Real estate investors cannot afford to ignore stakeholder engagement as part of their environmental, social and governance process and as a key to adding value to their assets.

A successful real estate sustainability program not only focuses on implementing ESG initiatives at the business and property level, but also engages stakeholders as part of the process. “Stakeholder engagement should be a pillar of a real estate organisation’s ESG programme,” says Sam Crispin, Head of Sustainability and ESG, Asia Pacific at Savills.

The range of stakeholders for a real estate business can be extremely broad, says Crispin. “It can include investors, tenants, creditors, employees, unions, regulators, the local community, NGOs and others.”

Seeking a diverse range of views is important. “Stakeholders may be segmented into subgroups, for example minority shareholders vs institutional shareholders. These sub-groups may have very different needs and expectations.”

Stakeholder engagement is the process by which organisations seek input from parties affected by their business activities. This will help them decide what topics, activities and impacts should be included as material topics in their sustainability reporting.

This may be done by routine communication or specific engagement. Regular surveys for example, may cover customer satisfaction and employee views, while investor roadshows can be used to canvass their opinions.

Meanwhile certain topics – a new development project for example – may require stakeholder interviews, expert opinions and focus groups or workshops. Digital tools can often be used to survey opinion and the company website can be a key contact and reference point for stakeholders.

The output of stakeholder engagement is to determine material topics for inclusion in developing a sustainability strategy and preparing ESG reports. According to the Global Reporting Initiative (GRI), material topics are those which have “significant economic, environmental and social impact, or substantively influence assessments and decisions of stakeholders”.

For owners of real estate assets, tenants, who are typically responsible for 60 to 70% of total energy consumption at a property, are key stakeholders, so engaging them is crucial to achieving better results. “Making real estate more sustainable is something that asset owners cannot do alone, so stakeholder engagement is crucial both for reporting on sustainability topics and achieving sustainability goals,” says Crispin.

As businesses become more focused on Scope 3 emissions (the result of activities from assets not owned or controlled by the reporting organisation, but that the organisation indirectly impacts in its value chain), supplier engagement will become more and more important.

Finally, stakeholder engagement is a key element in sustainability rating programmes. For example, it is a key feature of the GRESB assessment, which has become the main sustainability rating tool for real estate owners and managers.

Further reading:
Savills APAC ESG services