Measuring ESG in the real estate environment in real time

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Author : Songo Didiza

In my previous article I introduced the key elements of the ESG reporting framework and the various technologies that are currently being sourced in the ESG reporting process. I also introduced the topic of emerging property technologies (appropriately dubbed as “proptech”) which are increasingly being used in the real estate environment to manage property data and assets.

Climate Risk and ESG Reporting in the Real Estate environment

Real estate is the single largest contributor to climate change, being responsible for over 40% of global carbon emissions. In one of my work contributions towards Science Based Targets initiative‘s Advisory group it has been recently estimated that between 2020 and 2050 the global floor area will increase by 75%, meaning CO2 emissions would rise dramatically if no decarbonisation efforts are implemented immediately (STBI, 2023). Globally, the directors of public companies are increasingly facing climate-linked challenges from investors and other stakeholders to be proactive in managing ESG risks. According to PwC’s Emerging Trends in Real Estate 2022 report, 82% consider ESG when deciding on investments and operation initiatives.

The onset of ESG reporting requirements has created a need for a sustainability change management process within the real estate industry value chains (property management, developers, facilities management and property valuations as a whole).

Proptech Solutions for ESG Reporting

These growing investors’ concerns have led companies to explore technology solutions to implement and manage their ESG data, more certainly the “E” part of the ESG reporting process.

Utilities are a significant component of real estate expense base and these costs, until recently, have been relatively uncontrolled. Landlords and Property Managers can now employ advanced dashboarding and record-keeping systems to report environmental performance to multiple stakeholders. Hardware proptech infrastructure such as smart meters, IOT devices and AI tools are being adopted by large commercial and retail estate clients.

Proptech has the potential to bring a range of efficiencies to the South African property sector. Benefits include increased automation, improved data analysis, and enhanced communication with tenants and investors. This can lead to better decision-making, reduced costs, increased building occupancy, and ultimately higher shareholder returns. ~ Joanne Solomon CEO, SA REIT Association

These technologies enable large real estate landlords take control of their utilities through increased accuracy and cost savings measures in real time. For instance, arranging a meter reading is a small job, but when you’re running a multiple portfolio real estate business it’s just one more thing to think about. With manual meter readings, a property manager would need to be around for an engineer/electrician, showing them the meter and waiting until they’re finished. A smart meter eliminates the need for any of this, meaning you can devote more time to seeing to the day-to-day property management activities and facility management services. Smart meters send real-time energy usage information automatically to the property owner without any need for a meter reading (see below).

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Smart Metering and IOT devices are essential building blocks for the creation of a greener and robust energy network due their ability to optimise the use of renewable energy sources within the real estate environment. These hardware devices enable real monitoring of a building’s overall electricity usage. The dashboard system (software) enable for increased visibility by the facilities’ team and asset managers; thus enabling for smarter integrated ESG reporting.

The next article in the six part series will unpack how the software can be married with hardware services to maximise savings for real estate stakeholders in real time.

References

*Songo Didiza has been selected a finalist for the South African Chamber of Commerce (UK) Annual Awards 2023, in the Category of ESG Leader.

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The future of Energy Efficiency in South Africa

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2024 CEM Energy Management Leadership Awards (+ National Awards)

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ASSOCIATION OF ENERGY ENGINEERS (AEE) Scholarship Opportunities.

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2024-2025 SAEEC BOARD NOMINATIONS

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