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ESG — Sus­tain­abil­i­ty in the real estate indus­try

Sus­tain­able into the future

The sus­tain­abil­i­ty theme has been firm­ly anchored in our soci­ety for years, and the real estate indus­try is no excep­tion. ESG rat­ings are becom­ing increas­ing­ly impor­tant in this con­text. These pro­vide infor­ma­tion on how sus­tain­able a com­pa­ny or a finan­cial prod­uct is, among oth­ers. How­ev­er, ESG cri­te­ria go far beyond the sus­tain­abil­i­ty aspect. They not only cov­er eco­log­i­cal aspects, but also pro­vide incen­tives for com­pa­nies and fund man­agers to uphold oth­er eth­i­cal and social val­ues. 
ESG in the real estate industry

What does ESG stand for?

As part of cor­po­rate social respon­si­bil­i­ty, ESG is a vol­un­tary con­tri­bu­tion by busi­ness to sus­tain­able devel­op­ment. This con­tri­bu­tion goes beyond the legal require­ments and cov­ers the envi­ron­men­tal, social and cor­po­rate gov­er­nance areas of respon­si­bil­i­ty. With a steadi­ly increas­ing aware­ness of sus­tain­abil­i­ty and busi­ness ethics in our soci­ety, it is impor­tant for an increas­ing num­ber of investors to invest in com­pa­nies and funds that also rep­re­sent these val­ues.

Mean­ing of the ESG cri­te­ria

Sus­tain­abil­i­ty as well as social jus­tice and con­sci­en­tious cor­po­rate gov­er­nance are impor­tant top­ics that should be devel­oped with a focus on the future. But ESG reg­u­la­tions are also eco­nom­i­cal­ly worth­while: Not only has sus­tain­abil­i­ty become a top trend in recent years, but oth­er ESG char­ac­ter­is­tics, such as diver­si­ty among employ­ees, have a pos­i­tive impact on a com­pa­ny’s finan­cial suc­cess, accord­ing to numer­ous stud­ies con­duct­ed in recent years. This in turn has a pos­i­tive impact on the num­ber of investors. Com­pa­nies there­fore ben­e­fit from an ESG strat­e­gy just as much as investors do. But what exact­ly con­sti­tutes these cri­te­ria?

ESG in the real estate industry

How have ESG reg­u­la­tions evolved?

Begin­ning

1960er
Social­ly respon­si­ble invest­ing (SRI) start­ed in the 1960s. Investors ini­tial­ly with­drew from their port­fo­lios shares in com­pa­nies or entire indus­tries whose busi­ness activ­i­ties they con­sid­ered moral­ly rep­re­hen­si­ble.
Gray
2006
The foun­da­tion for the wide­spread use of ESG cri­te­ria today was estab­lished by the Unit­ed Nations Prin­ci­ples for Respon­si­ble Invest­ment (PRI), launched in 2006. By sign­ing the PRI, com­pa­nies com­mit to incor­po­rat­ing ESG fac­tors into their strat­e­gy. As of March 2021, the ini­tia­tive record­ed sig­na­tures from more than 3,800 com­pa­nies world­wide.

Leg­is­la­tion

2021
In spring 2021, parts of the EU’s Sus­tain­able Finance Action Plan also came into force. This means that for the first time there are legal­ly defined, bind­ing ESG cri­te­ria for funds and com­pa­nies that wish to describe them­selves as ESG-com­pli­ant. 

Respon­si­bil­i­ty for sus­tain­able devel­op­ment on a social, eco­nom­ic and eco­log­i­cal lev­el


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