ESG (environmental, social and governance) is the new buzz word in the global corporate world – picking up importance and credibility for clients, private companies, public companies and governments at a rapid rate.

Whilst it can be seen as a merger of existing company initiatives – sustainability, CSR and corporate governance – it is now more clearly stipulated, measured, reported and judged, meaning “box ticking” options have disappeared.

The real estate industry plays a significant role for many stakeholders and gives rise to an opportunity for growth when it comes to ESG, especially the environmental aspect which includes sustainability, energy efficiency and climate change mitigation.

Our business entities within iREC Holdings incorporate the holistic ESG model but we can have a special focus on our real estate clients where we are focusing on this global strategy and implementing initiatives to meet the Sustainable Development Goals adopted by the United Nations. 

Our real estate division has been at the forefront of sustainability initiatives. They have managed several projects focusing on environmental well-being such as the installation of solar power in an apartment community producing around 20% of the total energy consumed, without the need for additional financing. 

An example of this was demonstrated by Kingfield who in 2021, installed BTU meters in an additional seven projects, where end-users were billed based on consumption – allowing individuals to contribute to the energy savings, and receiving the associated rewards.

In addition, two premium buildings in our portfolio have achieved significant savings of around 33% and 21% in total energy consumed that was accomplished through investment in energy saving measures with a ROI of over 20% and no impact on cash flow; communities therefore benefit from higher energy savings reflecting in their management fee. 

In the UAE, clean energy is also a top priority for the government. In the National Dedicated Contribution (NDC) of December 2020, the government adopted ‘UAE National Energy Strategy 2050’ which targets an increase in the share of clean energy, including reducing final energy demand by 40 % by 2050.

To achieve these goals, companies are sourcing energy from renewable resources and using new technologies and data analysis to aid in reducing energy consumption, waste diversion programs and decreasing water usage through efficiencies and conservation practices.

Reducing emissions not only reduces carbon output but also provides long-term value by reducing energy costs, creating operational efficiency and extending the useful life of building systems.

Offering homebuyers/tenants environmentally conscious features such as rooftop solar panels, LED lighting, improved insulation and smart-home technology, plays well in the eyes of both the consumer and investor, as they are both intentional and measurable, offering lower utility bills, reduced water usage and renewable solar energy. 

From a social perspective, the built environment has a major impact on its occupiers, both corporate and residential. There is increasing evidence of the importance for people's physical and mental wellbeing of living and working in buildings which have been designed and are operated with human health and wellbeing at their center.

Tenants are therefore demanding higher standards from their landlords in relation to, for example, air quality, water quality, natural light and access to green spaces and cycling facilities which is another factor driving change across the industry.

Since sustainability and energy efficiency is becoming increasingly prevalent and is at the core of our business, there are immediate actions we can take as community managers to start making homes, workplaces and indoor spaces more energy efficient and sustainable through a variety of means, including:

• Replace all light fixtures with energy efficient LED or CFL bulbs
• Add ceiling, floor and window insulation
• Install low flow showerheads and faucets to reduce hot water usage
• Ensure that heating and cooling ducts are well sealed and insulated
• Install an energy recovery ventilation system which provides a continual supply of fresh and filtered air all year round

iREC entities will continue to work with our clients to identify, propose and execute initiatives across their real estate portfolios. ESG is here to stay, and iREC will be a first mover in understanding and embracing these new standards.

The author Naser Barhoum is Divisional CEO at iREC Holdings.