Home Property Australia Putting the S back in ‘ESG’

Putting the S back in ‘ESG’

  • February 14, 2023
  • by Property Australia

Devan Valenti, Senior Manager, Asia Pacific at International WELL Building Institute

In the world of sustainability, the S in ESG (environmental, social, and governance) is often assumed to stand for exactly that. However, experts warn that this common mistake risks overlooking a crucial component: the “social” aspect.

Devan Valenti of the International WELL Building Institute said the sleeping giant of ESG cannot be ignored, especially as the property market increasingly focuses on sustainability.

“One of the realisations investors are having is that there’s a better appreciation and understanding of the risks with poor social performance on an ESG perspective,” he said.

“Where people get stuck, is that their investors think about it from a full ESG perspective. So, if they’re only focusing on the ‘E’, they’re missing an opportunity, and it’s a potential risk for them at the same time.

“They’re doing everything they can to ask very difficult questions, so that they can better manage that risk.”

Mr Valenti pointed towards designing office spaces for those with autism or ADHD as an example of the S in action.

He said open plan offices typically are not conducive to how they are best suited to work and that they generally need quite places where they can focus.

“That’s the role of property in this example. We really need to cater to people with diverse needs and backgrounds,” he said.

“It’s also not even people that are within the building, it’s the communities around the building that you’re going to be impacting. Buildings have an incredible potential to build the resilience of their communities.”

Mr Valenti said the social extended to not just those outside of an organisation, but within it.

“Investors are waking up to the fact that people are 90 per cent of the cost to a company,” he said.

He said investors are starting to see staff turnover as a risk to companies.

Mr Valenti said many investors are now looking at ESG credentials beyond the environment. He said the same shift that happened in environmental reporting, from quantitative to qualitative, is starting to happen to the social aspects as well.

“We’re starting to see the same shift around social and particularly health and well-being to actually measuring performance. Investors are asking less saying, just quantitative commentary is not enough. They actually want hard data,” he said.

“It’s going to be a huge, huge area in the future. We’ve seen a huge take up in the past two to three years as well.”