How to rate buildings for ESG?
ESG is an acronym for Environmental, Social and Governance, which refers to the three criteria that investors use to evaluate companies to assess their value. ESG takes into account environmental, social and corporate factors such as carbon emissions, gender equality policies, transparency and board accountability.
An ESG rating is important for investors because it allows them to understand how the companies in question deal with factors that may affect their long-term profitability and value. As a result, investors often choose companies with a high ESG rating as potential investments because they believe they are more responsible and stable. According to eToro’s 2022 survey, up to 71% of investors consider ESG factors before investing.
ESG reporting is an important and growing topic, as the EU will be placing greater emphasis on companies in terms of sustainability in the coming period. The CSRD, which comes into force in June 2023, will oblige reporting in addition to large companies, also smaller ones – with up to 250 company employees.
Not only companies and partnerships, but also the buildings themselves can be assessed for ESG compliance.
ESG assessment of buildings covers several different aspects, such as:
- Environmental: Energy efficiency of the building, use of renewable energy sources, indoor air quality and waste management.
- Social: Accessibility and quality of public services, security of the building and its surroundings, accessibility for people with disabilities.
- Governance: Transparency and accountability of the management, resource management, management of risks.
Environmental
The Environmental section describes what impact the building has on the environment, looking at aspects such as:
- management of operational waste and generated during construction.
- enhancement of ecological biodiversity
- water and electricity consumption.
The energy efficiency of the building is also assessed by verifying, among other things, the primary energy demand. The verification of the carbon footprint of the investment is also the subject of an in-depth analysis. Direct and indirect greenhouse gas emissions are analysed.
Social
Moving on to the 'second letter’ in the report, the health and safety of those using the building is assessed. To this end, policies and procedures relating to the health and safety of occupants are reviewed.
A widely analysed topic is the 'wellbeing’ of users. Measures to improve air quality and the indoor environment are examined, as well as measures to improve the comfort of tenants. To this end, it is good practice for a building to have documents such as an Indoor Air Quality Plan.
The location of the building, accessibility to public transport and distances to public amenities such as shops or ATMs are also audited. Among other things, activities for local communities such as food collection campaigns for the needy are also presented in this section.
An important aspect reviewed in the Social section is the Inclusivity of the building. This includes any facilities for people with disabilities or building solutions to enable integration into the local community.
Governance
The verification of the last section starts by checking whether the property owner and tenants have ESG policies in place.
It is audited what kind of policies the company owning the property has, such as purchasing policies, employment policies or equality/anti-discrimination policies.
When assessing a building for ESG, you need to demonstrate equal opportunities for all applicants to work in the building, not allowing discrimination on the basis of legally protected characteristics, i.e. gender, age, fitness level, race, religion, nationality, political beliefs, ethnicity, religion or sexual orientation.
In summary, ESG is an increasingly important part of investment strategy, as many companies and investors believe that taking ESG factors into account can help the long-term success and profitability of companies. Focusing on ESG is also seen as a way to ensure more sustainable and responsible economic development.
By assessing a building from an ESG perspective, an investor gains information on how their building fits into ESG criteria and what solutions can be implemented to improve it. As a result, investors can gain a better understanding of how buildings impact the environment and society and what their future prospects are.
What can Go4Energy do for you?
We offer our customers:
- conduction of the ESG reporting process for the organization in accordance with the GRI standard;
- development of an ESG report for the building;
- preparation of a strategy to reach the company’s climate neutrality;
- carrying out BREEAM certification;
- carrying out ActiveScore certification.
- calculation of the organization’s carbon footprint according to the GHG Protocol standard;
- analysis and reduction of the building’s carbon footprint;
- preparation of the decarbonization strategy;
We also support the implementation of other ESG and sustainability measures:
- analysis of compliance with the EU Taxonomy for new buildings;
- analysis of compliance with the EU Taxonomy for renovated buildings;
- conducting an analysis of the impact of BREEAM, LEED and WELL certifications on EU Taxonomy.
Please do not hesitate to contact us, our experts will answer all the questions and help to tailor the best solution for Your company.
Author: Ryszard Sikorski
Breeam In-Use Auditor, ESG Consultant