Maintaining the financial health of property owners and achieving sustainable profitability for investors are two of the most important tenets of responsible property management. Yet, the volume is increasing on a deeper conversation.

There is a growing concern that property owners, businesses, and investors should narrow their focus on social impact concerns.

This conversation is broadly categorised under Environmental, Social and Governance (ESG) factors and relates to the environmental sustainability of a property and its impact on the property owner, the commercial and/or residential occupants of a property, and the local community.

What is ESG and how is it relevant to the real estate industry?

ESG refers to the impact that social and environmental aspects have on the performance of companies and industries. While ESG plays a crucial role in the management of any commercial organisation, it is especially important to the progress of the Proptech industry where the focus is on leveraging technology to maximise efficiency in real estate.

In the past, ESG has had little prominence in business planning and investment management. However, with the increased awareness of sustainability and its potential risks and opportunities, ESG is now a major part of planning and discussions in the property industry and elsewhere. These discussions are happening not just at the top of the industry, but within communities, at the grassroots level, and in the public sector.

Globally, the real estate industry is experiencing fundamental changes in terms of both tenants and investors as a result of climate change and COVID-19. The shift of focus from short to long-term investments means that ESG is not solely about managing natural resources and green construction, but also about building healthy and happy communities with longevity in mind.

How can ESG and Proptech lead to better sustainability outcomes?

The Proptech industry is one of the most innovative areas to be able to address these factors. Property management technology, for example, is designed to help clients monitor and adapt the ways they manage their properties. Here, increasing investment in ESG can be a way for property owners to reduce their carbon footprint, create a responsible culture of sustainability, and make a positive impact on their environment.

This starts from using data to gain a better understanding of what residential and commercial tenants need – and extends to a more robust maintenance and management solution that helps property owners to unlock enhanced value through lowering their costs responsibly and creating opportunities for local businesses and service providers.

As society continues to move towards a more environmentally conscious and sustainable way of living, the innovative Proptech industry can provide focused solutions to help alleviate social and environmental pressures, as well as promote social and environmental justice.