A letter from our founder

By the time the Paris agreement was signed, and the EU started to draft the Taxonomy we have left the science-based approach and went on with a political discussion.

The message is clear, “whatever it takes” the three words spoken by ECB President Mario Draghi which marked the turnaround of the Euro crisis are applying for the ESG Taxonomy as well. According to the EU administration all investments must go to green and sustainable economy. 

The implication for the real estate industry is tremendous, even so we are only discovering the full consequences little by little, ESG appears as a transition risk. To comply with ESG regulation is a question of life or death. The ones who don´t jump on the train will be left without a chance to survive.

The demand for sustainable products from investors, tenants and banks is increasing and this trend will not reverse. In 5-6 years from now, by end of the decade, we will find ourselves in another world, where the common knowledge and “Zeitgeist” about sustainability will not allow green washing any more.  

To comply with the new rules, it requires a change of culture.

“Culture eats strategy for breakfast!” – (Peter Drucker)

In other words, the culture of a company determines the success, regardless of how effective the strategy may be.

There are multiple examples where a team works on an ESG-Strategy without the full support and commitment of the C-Level and that’s the reason why they are designed to fail.

Another common strategy, which is designed to fail, is to apply for a certificate and to believe that it provides ESG-Compliance.

There are more than 80 certificates for properties in the market. But whatever the certificate confirms and whatever is written in the EU-Taxonomy and in local regulations, ESG-Compliance is always about people. If you want to understand people, you need to understand their incentives.

In other words, ESG-Strategies can be complex and simple at the same time, but the basis of its success is always to understand the context of its purpose.

ESG comes with a unique experience, most of the time it´s something you can´t define in the first place. But when you feel something is different in a positive way, it´s mostly related with ESG-Compliance.

It can be a proactive community management for tenants or a transparent communication on service charges. It also can be related to guidelines on how to save energy or some beehives to support biodiversity.

As some of the most frequent asked questions are showing us, the understanding and clarification of the narrative is crucial for the successful implementation of any ESG-Compliance.

• What’s the difference between ESG-Reporting, ESG-Rating and ESG-Certification?
• What’s the specific regulation in my country and how does it work in my asset class?
• Where is the add value of ESG-Compliance, how does it pay back?

ESG-Compliance always starts with transparency and disclosure.

Any investment in a thoughtful ESG-Strategy pays back one or the other way. Be it because of less costs for utilities and service charges or for supporting and preserving the values or the property, or to gain better conditions for financing.

At workcloud24 we are dedicated to the principles of value management and value engineering, to make your journey to ESG-Compliance a success!

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