Real Estate Investment 2022 34 Environmental, social and governance (ESG) Environmental, social and governance (ESG) is a vital consideration for global real estate. In the UK, the government has set ambitious targets for net zero by 2050. With real estate being a major contributor to the country’s CO2 emissions, there’s significant pressure on the impact and sustainability of investment decisions. In the short to medium term, we expect ESG to increasingly shape and influence real estate valuation as investors look to allocate their commitments under this banner. As discussed in our City 2040 report, there are significant opportunities in this space, driven by retrofitting and development that responds to changing needs. Some jurisdictions, like Singapore, are already moving towards a smart nation approach that combines proptech, positive community impact and sustainable construction methods. Increasing numbers of these forward-thinking assets will ultimately mean less of a ‘green premium’ and more the risk of a ‘brown discount’ for those left behind. There are already an estimated 3000 BREEAM-rated buildings in London alone. The opportunity