PropTech and ESG: separating the good from the bad

Welcome back to Straight Talking PropTech. As always, I went back and forth between a few ideas for this edition.

I decided to settle on two different topics that I’ve been thinking about this month: the first is an interesting debate about the necessity of PropTech in the real estate industry, and the second is how to action ESG goals – something I’ve noticed a lot of people struggling with.?

Let’s dive in, and please do get in touch if you want to debate any of these topics.?

Is PropTech failing real estate?

This article caught my eye last week. It summarises a discussion that took place at the ULI Europe Conference in Brussels, all about whether real estate is being hindered by an overwhelming selection of PropTech solutions. A case of ‘too many cooks’, if you will.?

As a co-founder of a (bloody awesome) PropTech company, my first instinct was to bristle when Alexander Gebauer, CEO at Allianz Real Estate, called PropTech “highly inefficient”. But, reading the whole article made me rethink – and overall, I kind of agree with him.?

I won’t rehash the entire piece, you can read it in your own time, but I will give a few thoughts.?

“The solutions we see and identify… are often very small, micro solutions and attack the smaller problems, not the real problems that many, many companies in the real estate business have.”?

Gebauer makes a great point, real estate certainly requires a tech-focused solution to many of its challenges, but one of the key issues we face is tech for tech’s sake.?

Offering up nice-to-have micro solutions to hyper specific problems actually isn’t solving anything in the long run. All this is doing is creating data silos and unnecessary admin, making small issues seem like they need huge, expensive tech to fix them.?

In reality, PropTech is hugely necessary in solving existing and emerging challenges in the real estate sphere, but this tech needs to look at the bigger picture.?????

The huge availability of micro solutions actually does more harm than good due to an overcrowded market: this makes it far too difficult to find PropTech that creates more sustainable, healthier, and cost-effective buildings.?

When it comes down to it, these aspects are going to be most important to any key stakeholder, everything else is just a – not entirely necessary – bonus.?

As Gregory Dewerpe, MD of A/O PropTech, argued in the article: “we need to establish the fact that there is not a scenario where we can ignore innovation and technology in this industry”. That just about sums it up!

Conversations about ESG

As it continues to be a massive talking point, I’ve seen lots of talk about sustainability and ESG recently. More huge corporations, such as Dutch airline KLM, have been accused of greenwashing, leading to governmental task forces attempting to take action.

My answer to this, frankly, is for companies to stop bullshitting and do something about ESG. I realise that sounds like I’m being unhelpful, but the process really doesn’t need to be a complicated one.?

ESG has been discussed for ages, but now requirements like energy reporting, sustainability reporting and state governance are looming, the conversations I’m having with people are shifting from ‘what does ESG reporting involve?’, to ‘okay, how do we actually action this reporting and improve our performance?’.

From my perspective, people have read a load about ESG reporting and they know it needs to be done, but they’re not quite sure of how to go about this. What exactly do they need to report on? What actually goes into an ESG report? What does an acceptable ESG report look like? And how do we report all this data upwards?

Start by asking yourself a few key questions. The most important thing to note is that ESG reporting will be a bit different for every company, there’s no one-size-fits-all. So, the best piece of advice I can give is to understand your own internal goals around your environmental and social governance.

From here you can look at the ‘E’, environmental. What are you doing to reduce your carbon footprint and, more importantly, do you even know what your carbon footprint is??

We recently did this at Metrikus and produced our first Impact Report to get a better understanding of the carbon emissions we’re actually producing. The really crucial thing here is looking at how to reduce your carbon footprint not only in your building, but across your entire supply chain. (By the way, this report isn’t us bragging about anything: we just wanted to ‘show our workings’ on our journey to net zero, with the hopes that it could help others on theirs.)

For the social side (‘S’), you need to think about how you’re taking care of your employees. Are you monitoring and improving indoor air quality? Are you ensuring the workspace is productive, healthy and safe? COVID-19 has obviously shone a light on indoor air quality monitoring, but it’s important that this isn’t pushed onto the backburner now that new priorities are emerging.

When it comes to the ‘G’ (governance), there are so many things to consider – tax transparency, executive pay, corruption, director nominations, cyber security, diversity – the list goes on.?

To achieve good corporate governance, you need good data. PropTech gives companies access to high quality data about a huge range of factors, and a smart building platform allows this to be presented in a way that is simple to understand, and easy to interpret and make decisions from.

The right platform can also help to break down data silos and bring data from different systems into one place. This is a great way to create more streamlined and collaborative processes, and ensure that records are transparent and accessible.

It’s worth saying that no platform is going to be a silver bullet and fix everything for you. You can’t just say you want to start ESG reporting and then expect that to be it. You need to set your objectives and go from there. As with many things in life, we all need to be constantly reflecting and improving.

If you're open about your ‘E’ and your ‘S’, then by virtue of that you're already doing the ‘G’ by governing your company better.

Please do reach out if you have any ESG related questions?– or thoughts about anything else I’ve discussed. As you can tell, I could talk about PropTech all day!