Amazon – the company we love to love and love to hate - has received more than its share of brickbats over the years ranging from the environmental impact over its over-generous packaging to adverse comments about avoiding tax. It seems that Amazon is not the standard bearer we would hope for in ESG (Environmental, Social and Governance) matters.
But wait; there has been positive press recently since it announced plans to create 10,000 jobs in the UK this year, and will pay London based operations staff a minimum of £10.80 per hour (£1.89 more than the national living wage for over 23s). What’s more, across the pond, Amazon’s introduction of higher wages in 2018 forced the hand of competitors, such as Levis, to also offer higher wages to workers which changed the landscape of local economies, in what has been coined the ‘Amazon effect’. This must be good news for, er, social impact on the community.
This ‘Amazon effect’ also shows the wide-reaching social impact that can be achieved through corporate policy and action.
ESG is multifaceted and pursuing and succeeding in all elements at the same time is all but impossible given the wide range of possible impacts a large company can have on its community. Where does one start with so many possible bear traps?
In real estate, there is not only a focus on reducing carbon emissions in the construction and operation of buildings, but also the social impact on local communities that is possible through innovation, technology and the informed use of data.
The increasing demand from investors for ESG performance data they can trust in order to make informed investments, coupled with the increasing regulations (such as SFDR), is promoting transparency around ESG throughout the industry. A cohesive ESG strategy focussing on increased transparency and prioritising ESG policies can not only add value and create additional returns for commercial real estate investors, but at the same time demonstrate the impact that individual companies are having on local communities.
We can’t guarantee that a focus on ESG strategy will keep you out of the papers but hopefully the press coverage will be for the positive impact you are having on the communities affected by your portfolio.