The Rise of ESG
6th May 2021
ESG has risen rapidly up the corporate agenda. But is it just the latest corporate buzz word or can it deliver real business benefits?
Anthony Watson, managing director of Knight Frank Promise, looks at the trend towards ESG and how it is being implemented at 103 Colmore Row.
In recent years, ESG has risen to prominence, with companies acknowledging that they have to be more environmentally, socially and ethically responsible. As a result, ESG is now at the forefront of landlords’, investors’ and occupiers’ real estate decision making.
The term ESG (Environmental, Social and Governance) refers to three central pillars in measuring the sustainability of an investment.
Environmental looks at how a business or building is tackling challenges such as waste, recycling, pollution, carbon emissions, and climate change, while the ‘Social’ element measures the treatment of people, for example diversity and equal opportunities, work conditions, and health and safety. Lastly, ‘Governance’ examines a company’s leadership, executive pay, audits, and shareholder rights. Or, in the case of a building, how environmental standards, such as BREEAM, are maintained through in-use management.
By investing in ESG, companies can create value for all their stakeholders, including employees, customers, suppliers and wider society – and not just the business owners.
For landlords and investors, ESG is becoming increasingly important. For landlords it can impact the ability to acquire properties, with banks factoring sustainability and green performance into their lending criteria, while for investors and landlords ESG can affect tenant demand, which in turn may impact rental levels and the overall investment value of a building.
For occupiers, the value of ESG lies in the ability to attract and retain talent and win new business, by demonstrating strong ethical and social policies. Having a clear ESG strategy speaks volumes about a company’s brand and core values.
Occupiers are also increasingly introducing more green and engaging spaces and facilities into their buildings and offices, both for staff wellbeing and productivity – the more engaging a building is, the more engaged and productive employees are likely to be.
All of these factors were carefully considered in the design and build of 103 Colmore Row. From the demolition of the old NatWest Tower and the removal and recycling of the waste material, to the construction of the new building and how it will be used by occupiers and visitors, ESG has been incorporated into the whole lifecycle of the development.
For example, 103 Colmore Row will be the first commercial office development in Birmingham’s central business district to benefit from the city’s District Energy Scheme.
The scheme is a pivotal part of Birmingham City Council’s climate change strategy, which aims to cut C02 emissions by 60 per cent by 2027.
103 Colmore Row’s heating and hot water will be supplied by the District Energy Scheme, removing the need for on-site fossil fuel burning boilers.
Furthermore, the building will use 100 per cent renewable energy for its electricity, making it one of the cleanest and greenest office developments in Birmingham.
In another first, 103 Colmore Row will be the first commercial office building in the city to actively combine enhanced facilities management with smart tech, via its own mobile app, to deliver an unrivalled occupier experience.
Registered users will get access to features such as contactless door and lift access, virtual concierge services, and meeting room booking, as well as exclusive offers from local shops bars and restaurants, information about what’s on in the city, news and updates about the building, and real-time travel information.
The app will provide the on-site property and facilities management team with real time data and information about the building’s energy performance and usage by tenants.
Occupiers will also have access to their own energy performance data via the app, enabling them to demonstrate their environmental credentials.
103 Colmore Row will be fresh air ventilated, whilst the floor to ceiling glazing will flood the floorplates with natural light, both of which are important for staff wellbeing.
Tenants will be encouraged to affiliate themselves with Birmingham City Council’s Travelwise scheme, which encourages businesses and their employees to use alternative modes of transport for commuting, thus reducing car journeys into the city.
As a best-in-class building, 103 Colmore Row is delivering where it matters, which for today’s environmentally and ethically minded businesses means providing much more than just office space. The buildings they occupy have to reflect their own corporate values, particularly where ESG is concerned.
Anthony Watson specialises in advising landlords and investors on property management services, from initial design for management strategies to total management services, for mixed-use buildings and estates.