How Does ESG Data Bolster Real Asset Strategies and Bootstrap CapEx Decisions?

We ask Ben Rouncefield-Swales, EVORA’s Global Head of Data Operations, how robust ESG data drives strategic financial decisions. The result? Real assets that are environmentally sustainable, socially positive, and credible, inspiring investor trust and confidence.

Hi Ben, What obstacles arise when using ESG data insights for sustainable real asset investments? 

Navigating the sustainability landscape for real asset investments poses many challenges. The most prominent is data availability, and the often-laborious nature of environmental, social, and governance (ESG) data collection and transformation. 

Data acquisition itself is a major challenge. It can be time-consuming, resource-intensive, error-prone, and difficult to scale. Not only does it burden sustainability teams with seemingly mundane tasks, but it also raises concerns about data integrity. It puts the brakes on informed decision-making throughout the business. As a result, many asset, fund, and sustainability managers find it tricky to integrate essential ESG data into their real asset investment processes for informed CapEx decisions. 

What strategies can real asset investors employ to overcome manual data challenges? 

It goes without saying that part of the solution lies in embracing data automation. Streamlining data sources and capturing data from as close to those sources as possible is key to data quality and data completeness. 

Another direct and effective approach is to adopt a secure central ESG data management platform that automates data collection, taking care of the heavy lifting when it comes to data transformation and validation. This results in streamlined data handling, offering clear and actionable insights and analysis. 

Real asset investors who proactively transition to automated and integrated ESG data management systems will certainly reap the benefits of having robust ESG data at their fingertips. 

How do ESG data management platforms drive stakeholder engagement and compliance? 

Many factors drive stakeholder engagement, but robust data serves as a powerful foundation. ESG data management platforms with advanced automation power trackable KPIs and facilitate evidence-based strategic decision-making. This, in turn, fosters stakeholder engagement, leading to improvements in your real asset investments. 

In addition, adopting a fully transparent approach not only aligns with ever-evolving sustainability frameworks, but also plays a pivotal role in building trust and credibility with internal and external stakeholders. Your ESG data management platform should bolster transparency by providing easily auditable data that can be traced from source, through various stages of transformation and manipulation, all the way to analytics and insights. 

Furthermore, an ESG data management platform should streamline standardised reporting for voluntary and mandatory disclosure frameworks (such as SFDR, EU Taxonomy, CSRD, GRESB, or TCFD). 

Simultaneously, it should offer enough flexibility to generate more tailored insights that can inform investment (or divestment) decisions. Sometimes, businesses need to stretch their reporting beyond compliance requirements to make a meaningful impact. 

ESG data management platforms should also highlight areas with low-quality or missing ESG data. In cases where data is absent (and cannot be retrieved), users must be able to fill these data gaps using trusted industry benchmarks like CRREM. 

How do ESG data management platforms steer investment optimisation in real assets? 

Robust, quality data underpins every sound optimisation strategy, proving a comprehensive view of real estate funds. Armed with this data, investors can develop action plans with measurable trajectories. These can be regularly reviewed and adjusted as needed over time. As optimisation measures are deployed, their impact can also be tracked, unlocking valuable insights on return-on-investment. 

Understanding the sustainability performance of your assets, funds, and entire portfolio is also pivotal to steer net zero roadmaps and make informed investment or divestment decisions. 

What ESG data should asset, fund, and investment managers prioritise to optimise their real assets? 

In a recent Guardian news report, Maria Kordowicz, an associate professor at the University of Nottingham, raises some thought-provoking questions on this topic. Kordowicz asks: How impactful is your organisation’s work? What contributions does it make to societal betterment? How can you champion environmental preservation? How do you ensure the sustainability of your business? 

In the same article, Lee Elliott, a commercial real estate expert at Knight Frank, highlights another looming challenge for real estate players: “Over the long term there’s no doubt that all the UK office markets are going to be impacted by obsolescence… buildings that are dated or fall foul of energy efficiency rules that are coming into force in 2027. About 60% of London office space would either need to be upgraded or demolished.” Although based on the UK market, this is a global issue. 

While there has been significant focus on the ‘E’ of ESG, it’s crucial for real asset investors to not only establish robust data-driven environmental strategies but also broaden their focus to include positive social and governance outcomes. This comprehensive approach is essential to truly optimise real assets in response to the challenges we face. 

