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Redefining real estate: The Evolution from ESG compliance to corporate leadership
The real estate industry is no longer content with tick-marking ESG compliance boxes, but is genuinely committed to redefining the sector and its contribution to bettering business through ESG interventions.
In the real estate sector,energy-efficient building designs, waste reduction strategies, and green technology integration are becoming increasingly prevalent.
The nature of business has evolved, and the real estate sector is no exception. It is no longer about constructing buildings or making profits, it is about creating a legacy of ethical practices, community engagement, and transparent governance. While the real estate sector has made commendable strides, especially in environmental sustainability, there's more to ESG (Environment, Social, Governance) than just green buildings.
The philosophy of excellence in business is encapsulated in the three core pillars of ESG – Environmental, Social, and Governance. A company's performance across these dimensions is becoming intricately linked to its bottom line. In the modern business place, consumers are showing heightened discernment in their choice of brands, placing greater emphasis on the ESG criteria. Simultaneously, investors are increasingly aligning their strategies with ESG-conscious companies. Companies are embracing this opportunity to enhance their operations by prioritizing transparency and accountability. This shift is taking place across sectors, including real estate.
Changing the perception of sustainability in commercial real estate
The real estate sector, which historically faced challenges related to transparency and trust, has been in the midst of a notable transformation. Environmental concerns are at the forefront, and sustainability is at the core of this shift. The industry is collectively undertaking numerous initiatives to bolster its sustainability practices. These efforts include a strong commitment to green certifications, the adoption of solar power generation systems, and a dedicated transition towards renewable energy usage. Moreover, the industry is actively embracing electric mobility and promoting the installation of EV charging infrastructure. Energy-efficient building designs, waste reduction strategies, and green technology integration are becoming increasingly prevalent. Water conservation and recycling also hold a prominent place in this paradigm shift.
The unique concept of green bonds has also emerged as a powerful financial instrument as the industry takes steps in integrating green finance into its business and projects. These bonds not only signify a commitment to sustainable development but also offer a novel approach to financing. They could channel capital towards impactful end use categories, including green buildings or projects, renewable energy initiatives, energy efficiency enhancements, and other environmentally responsible endeavours.
Community building and social responsibility
Large-scale construction projects have served as catalysts for community transformation and progress, when real estate brands have focussed their commitment to actively engaging with the local communities they operate in. Real estate players can engage with local communities to understand their needs and concerns. They can also deploy construction expertise to support local infrastructure projects, community development programs, or contribute to social causes. By doing so, the sector can position itself as a ‘Social Architect’.
In addition to community engagement, social responsibility within the construction sector also encompasses Diversity, Equity, and Inclusion (DEI) efforts. Promoting DEI not only enhances the workforce's inclusivity but also reflects a commitment to fostering equal opportunities for all individuals, regardless of their background. Embracing DEI principles helps create a more equitable industry and building a more sustainable and socially responsible future.
Ethical governance and transparency
The commercial real estate sector is also embracing greater transparency, accountability and governance. Engaging with stakeholders such as investors, customers, and suppliers is crucial for effective governance practices. Clear communication channels, feedback mechanisms, and addressing stakeholder concerns are imperative. Furthermore, the shift towards greater transparency is not just a reactive response to market dynamics but a strategic move to build long-term sustainability. By openly sharing information on sustainability efforts, financial performance, and compliance, commercial real estate entities can create a climate of trust and accountability.
Leading the transformation
Commercial real estate is today at a pivotal juncture of transformation. The industry is no longer content with tick-marking ESG compliance boxes, but is genuinely committed to redefining the sector and its contribution to bettering business through ESG interventions. The journey is not just about adhering to regulations, it is about leading the game and shaping the future through active leadership. The time is now to innovate, collaborate and create measurable and meaningful change.
Commercial Real estate industry can become architects of progress, advocates of ethical business practices, and the custodians of a brighter future for generations to come. Today we have the opportunity, to not just follow ESG guidelines but to set the standards and inspire a movement where leadership and not compliance, becomes the driving force for change in India’s commercial real estate industry.
Vinod Rohira is managing director and chief executive, commercial real estate, at K Raheja Corp
Source: Livemint