Everyone is talking about ESG. The acronym stands for Environmental, Social and Governance and it is an approach to evaluating the impact of a business’ activities. The concept encompasses everything from carbon footprint and diversity to labor practices and transparency. ESG has become an important investment criterion for investors and it plays a role in modern consumers’ buying decisions. ESG is also a factor that brands consider choosing business partners and can even influence whether or not a potential employee decides to join a business.
Given the broad environmental and social impact of the real estate industry, ESG holds particular importance in this space. Consider for a moment that the world is undergoing the largest wave of urban growth in human history. Experts predict that an additional 2.4 trillion square feet (230 billion square meters) of new floor area will be added to the global building stock as a result of this growth. According to Architecture 2030, this is equivalent to another New York City being built every month for the next 40 years. While a building boom of this scale is incredibly positive for the real estate industry, ESG priorities demand that any new developments be executed with sustainability, equity and social impact in mind. This is where monitoring is essential.
Many businesses understand the value of ESG but fall short when it comes to accurately keeping tabs on their impact. Often reporting is a struggle because the business can’t effectively track and measure their efforts and, thus, they don’t have a complete picture of how their ESG strategies are really doing.
Data remains the primary barrier for real estate asset managers looking to integrate their environmental, social and governance strategies because they are dealing with so much data that they battle to identify what is and isn’t important for ESG reporting. And in many instances, this data isn’t readily available.
For example, in New York City, where buildings of particular sizes must cut emissions by 40% by 2030 and 80% by 2050, this can be tricky to get right if you do not have a fully integrated environment feeding you data points to then action. Similarly, in the EU, reductions in emissions have also been mandated, with 55% reduction required by 2030. But the vendors who control the systems in a building – think heating, cooling, lighting and maintenance – usually make use of proprietary software packages. These packages purposefully exclude external parties from accessing data. Without a clear view of energy consumption beyond the central plant in your building, understanding how to meet these requirements is difficult.
And in instances where the data is available, it is common for businesses to have trouble consolidating it. Dealing with swathes of raw information from so many different systems and third-party service providers and bringing it into a central location is a challenge. When businesses attempt to consolidate the data manually, there is a high likelihood of data entry errors, duplications, and omissions. This process also presents various compliance concerns, especially regarding data handling.
So how exactly do real estate asset managers keep track of their impact, and avoid penalties for non-compliance, without a single view of all the data they need to do so? Quite simply, they don’t.
ESG is not a new consideration, but it has never been more relevant than it is today. Developing and implementing an ESG strategy starts with defining the key metrics that need to be measured. Once you have established these metrics, you need to put systems in place to bring all the relevant data together so that you can achieve a single version of the truth. Developing and implementing a comprehensive ESG strategy can only happen once you unlock and integrate data to create a unified view of the information.
With this wealth of information at their fingertips, asset managers can aggregate data and compile reports that will help them hold consultants and suppliers accountable for maintaining critical assets; making sure that their sustainability priorities are adhered to, and targets met. Having access to accurate and near real-time data on assets minimizes discrepancies across sub-contractors, which, in turn, reduces costs. This also allows for improved decision-making, revealing insights into risk and compliance.
By implementing Synatic’s Hybrid Integration Platform (HIP), siloed data and proprietary technology become more accessible, useable, and easier to interpret, even as complexity increases. With Synatic’s HIP, asset managers are able to get the right data to the right person at the right time, and get a deeper understanding of how buildings are performing. This doesn’t just drive efficiency – it equips asset managers with the information they need to make accurate and strategic portfolio decisions. To learn more about Synatic and how we can help you navigate your ESG journey, contact us today.
