While more and more companies commit to sustainable ESG – Environmental, Social & Governance – programmes and more corporate assets are defined as ESG, a concern raised here earlier this year does not seem to be building a presence in the frameworks or metrics that are structuring and measuring this growth. That concern is about the voices of local communities, or expressed in ESG parlance, the “S” in ESG.
Putting out statements on ESG and other forms of demonstrating commitment to ESG principles does seem to be increasingly necessary for companies to gain investors’ attention, satisfy concerns of shareholders, attract talent and and build customer loyalty. The property sector is no exception to companies jumping on to the bandwagon. The question is, how does the community sector jump on, too?
One challenge they face is adapting the language of ESG which, though increasingly inclusive, is designed for and spoken mainly by those in the corporate and investment communities. What local communities see as poverty, poor air quality, or health inequality, the investment community sees as “systemic risks”, as explained in a recent report from Business Fights Poverty:
“Systems-level investing therefore means that for those who invest across the entire range of the global economic system, considering the impacts of climate or inequality only to the profits of a single company is insufficient to address total portfolio risk. More important are the risks the company poses to people and the planet that affect economic, social, and environmental (ESG) sustainability”
Another challenge is identifying who walks the walk on ESG. Everyone talks the talk. One of the largest regeneration projects in London is in Mortlake, where City Developments Limited, a listed Singaporean property company, is aiming to redevelop the former Stag Brewery into housing with some mixed uses, and has resubmitted a planning application to London Borough of Richmond upon Thames following the Mayor of London’s rejection of the scheme last year.
CDL frequently reports on its ESG principles and programmes which, as a publicly listed company, undergoes scrutiny by the investment community, but few, if any, of these principles have been evident on the scheme in Mortlake.
On top of this, the lead designer of the scheme, Michael Squires of Squires Partners wrote last year about how “social value is more than a box ticking exercise”
“This year has seen social value come to the fore for the office sector. Just as high environmental sustainability standards have become a prerequisite for occupiers and investors, the impact of a building on its surrounding community is becoming a priority” he said.
The reality – how local communities in Mortlake and surrounding areas have been and will be impacted, or even engaged -- is quite different. Engagement with the local community has been minimal and only through a local agent; impact assessments are formulaic and lacking any community input; accessibility and transparency of information on the proposed scheme has been poor.
Metrics are aimed at investors who decide whether CDL is practicing good ESG or bad ESG or ESG at all. The local community – who lives and breathes the impact – has no say at all in the developer’s policy, its implementation or its accountability. In the case of the redevelopment of the Stag Brewery in Mortlake, CDL’s ESG policy has been Elusive, Shameless and Greedy.
So how do we shift the balance of ESG from focusing only on the risk and reward requirements of investors to include the risk and reward profiles of local communities?
Could ESG policy and practice serve as a prerequisite for selection on major schemes with significant community impact, so that ESG serves not just investors but is a recognised mark for local government, communities, constructors, designers etc through the regeneration chain?
I’ve come up with three things that local communities can do to promote the discussion and their participation in it:
1. Lobby government and national legislators to bring communities into social impact metrics. There are two opportunities for this – the All Party Parliamentary Group on ESG and a recently established Government taskforce set up to increase the social impact investing of pensions
2. Engage developers that demonstrate ESG commitment & practice, and hold them to account by their statements. This week Landsec, one of the UK’s largest property developers, launched its New Sustainable Toolkit for Developments. This gives community groups a structure and framework to identify how their experience of and aspirations for sustainability align with the development impacting their local community.
3. Engage ESG and property sector thought leaders around including community voices in discussions on how ESG policies impact local communities. And here’s a bonus idea: work with them to develop a community-led mark of ESG delivery, applied to those property developers with a stated ESG policy.
Comments, suggestions and insights are all welcome.
Listen to Locals
27 July 2022