Here’s why the business of sustainability has come of age

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Alexis Crow, Global Head, Geopolitical Investing, PwC & Samir Saran, President, Observer Research Foundation (ORF)


  • There is a unique opportunity for businesses to lead the way when it comes to sustainable investments.
  • But it needs the support of governments and regulators, and it will require hard dollars and soft power.
  • By seizing the opportunities and working together, the private sector can not only create a more sustainable future, but can unlock significant long-term value, for business and for society.

In 2019, impact investing was a $715 billion global market. Looking beyond the pure financial heft of the market, the number accurately reflects the growing reality among corporates and investors who are seeking to deliver strong financial returns for their shareholders, while building a more equitable world for their stakeholders.

With a sharper corporate focus on achieving Environmental, Social and Governance (ESG) impact, the appetite for investments that address some of the world’s most pressing challenges has grown steadily in recent years. In seeking to address these challenges, business has an historic opportunity.

It cannot abdicate its responsibility in working for a more just and progressive society for one fundamental reason: such an environment is a prerequisite for a sustainable, resilient and market-oriented private sector.

Historically, investments in sustainability have always been regarded through a narrow return-on-investment lens – an approach that could be even more challenging in the current context. However, that thinking has evolved over the years as global investors, pension funds, and financial institutions are demanding that their investee companies incorporate, track and report ESG performance into the risk-adjusted returns that they deliver.

What is more, there is growing evidence that by focusing on ‘people, prosperity and the planet’, businesses can generate long-term business value. This could be achieved by strengthening health and safety measures in hospitality assets to ensure guest well-being and drive greater footfall; by saving energy costs and reducing carbon emissions; or by making property assets more liveable with the help of digitalization and automation, ultimately enhancing the underlying value of these assets.

The list goes on and the arguments are compelling. For real estate affordability, liveability and resilience, investing in ESG is a ‘trade-on’ – not a ‘trade-off’.

ESG and value creation

Enterprises large and small have one dominant goal for 2020: economic survival. Beyond just ‘making it’ and getting through the year, businesses must also plan for the long-term to get back onto a growth curve. However, the choice between ‘survival’ and ‘survival with more costs’ is challenging.

A report by real-estate expert Knight Frank in 2019 underlined that there is strong evidence that investors are increasingly looking to deploy capital into energy-efficient, sustainable buildings. While implementing new, often complex, technology requires upfront investments, these are more than offset by higher rental incomes and lower operating costs.

Majid Al Futtaim’s hotel portfolio in the UAE is a case in point: together with Siemens and facilities management firm Enova (a joint venture between Veolia and Majid Al Futtaim) we embarked on introducing energy conservation measures across 13 hotels. While the cost of AED22.5 million is significant, the measures will lead to guaranteed annual savings of AED5.5 million – with a payback period of just over four years.

With utilities representing one of the largest operational costs for real estate assets, this increased efficiency will have a direct financial impact over the long-term. Moreover, assets with recognized sustainability credentials such as LEED, command a favourable premium as this serves as reassurance to both investors and tenants, thereby lowering the perceived risk of their commitment to the asset.

For real estate affordability, liveability and resilience, investing in ESG is a ‘trade-on’ – not a ‘trade-off’. —Ahmed Galal Ismail, Chief Executive, Majid Al Futtaim – Properties

Our experience has taken us from regarding ESG as a lever to reduce risk and liabilities to embracing it as an opportunity to increase business performance and strengthen valuations across the lifecycle of our assets.

A Market for ‘Green’

While the risks associated with sustainability and other ESG-related investments have been a considerable barrier in the past, the ‘business of sustainability’ is now truly coming of age.

This is apparent when we look at the shift in the financial industry toward green bonds and similar vehicles for funding ESG-related investments. For 2019, green bonds reached an unprecedented $255 billion globally, led by China, France and the US. The new President of the European Central Bank (ECB), Christine Lagarde, has stressed her commitment to combatting climate change and examining green changes to the ECB’s activities, including its €2.8 trillion asset purchase scheme.

Closer to home, when Majid Al Futtaim launched its Green Sukuk (bond) in 2019 valued at $600 million, it was oversubscribed more than six times, with an order book above $3 billion. The first corporate Green Sukuk in the Middle East, the investments will be used towards Majid Al Futtaim’s long-standing 2040 Net Positive targets that align with our objectives of creating a more sustainable future for our stakeholders and generating strong returns for our partners.

