Commercial Investment Real Estate Summer 2020 | Page 8

By Nicholas Leider
BUILDING
KNOWLEDGE
A leading expert in ESG discusses the potential to save time,
energy, and money by harnessing data.
Living through a pandemic has a
way of making folks hyperaware of
their surroundings.
How many people are on this bus? Is
this sidewalk at least six feet wide? Don’t forget
your mask!
But even before the COVID-19 crisis,
the commercial real estate industry was starting
to pay more attention to the operations in
and around properties. ESG — environmental,
social, and corporate governance — has
become a trending topic, with improved data
collection giving property owners and managers
the ability to refine operations to reduce
energy use and expenses.
In a recent episode of the Commercial
Investment Real Estate podcast series,
just as the COVID-19 pandemic was shutting
down the global economy, we spoke
with Roxana Isaiu, director of ESG and real
estate at GRESB, a leading sustainability
benchmark for real estate and infrastructure
investments across the globe. She discussed
how environmental, social, and corporate
governance initiatives differ in Europe
and North America. She also
outlined how ESG will impact
the struggle against the
COVID-19 pandemic.
CIRE: SINCE SO MANY OF
OUR READERS ARE IN NORTH
AMERICA, CAN YOU GIVE US
A BRIEF HISTORY OF HOW
ESG HAS GROWN IN EUROPE
TO WHERE IT IS TODAY?
ROXANA ISAIU: While ESG is a
relatively new term, it’s definitely
not a new concept. Conceptually
speaking, as an industry and
as a society all together, we’ve
always been concerned with
issues of efficiency, resilience,
risk, reducing costs, and maximizing
profits, which is ultimately what ESG
is all about — except we’re not just taking the
view of financial costs and profits from a very
specific business perspective. We are looking
at the bigger impact of our businesses. Effectively,
we’re evaluating impacts of real estate
portfolios and funds from environmental,
social, and governance perspectives, as well
as the infrastructure of funds and projects.
CIRE: LOOKING AT THE ADOPTION OF ESG
IN EUROPE AS A CASE STUDY FOR NORTH
AMERICA, WHAT OBSTACLES DID YOU SEE,
AND HOW DID THE COMMERCIAL REAL
ESTATE INDUSTRY OVERCOME THEM?
ISAIU: One big difference between the European
and North American markets is that
the building stock in Europe is much older.
Think of London, think of Paris, think of
Rome, think of Amsterdam — these cities
have long histories and a lot of historical
buildings that are still in pristine conditions.
And generally speaking, the managers, owners,
and rural sector managers in Europe
have had to deal with issues of business continuity,
keeping their assets in good shape,
and keeping them resilient for a longer time.
In the U.S., I wouldn’t say there are specific
challenges compared to other regions. The
real estate market in general shares a set of
challenges and a set of opportunities, but
there are also regional differences.
CIRE: WHAT ARE KEYS TO EMPHASIZING
THE IMPORTANCE OF ESG INITIATIVES
TO THOSE WHO OWN OR MANAGE
SUCH ASSETS?
ISAIU: In Europe, the institutional investor
community is the one that has largely driven
advancements in this spectrum, like large
pension funds. And in fact, GRESB, as an
initiative, was set up by APG, PGGM, and
USS — three of the largest pension funds
in Europe. These institutional investors,
with a very long-term investment horizon,
effectively looked at their portfolios and
observed the need for a standardized way of
evaluating the non-financial performance of
their investments. The institutional investor
community drove ESG in Europe, and this is
6
COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE
SUMMER 2020