The focus of Environmental, Social and Governance (ESG) risk management in the commercial property sector has been swiftly elevated into boardrooms across the world with Global analysts predicting that this is going to remain for decades to come. Institutional investors are now under pressure to seriously consider ESG criteria in all their investment decisions requiring more rigour in their evaluation of investee companies and clearer, more transparent policies than ever before. The box-ticking exercises of the past are no longer sufficient to keep investors convinced of a company’s ESG credentials.
The key seems to be in the availability of data, and therein lie all the solutions and the problems. With so many in the real estate sector embracing ESG, even voluntarily, and across all their activities, be that within the landlord/tenant, the owner/investor, the facility and asset management relationships, the challenges are consistent across the sector with poor data management being the common denominator.
Commonly that data pot is also misaligned and challenging given inaccuracies in historical records. Processes are mismatched, meter readings are incorrectly reported, tenant files are outdated, discrepancies exist in building occupation and tariff changes are not updated.
With the exponential pressure on companies to provide adequate disclosure, many find themselves on the back foot with inadequate data management infrastructure, human resources and processes to manage the overwhelming volume of both financial and non-financial data relating to their ESG performance, unable to gains insights or make sense of it. This makes decision making very challenging.
The weightings of priorities between sustainability and shareholder value also remain ambiguous yet we know for sure that within the measure of sustainability and green buildings lies enormous opportunities to drive resource efficiencies, reduce waste, reduce vacancies and increase value.
With the advent of Covid-19, the added focus on healthy buildings has exacerbated the stress landlords and tenants are under, and given that utilities are a huge chunk of monthly expenses for both parties, this is a fantastic opportunity for asset managers and tenants to collaborate to keep costs (and carbon footprint) down.
Getting Back to Data Basics
The point is that with everyone doing their own thing, chaos emerges. The solution, as we at GCX have identified, comes down to getting the basics right at the most granular level and evolve from there through a program of continuous improvement. How do we do this? We have developed a proprietary strategic framework that consolidates a commercial property’s ESG data into easily understandable, and more importantly, accurate datasets so that every stakeholder understands what ESG performance means through their individual lenses.
In the process of exposing data, and the manner in which the GCX platform and methodology organise it, a number of issues are addressed simultaneously. Firstly, the GCX solution removes the need to invest in expensive data analytics software that will not only require ongoing maintenance, but the cost of additional skilled resources to turn the data in the required insights in order to interpret it. Secondly, we use cloud-based, and other specialised tools, automated data flow and rich visualisations, to reveal and expand datasets, ultimately providing companies with a 360 view of their current performance and future goals.
The advent of cloud-based systems has been a game-changer when it comes to being able to fully account for, report on, and disclose ESG factors because they are not dependent on fixed IT structures and architecture making this the most agile way of a company getting exactly what they require to understand their performance.
Our GCX dashboard and its reporting platform are hosted in the Microsoft Azure cloud and can be configured, automated, and accessed through any web browser, and delivers rigorous and robust data protection and security.
The accuracy of the information presents one version of the truth that can be confidently included in annual reporting resulting in deeper compliance with ‘integrated’ reporting and alignment to King IV and other listing requirements. It enables those making investment decisions to confidently integrate ESG criteria into capital allocation decisions, thereby driving the move towards a low-carbon economy and managing commercial and ESG risk at the same time.
Bespoke Solutions for the Commercial Property Sector
GCX Eco-Analytics provides the ultimate benchmarking tool. Being able to compare all asset and stakeholders in close to real-time, is a step-change for any company wanting to drive an environmental performance program across their company and portfolio. It is a big objective of ours to ingrain sustainability into the behaviour of all stakeholders, including tenants, facility and asset managers, landlords and board members so that all stakeholders up and down the corporate hierarchy are able to engage swiftly and with confidence.
Facility and asset managers are aided with the knowledge to promote better efficiencies in their buildings and are able to then engage with tenants to expose their performance across energy and water consumption as well as waste generation to drive their own sustainability performance through increased efficiencies, reduced waste and a better bottom line.
Sustainability managers use the GCX dashboard to drive environmental performance management and produce automated reports that are aligned with relevant industry reporting standard, frameworks as benchmarks (e.g. CDP, GRESB, King 4, GHG Protocol). The consolidation and wealth of data allow them to create sub-sets of customised reports targeted and relevant to each stakeholder to enable them to track performance against past and future goals. GCX provides a level of internal assurance to risk managers providing them with confidence that their publicly available disclosure is reliable and based on accurate data.
The GCX Eco Analytics Dashboard has already proven all of the above across some of South Africa’s largest commercial property portfolios. With the aircover from GCX analysts, we consolidate all information from legacy systems into the cloud and monitor the data monthly. The dashboard overlays the data to the extent that it uses existing organisational APIs, spreadsheets, PDFs and processes ensuring minimal disruption and swift deployment that provides a visual snapshot of performance at any point in time from an asset, stakeholder or group level.
The ability to measure all activities against a baseline is likely one of the most critical capabilities of GCX’s solutions. Property companies often lack the confidence in the quality of their data and are therefore reluctant to draw a line in the sand and develop a baseline against which to measure their future carbon and environmental performance. Given GCX big emphasis on enhanced data confidence, this is something we are able to help our clients with.
This is a major step for many companies and in itself is transformative. Measuring performance against an agreed baseline quickly exposes performance anomalies – in many cases long before they become problems – enabling those involved to resolve such issues quickly and efficiently.
Yet another advantage from GCX is that it is completely independent of all other data providers and its systems can be used for, and customised to, any sector of property asset classes, be those private or public enterprises. GCX also offers tiered package solutions that enable clients to grow their data analysis and environmental performance at a pace suited to their budget and environmental performance.
Ultimately, GCX believes that the ability to uncover waste or non-aligned sustainability practices, be that financial or otherwise, will have a positive and transformative impact on the value of a company’s assets.
Drive your data and ESG performance with GCX, get in touch for a demo.