Technology's Role in Achieving ESG Targets
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Insights
Examining the intersection of technology and ESG within the commercial property sector reveals a rapidly evolving landscape. The adoption of sophisticated Building Management Systems (BMS) allows for a more granular and dynamic approach to energy management, which could significantly reduce the carbon footprint of buildings. The scalability of such technology means that a single operator could potentially optimize hundreds of buildings simultaneously, leveraging data analytics to pinpoint inefficiencies and rectify them in real-time.
However, the benefits extend beyond mere energy savings. Intelligent buildings can contribute to the social and governance pillars of ESG by enhancing tenant comfort and safety, thus potentially increasing the property's value and attractiveness to investors. In the long term, this tech-driven approach to ESG could become a market differentiator, setting a new standard for the industry.
The challenge lies in the upfront investment and the need for skilled personnel to manage these systems effectively. As the technology becomes more prevalent, the industry may face a skills gap that needs to be addressed through education and training programs.
The integration of ESG-focused technology in real estate is not just a trend but a strategic investment that could reshape the industry's financial landscape. Investors are increasingly scrutinizing the ESG performance of their portfolios and properties that excel in these criteria are likely to see enhanced marketability and potentially higher returns. The ability to monitor and improve a building's ESG performance at scale could translate into significant operational cost savings, leading to an improved net operating income (NOI) for property owners.
It is important to note that while the potential for increased valuation is there, the initial capital expenditure for such technologies might be substantial. Investors and stakeholders must weigh the long-term benefits against short-term financial impacts. Additionally, as regulatory pressures mount for greener buildings, properties equipped with advanced ESG technologies may also benefit from incentives or avoid potential penalties, influencing both their competitive and risk profiles.
With technology's increasing footprint within our built environment today and in the future, CBRE's Su-Fern Tan and Taronga Ventures' Julian Kezelman explore its true potential in the ESG space.
NORTHAMPTON, MA / ACCESSWIRE / March 29, 2024 / CBRE Group, Inc.
CBRE
Technology forms the fabric of everything humans interact with, including their built environment.
At the Property Council of Australia's first Technology Summit in Sydney, CBRE's Phil Rowland underscored the importance of harnessing the potential of technology to shape the diversity of our future surroundings.
"It's important that we make our industry more productive, our places and precincts more relevant and inclusive to our tenants and the public. This involves making our buildings more intelligent, softening the footprint on our environment and developing the capabilities that we'll need in the future to thrive in a technological society."
Today's technology is already being used to reach some of the boldest ESG (Environmental, Social and Governance) targets today by proactive building operators.
It's a scenario in which Julian Kezelman, Innovation Director at Taronga Ventures, and Su-Fern Tan, Pacific Head of ESG at CBRE, understand the true potential of. During their Technology Summit keynote, the duo explained how technology was being used to maximise the ESG impacts on the built environment.
Technology's role in ESG strategy
As the case for reaching net zero takes precedence across the commercial property sector, there's been increasing demand for ESG solutions amongst clients, investors and tenants.
"We help them understand what that strategy looks like and then develop the roadmap to get there," says Tan.
"Take property management for example. I can spend time in front of a BMS trying to diagnose a building and how we can run it more efficiently, but how scalable is that?
"With technology, I can analyse 200 buildings in a day, so it's about trying to scale that impact. I think the role that technology plays when it comes to delivering sustainability is about scale, data and integration."
The current client demographic for supporters of ESG and technology is diverse, ranging from the tech savvy through to those who are completely foreign to the concept. Their priorities commonly revolve around energy, water and waste efficiencies.
"Energy efficiency is essentially the old sustainability game that's becoming more mature. We're now starting to talk about water efficiency, waste, embodied carbon, and nature repair. It's all interconnected, interdependent and getting pretty complicated, and underneath all of this lies the data."
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SOURCE: CBRE Group, Inc.
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FAQ
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