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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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