Environmental, Social And Governance (ESG) Practices At RMZ Corp
Leading businesses from around the world have stepped up and transformed their commercial landscape incorporating these principles to their corporate strategies invests in.
A. N. Venugopal, President, RMZ Foundation
Over the last few years, there has been a fundamental shift in understanding the role of businesses in society. The earlier paradigm focused at business as an entity that extracts resources from society and creates wealth for its investors. Today, the understanding has changed and there is a growing realization that businesses are embedded in social, economic and natural systems and cannot be viewed in isolation.
The social and natural systems that the society at large depend on are facing a high degree of risk due to resource scarcity, climate change, social inequality and technological disruptions. According to the Task Force on Climate-Related Financial Disclosures (TCFD), the risks to businesses are both physical and transitional (Task Force on Climate-related Financial Disclosures, 2017). The physical risks stem from impact on operations and supply chains due to environmental depletion, resource scarcity/volatility and extreme weather events. Transition risks are created due to potential changes in regulations – particularly taxes on emissions, water or other raw material use. The reputation of the brand is also a transition risk due to these changes – from active civil society, employees and customers. However, along with these risks there have been opportunities for innovation, resilience, efficiency and stakeholder confidence.
The response of the business community to these changes includes the adoption of corporate sustainability principles that encompass environmental, social and governance practices, commonly known as ESG practices.
Leading businesses from around the world have stepped up and transformed their commercial landscape incorporating these principles to their corporate strategies.
ESG practices correspond to a host of criteria around doing business responsibly that include resource efficiency, climate change mitigation, ethical work practices and corporate governance. ESG integration provides benefits in the form operational efficiency, risk management, enhanced accountability, competitive advantage and stronger stakeholder relationships. Studies have been conducted which demonstrate that there is a positive relationship between the ESG performance and stock performance of companies.
ESG in the Real Estate Sector
Although, the real estate sector has been one of the key drivers of the economy and social mobility, it is also the one that is resource intensive and has a high contribution to global carbon emissions.
Leading corporates in this sector are working on infusing ESG principles into their business. A Global ESG Real Estate Investment Survey was conducted by UNEP FI wherein 44 companies across the world were surveyed to understand the influence of ESG integration in real estate investment decision making and management. Results of the survey indicated that 93% of investors include ESG criteria in their investment decisions (Bentall Kennedy, 2019)
The Sustainability Accounting Standards Board (SASB) has developed an indicative list of issues for the real estate sector which are illustrated below.
Many leading players in the real estate sector have invested heavily into projects that enhance their ESG performance. Greenprint is a leading consortium of real estate firms, investors and strategic partners which is focused on enhancing the environmental performance of its member firms. A study carried out by Greenprint in 2018, shows that member firms invested in projects with a total of $ 40.7 million – in energy efficiency, renewable energy, waste management and advanced technologies to lower operating costs, energy use and carbon emissions (Urban Land Institute, 2018), as shown in the chart below.
As one of the largest REIT investors, we believe it is our responsibility to exercise our ownership rights through proxy voting and shareholder resolutions to drive the long-term success of companies. We take an active approach on this front, driven by our views on global best practice and our investment professionals covering each region. We also believe direct engagement with company management teams and boards can make positive and lasting change, and public policy initiatives can be advanced through partnering with other industry constituents and membership of investor coalitions.
The business case for ESG performance is crystal clear and like many other peers in its sector, RMZ Corp has undertaken initiatives for deeper integration of ESG practices into its operations.
ESG AT RMZ
With the evolution of risk landscape, we are developing strategies that identify and mitigate risks that are material to us. Our strategies are developed considering industry trends and peer performance. They enable us to identify opportunities associated with the risk and arrive at innovative and sustainable solutions for the same.
We are particularly concerned with the ESG risks related to climate change, environmental management practices, working conditions, occupational health and safety, anti-bribery corruption practices and compliance. Our project development process includes identification, addressing and monitoring of risks at each stage. Throughout the project lifecycle, our sustainability vision will be focused on green construction, ethical work practices, occupational health & safety, and competitive sustainability solutions.
We also carry out various environmental assessment studies (Environmental Impact Assessment) that covers ambient air quality, noise quality, water quality, traffic monitoring as per local regulatory requirements etc. We adhere to all relevant regulatory compliances such as National Building Code, Solid Waste Management and Handling Rules, Construction and Demolition Waste Management Rules etc.
Committed to our ethos to offer services that match global standards, we aim to create built environments that are certified by recognized green rating certification bodies such as the US Green Building Council (USGBC) and the Indian Green Building Council (IGBC). In India, RMZ holds the largest portfolio of assets certified under LEED Arc, a leading green building rating system. We have also become a WELL Portfolio Partner with International Well Building Institute (IWBI). The Well certification is a premier standard used worldwide for buildings to measure and validate their features that support and enhance human health and wellness. Several studies have established the linkage between healthy and aesthetic workplaces and employee productivity. RMZ will seek certification for all its upcoming spaces to assess and improve its performance from the perspectives of its occupants.
Our sustainability team drives the organization’s sustainability transformation at RMZ. In addition, a “Green Committee” is formed to engage employees across all operations to be a part of our sustainability efforts. At RMZ, we are consistently embedding sustainable practices in our operations to meaningfully craft the future of space. We believe that sustainability is not just a concept of the future, it is rather the new norm and a business imperative. Through stakeholder engagement in the larger sustainability community, we aim to continually and meaningfully integrate ESG into our strategy, operations, value chain and culture.
(n.d.). Retrieved from Sustainability Accounting Standards Board: https://materiality.sasb.org/
Bentall Kennedy, R. U. (2019). Global ESG Real Estate Investment Survey Results. Retrieved from unepfi.org: https://www.unepfi.org/wordpress/wp-content/ uploads/2019/03/Global-ESG-Real-Estate-Investment-Survey-Results.pdf
Solutions, A. G. (n.d.). ESG in Real Estate. Retrieved from WELL: https://resources.wellcertified.com
Task Force on Climate-related Financial Disclosures. (2017). Recommendations of the Task Force on Climate-related Financial Disclosures. Retrieved from fsb- tcfd.org: https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-TCFD-Report-062817.pdf
Urban Land Institute. (2018). Greenprint Performance Report. Retrieved from americas.uli.org: https://americas.uli.org/wp-content/uploads/sites/2/ULI- Documents/Greenprint_PerformanceReport_VOL-10.pdf
About the author
A. N. Venugopal
Venugopal has extensive experience of over 35 years mainly in Real estate Industry in Project development of Commercial, Residential, Hospitality and Mixed use projects in India. During initial career handled Industrial and Educational projects in India and abroad. Has successfully completed LEED certified projects in India. He has been instrumental in aggregating partnerships with business, government and philanthropic communities.
Before taking over as the President of RMZ Foundation he was the Managing Directordevelopment management at RMZ Corp and member of the Executive Committee responsible for enhancing the shareholders’ value in the Real Estate development. Currently Venugopal spearheads Sustainability, Skill Development, Social Welfare, Urban Development and the Art initiatives at RMZ Foundation. A passionate leader. He also serves on the boards of various NGOs in India and also members of -World Economic Forum- Steering Committee- Future of Urban Development & Services in India.