The emerging class of social data presents a new challenge for the real asset sector. Just as real asset investors have become proficient in handling utility and waste data, they must now grapple with what many would agree is a more complex class of data. Many data points within the social data class lack structure, presenting new whole challenges for collection, transformation, and automation. 

Based on what we’re seeing in the market, early adopters among real asset investors who’ve successfully managed their ESG data to drive ambitious environmental strategies are now turning their attention towards acquiring the essential data needed to pursue social and governance goals. 

What’s the impact of social wellbeing for real assets? 

The impact is multi-faceted. Social performance matters and it’s having an increasing impact on the value of assets. Prioritising social metrics within investment strategies incorporates health, social, and wellbeing factors into the decision-making process. This alignment with evolving ESG standards and regulatory frameworks not only enhances asset value but also supports responsible investment practices. 

Prioritising social metrics within investment strategies enhances asset value and improves wellbeing and the environment for tenants, visitors, and employees in buildings. The concept of placemaking continues to gain traction among developers and investors aiming to create appealing places for living, working, leisure, and education. Partnerships with initiatives like Fitwel can also assist in crafting people-centric ESG strategies that align with the practice of creating or enhancing social value. 

This approach mirrors Kordowicz’s perspective on societal improvement and the growing trend of encouraging office returns, providing real asset investors with a path to success in a socially conscious landscape. 

How can social data bolster the social wellbeing value proposition of real assets? 

By assessing and highlighting your contributions to community health, safety, and overall quality of life, an expanding array of ESG metrics (including accessibility, air quality, green space, crime rates, indoor air quality, water quality, and community engagement) illustrate real asset performance for social value to prospective investors. 

This concept is best illustrated with EVORA’s global first partnership with Fitwel. EVORA has collaborated with leading healthy building certification Fitwel to launch Certified Metrics – a pioneering framework for social reporting within the industry. 

Social metrics inputted into this new standardised framework must meet rigorous criteria. They must be validated by academic data, directly influence people and their surroundings, and exhibit a direct connection to real asset value. Certified Metrics marks the first global standard combining these three essential components, underscoring the critical role of social data for real assets. 

How does EVORA support social wellbeing initiatives to optimise real assets? 

At EVORA, our Social Wellbeing Consultancy Service Line promotes collaboration among asset, fund, and sustainability managers to help craft robust corporate strategies. We help your teams understand their existing activities and then build competencies based on those areas. We guide social programme implementation aligned with your goals, global standards, and community needs.

These social wellbeing strategies not only validate but also enhance the investment value of upgraded real assets. As an accredited Fitwel Partner, we also facilitate the development of buildings that cater to the needs of employees and tenants. 

These social wellbeing endeavours also seamlessly integrate into our SIERA data management platform, offering transparent reporting metrics aligned with best practices and regulatory frameworks. This includes prospective social reporting for CSRD and GRESB, adhering with standards like the UN SDGs (Sustainable Development Goals) and the WGBC (World Green Building Council). 

First and foremost, the SIERA data management platform simplifies the process of making data-driven environmental decisions while enabling the prioritisation of social strategies to enhance real asset growth and improve underperforming buildings. 

How can ESG data bolster the credibility of real assets for transparent governance? 

Good governance plays a key role in enhancing transparency and credibility across your real assets. By systematically collecting and analysing governance-related information, you set up a clear framework for decision-making and risk management. This ensures alignment with ethical standards, regulatory compliance, and responsible management practices. In turn, instilling trust among your stakeholders. 

Ultimately, robust governance ensures your real assets are managed in a sustainable, ethical, and accountable manner, elevating transparency and credibility. This positions you as a trusted and responsible player in the real asset market. 

In the context of ESG, how can investors skilfully distinguish between thriving and underperforming assets? 

Identifying the strongest performing assets within your portfolio requires a holistic evaluation of all available ESG data. No longer is it enough to simply examine energy and carbon data to optimise sustainable real assets within your fund or portfolio. You must also factor in physical climate risk, biodiversity, social value, and adherence to regulations. And to do this, you need to leverage an ESG data management platform, preferably with an elevated level of automation. 

Through thorough due diligence and data-driven analysis, you’ll make informed decisions on asset optimisation. Leveraging advanced ESG data management systems and predictive analytics will streamline the collection and interpretation of your unstructured ESG data. And as the market landscape evolves, investors who adeptly navigate these challenges stand to gain the most. 

Investing in real assets with precision and purpose starts with quality ESG data. Discover how our ESG data management platform, SIERA, will transform your ESG strategies and drive robust CapEx decisions for maximum ROI.