Future proof your real estate investments with ESG reporting

The impact of new sustainability standards on investment decisions

Climate-related natural disasters are a growing topic for society as a whole. But it’s not only government bodies that have more scrutiny for ESG requirements across industries, including the real estate and building sector. To inform investment decisions of all kinds, the International Financial Reporting Standards Foundation issued its inaugural Sustainability Disclosure Standards in June 2023. This is meant to serve as a guiding framework for assessing and reporting on sustainability standards that will have a substantial impact on how real estate investments are perceived and possibly valued. Now, savvy investors need to know that their investment properties not only abide by any current ESG regulations, but also throughout the lifecycle of the investment. ESG awareness is only going to intensify. This is why Susteco provides portfolio and asset managers with consolidated platform, a reporting tool to establish a transparent baseline, year on year. In practice, more transparency also means more opportunity to improve reporting KPIs and increase overall building efficiency.

Efficiency despite economic uncertainties

With historic inflation and economic uncertainty worldwide, efficiency has become a key focus of the investment community. This is a very logical response in many ways. Higher inflation leads to higher interest rates, which means that not only operating costs increase, but the cost of borrowing as well. If ESG factors aren’t included properly in this calculation, the costs of a real estate investment could balloon over the mid to long term. Clear ESG reporting provides investors with the reassurance they need to know that their investment is and will continue to be viable over time. In addition, real-time KPIs can bring valuable insight into how a property or group of properties needs to reduce the cost of energy and utilities. But if we don’t know what the problem is, how can we work on solving it? This is where Susteco’s unified interface provides a single source of truth for all parties involved. For many portfolio and asset managers, ESG data comes from a variety of disparate sources, so the KPIs often don’t match up. If different ESG reports are structured differently as well, it becomes incredibly difficult to have a quick overview for making informed decisions. Susteco can bring all of this data together into a straightforward interface.

The details of solving ESG reporting problems are often technical, but the core issue is usually more human-centric: many people in the real estate industry simply don’t understand ESG topics. And let’s face it, the reasoning for and impact of these KPIs are very fluid in nature, often relying on multiple financial, social, and environmental factors that can seemingly change overnight. For someone who has spent the last 20 years building, managing, or investing in real estate, it’s not easy to start thinking in a new and different way. Usually, it’s the very people with such deep, in-depth knowledge of the industry that need to make informed decisions about improving ESG reporting and increasing efficiency. Yet they lack a detailed but straightforward framework to understand their decisions. Susteco provides this framework through a consistent data format and streamlined reporting process for all parties involved, throughout the lifecycle of a building or a portfolio. This can range from contractors needed during an initial construction or renovation to long-term service providers for HVAC or civic utilities like water or electricity, among others. When multiple stakeholders have the opportunity to work with the Susteco platform, then nearly all the relevant data is in one place, in one format, to simplify and speed up the decision-making process.

Once this unified platform is in place for the various builders, contractors, service providers, or building and investment managers, Susteco can automate many of the ESG processes to improve KPIs even more over the long term. Imagine an HVAC unit isn’t performing as efficiently as usual. Susteco can automatically notify the asset manager about the change in data. This streamlines the process of reaching out to the owner or portfolio managerwho might need to decide on whether to have the unit serviced or even replaced. The HVAC service provider can then quickly make a recommendation or offer, because the necessary data is right at their fingertips in the Susteco platform. Any new data can be stored for the required ESG reporting, which then also shows an improvement in energy usage and KPIs. This possible use case not only helps abide by any governmental regulations, but it can document a clear track record of cost-savings and increased efficiency over time. Apply this across an entire real estate portfolio, and investment managers are in a position to quantify their increased efficiency on a yearly basis. For an industry that is notoriously slow moving, Susteco gives a consistent path to improving ESG reporting from the short to the long term.

Susteco's open data platform with its network of service partners

To achieve the best results, certain technical groundwork needs to be in place. This is why Susteco works with an established network of expert partners to help us all adapt to digital transformation. This is no small task. But even in small, incremental ways, using the Susteco platform helps stakeholders understand ESG requirements and how these processes can improve KPIs. It takes so many different people to finance, build, and maintain real estate investments. Having one unified platform gives all the parties involved common ground, consistent data, and streamlined processes for ESG strategies and reporting. Over time, Susteco can noticeably improve and simplify ESG reporting while increasing building efficiency. But any ESG strategy is an ongoing process of revaluating the new status quo. As global economic headwinds and climate change continue to evolve, ESG tools like Susteco will become even more important in the daily business of portfolio and asset managers. Many in the real estate industry are just starting out on their ESG journey. But for all of us, this is where the real work begins.