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Achieving a sustainable development

This article describes Environmental Social Governance (ESG) and how sustainable property practice can be measured.

Over the last few decades, sustainability has emerged as an important topic in real estate markets and is now explicitly addressed in property. This can be attributed to issues such as:

  • climate change

  • concerns about energy security, a wider move towards environmental efficiency and improving the working environment.

A frequently cited definition for sustainable development comes from the Brundtland Report (Brundtland Commission, 1987), which states that:

“In essence, sustainable development is a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development; and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations.”

From a business perspective, sustainability is often framed around Environmental Social Governance (ESG). This approach seeks alignment between Environmental, Social and Economic issues. Solutions that address all three in a balanced way, now and in the future, can be called sustainable. This focus’ on the three Ps:

  • Planet
  • People and
  • Profit

has also been referred to as the Triple Bottom Line.

Air ‘chill beams’, mentioned at 4.12 in the video on Step 2.3. ©Lendlease.

Sustainable development performance in real estate markets can be measured using balanced scorecards. These are assessment methods that provide performance metrics (from which to measure against) which can be used to inform strategic property development and management decisions. Current methods tend to focus either on a specific sustainable development theme, such as:

  • energy or wellness

or assess property performance across a wider range of sustainable development themes, including:

  • energy
  • indoor health & wellbeing
  • water
  • waste, materials
  • site ecology and
  • pollution.

The main property energy and environmental assessment methods in the UK are included in the table below.

  Property type  
  Commercial Residential
Energy performance Energy Performance Certificates (EPCs) Non-domestic, Display Energy Certificates (DECs) Energy Performance Certificates (EPCs) Domestic
Environmental performance Building Research Establishment Environmental Assessment Method (BREEAM) Home Quality Mark
Table showing energy and environmental assessment methods – UK.

References and further reading

© HBS and RREF
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