Interaction of Technology, IFM and ESG in a Real Estate Framework

ESG has become an important business consideration around the world. The need for ESG grew out of climate change concerns, investor and lender expectations, and stringent regulatory requirements. Companies are beginning to formalize ESG-related initiatives due to tangible, regulatory and reputational risks. Globally, investors and their stakeholders are increasingly using ESG metrics to screen investments, leading private real estate investment managers to focus more on environmental and sustainability criteria.

India has delivered on its commitment under the Paris Agreement in terms of reducing energy intensity and increasing the use of renewable energy. This commitment will come much faster than expected, leading to an increased need for ESG compliance, especially in real estate which contributes over 40% of carbon emissions. As developers and facility managers continue to work in sync towards green buildings and legal compliance, we are already seeing significant change with investments directed towards ESG readiness. At the same time, with the growing involvement of IFMs (Integrated Facility Management) in making decisions that make real estate “ESG-ready”, there is a promising transformation in the way business is conducted in this age-old industry. .

Understanding ESG and IFM

In the real estate industry, ESG is a framework that impacts every phase, from land acquisition to operations. ESG criteria are a set of principles on which a company must operate and which socially responsible investors use to screen potential investments. The ESG covers a selection of geographies that can support development, using sustainable materials for construction, efficient infrastructure for sustainable operations, ethical governance and full disclosure of information. With regard to the operation phase of real estate, most of the buildings are old or already functional. This is where a lot of hard work can easily yield results. This is the predominant area where Facility Management (FM) plays a vital role.

With tons of commercial and real estate operations active in every market, the need to better manage and maintain buildings has never been a more pressing concern. With an unprecedented paradigm shift due to the outbreak of Covid 19, the growth of people-centric technology is redefining how facilities management companies approach guest-centric experiences.

Technology and its role

The emergence of sustainable/green buildings has led to an evolution in the conservation of the built environment. The facilities management industry today is key to identifying bottlenecks and creating sustainable solutions in response. As Peter Drucker rightly said, “we can’t manage what we don’t measure”. The use of sensor technology and cloud integration enables real-time monitoring of utility consumptions, providing data for analysis and benchmarking. While acquiring data, stakeholders can benchmark their portfolio by pursuing global certifications from GRESB, IWBI, etc. ; furthermore, stakeholders can then take informed steps to plan their investments for ESG readiness. Energy management, water management and waste management continue to be major concerns in the Indian landscape. With India committing to produce 500 GW of renewable energy by 2030 and Net-zero by 2070, it is imperative that facilities invest on tangible results within the ESG framework.

Conclusion

Tomorrow’s growth largely depends on the foundations laid today. The world is changing, requiring real-time attention and action to improve business results. It is the facilities management industry that is empowered to build strategic pillars to carry out operations with a strong data-driven and future-ready approach. ESG objectives depend on multiple factors such as the nature of the business, environmental landscape, political landscape, topography, social landscape, financial landscape, etc. While ESG will create rapid change and push companies towards best practices that benefit everyone in the ecosystem, pursuing it in a structured and science-based method is essential for success.



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Disclaimer

The opinions expressed above are those of the author.



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