have also heightened accountability of investment decisions, and the increasing availability and popularity of voluntary reporting tools such as CDP, GRESB or the Task Force on Climate-Related Financial Disclosures (TCFD) 59 , have facilitated mass market engagement. This trend is true for built asset owners as environmental initiatives such as reducing energy or water usage have been attractive due to their tangible financial benefit from lower operating costs. The impacts of climate change have already influenced real estate markets at the global scale, with 65% of investors expressing their motive for taking ESG issues into consideration to help manage investment risks, as 35% of Real Estate Investment Trusts’ (REITs) properties are exposed to climate hazards 60 . More than half of global asset owners are currently implementing or evaluating ESG considerations in their investment strategy 61 and it is estimated that ESG funds under management will represent the majority of proportions of mutual fund assets by 2025 62 . ESG now represents a priority for leaders and companies in all sectors, including real estate 63 . 28 | BEYOND THE BUSINESS CASE
BEYOND THE BUSINESS CASE WHY YOU CAN’T AFFORD NOT TO INVEST IN A SUSTAINABLE BUILT ENVIRONMENT November 2021 | 1