The recovery from the pandemic has been called the ‘Great Reset’ by Professor Klaus Schwab and calls have been made to ‘build back better’. Strategic investments in ESG must represent a fundamental tenet of this framework. In building this ‘reset’, a whole range of stakeholders from investors, corporates, governments, financial institutions and consumers must align to create an ecosystem through which we invest in a cleaner, greener future.

Today, there is a unique opportunity for the property industry to lead the way when it comes to sustainable investments. But we also need the support of Governments and regulators to mandate and incentivize such investments to create meaningful opportunities for the industry and the multiple stakeholders it serves.

This will require hard dollars and soft power. But by working together and seizing the opportunities that are ahead, we can not only create a more sustainable future, but also unlock significant long-term value, for business and for society.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Glaringly false reassurances about the repercussions of the EU-US free trade agreement

Here’s how to close the $176 billion health financing gap

Parliament wants to suspend EU accession negotiations with Turkey

German synagogue shooting ‘another tragic demonstration of anti-Semitism’: UN chief

UN conference agrees better ways for Global South countries to work together on sustainable development

‘Signs of hope’ toward a political settlement in Yemen, UN special envoy tells Security Council

Do you dare to go to China?

World Refugee Day, 20 June 2020: Joint Statement by the European Commission and the High Representative

Gender inequality in the medicine field: two commonly issues

UN chief pays tribute to Egypt’s role in avoiding ‘dramatic’ escalation in conflict across the Gaza-Israel border

A new era of computing is coming. How can we make sure it is sustainable?

Boris as UK Premier to be cornered if attempting a no-deal Brexit

UN report sheds light on ‘unimaginable horrors’ faced by migrants and refugees in Libya, and beyond

CLIMATE CHANGE FOCUS: Tunisia coastline in need of climate cash boost

Women’s empowerment ‘essential to global progress’ says Guterres, marking International Day

‘Humiliation was the worst’; Holocaust survivor at UN, asks world to act with ‘empathy and compassion’

Brazilian public health system and universality: a forgotten right!

Normal reactions to the abnormality of the pandemic

‘Critical test’ for North Korea’s Government as civilian suffering remains rife, warns UN rights expert

COVID-19 is more deadly for some ethnic groups

European Commission authorises second safe and effective vaccine against COVID-19

Listen to the future – how 26 youth-led organizations are supercharging the UN’s Global Goals

Telecommunications and Internet: A Jungle with no principles?

Eurozone’s north-south growth gap to become structural

Delivering masks across borders: EU Single Market protecting citizens’ health

We need to deep clean the oceans. Here’s how to pay for it

Three ways the world must tackle mental health

Car-free day – and the other 364 days of the year

EU-UK future relations: “level playing field” crucial to ensure fair competition

Humanitarian aid: EU announces additional €35 million for Africa’s Sahel region

Coronavirus response: How the Capital Markets Union can support Europe’s recovery

This is how good governance can make sure technology works for everyone

Von der Leyen in Ireland: Our mutual solidarity is here to stay

Science leads the response to COVID-19. These 25 scientists are tackling the other global challenges

How privacy tech is redefining the data economy

Understanding our own garden that we call mind

Impressions of China

Scaling for success: SMEs, tech innovations and the ITU Telecom World Awards 2019, in association with The European Sting

Everything you need to know about water

Croatian Presidency priorities discussed in the European Parliament

Brexit: European Commission intensifies preparedness work and outlines contingency action plan in the event of a no deal scenario with the UK

DR Congo Ebola outbreak now a Public Health Emergency, UN health agency declares

WEF Davos 2016 LIVE: Cameron corroborates that Britain should remain in the EU

IMF: How To Deal With Failed Banks

A question of trust: the UN political chief working behind the scenes to prevent tomorrow’s wars

Security Council imposes arms embargo on South Sudan

Google and Apple suddenly realise that doing business in EU is tough?

5 inventions that could transform the health of our ocean

Smart devices must come with trust already installed

Mixed news about the Eurozone economy

How to rebuild trust and integrity in South Africa

Four in five adolescents failing to exercise for even 60 minutes a day, UN health agency warns

Girls still being treated as aliens in medicine in the 21st century

2nd Global Consultation on Migrant Health 21-23 February 2017 in Sri Lanka

Attempt to defy international law over Golan Heights sovereignty ‘doomed to failure’ Security Council hears

UN should be ‘exemplary’ in defending judicial independence, top Judge tells Security Council

Neither side stands to benefit in US-China trade spat, UN says

Security Council urges countries to factor child protection into conflict prevention efforts

As tech disrupts our jobs, it’s not too late to turn pain into gain

Antitrust: Commission consults stakeholders on guidance for national courts when handling disclosure information

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s