ESG – Information Overload to Strategic Clarity
In his May 12, 2021 article in Forbes Magazine, Halsey Schreier says “while widely recognized, Environmental, Social and Governance (ESG) is an umbrella term that often means different things to different people.” A simple google search will reveal massive amounts of ESG information with different implications for various sectors of the economy. There is no shortage of ESG success stories, cautionary tales, and checklists that promise to lead to an effective ESG strategy. Because the concept is so broad, an effort that starts with a noble premise can quickly evolve into confusion about where to begin, questions about compliance and reporting, and worst of all, an effort appearing separate and distinct from the core business strategy.
Well-run ESG strategies are a means to an end for the overall corporate strategy, rather than a distinct and disconnected set of goals. Focusing on initiatives that reduce carbon emissions, creating a diverse and inclusive working environment, and developing strong governance and oversight are examples of ESG integration in corporate operations.
Since ESG factors cover such a broad range of activities, some are often not relevant to a corporate strategy. ESG will mean one thing to a large manufacturing company and something dramatically different to a small general contractor.
ESG in the Commercial Real Estate Sector
Global Real Estate Sustainability Benchmark (GRESB) is an independent organization well known for creating assessments to collect measurable data on ESG and other related performance of real assets that generate benchmarks for the industry. According to GRESB, “growing evidence suggests that ESG integration may be a key differentiator, providing organizations with a competitive advantage and leading to improved long-term financial performance compared to peers.”
This is an area of consideration in Boyd Watterson Asset Management, LLC (BWAM) real estate management practices. Technology advancements have made it easier to identify projects that reduce the carbon footprint of our managed real estate assets and pursue opportunities to enhance the overall performance of the assets.
The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance. The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.
Executive Vice President, Portfolio Management
Boyd Watterson Asset Management, LLC