The Importance of ESG in the Real Assets Industry

Do you know that the real estate sector accounts for nearly 40% of global carbon dioxide emissions? Building operations account for 70% of these emissions, while construction produce the remaining 30%. To achieve global climate goals such as combating climate change and reducing greenhouse gas emissions, there is a need for real assets companies to set environmental, social, and corporate governance (ESG) targets.

So, what exactly is environmental, social, and governance (ESG), and why should real estate firms care? Consider themes such as low-carbon transition, diversity, and corporate compliance to better understand the definition of ESG. ESG regulation in Asia Pacific is rapidly developing, and it is an inevitable reality that developers, asset managers, investors, and other companies must face. This is accompanied by a pressing need to align with developing ESG standards to avoid falling behind, as many corporations are incorporating ESG considerations into their business decision-making processes.

Instead of viewing ESG as a necessary business cost to be incurred in order to comply with increasingly stringent regulatory measures and corporate competition, businesses can aggressively capitalise on climate opportunities. According to a recent Bloomberg Intelligence survey, global ESG assets are on track to exceed $53 trillion by 2025, accounting for more than a third of the projected total assets under management of $140.5 trillion.

As the region’s voice for sustainable investing and in light of the growing importance of ESG, APREA addresses our members’ needs through our core services to help them realise the full potential of ESG opportunities. We educate our stakeholders by sharing best practices and the latest research, actively engaging with them in ESG-related initiatives, and hosting events in collaboration with top industry experts to keep members up to date on the latest ESG news.

In essence, sustainability is a growing trend that should not be overlooked. Now more than ever, companies in the real assets industry must prioritise ESG to develop a resilient business that creates a long-term value for stakeholders.