ESG to dominate real estate for two decades

Real estate’s focus on environmental, social and governance (ESG) issues will be the dominant trend in the next two decades, a ULI report says. 

Emerging Trends in Real Estate Europe 2023, the 20th annual survey of European real estate sector leaders’ expectations by the Urban Land Institute (ULI) and PwC, said responsible capitalism is now seen a crucial to success. 

Asked about the factors determining success, 93% of respondents selected running a socially and environmentally responsible business, closely followed by 87% concerned with creating social impact alongside financial return.

Sophie Chick, head of research for ULI Europe, said: “For the real estate industry to be successful over the long term, it needs to step up from an operational and reporting ESG focus to an all-stakeholder model that fully aligns and integrates the interests of the planet and people with a company’s profitability.”

ULI said greening the world’s existing real estate stock will require vast capital expenditure and needs to happen swiftly to meet climate goals. Pressure to incorporate social impact is predicted to grow as public sector balance sheets become increasingly stretched. Property companies embracing ‘responsible capitalism’ will become more involved in providing social infrastructure, public realm, healthcare and community spaces and in addressing loneliness, growing inequality and ageing populations, it added.