Futures Cut is a personal view of the evolving role of real estate in a world of technological, social and business change, by Richard Pickering, Chief Strategy Officer, UK.
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Sustainability, speed and surnames
10 years ago, ‘sustainability’ denoted something vaguely to do with the environment and a box to be ticked on a business’s annual report. Over the past few years it has risen to encompass a broader agenda of social, governance, ethical and economic issues, and has become a lever for competitive advantage in some markets. This year it will become so baked into business thinking that if you want to let, fund or sell property, you will need to have a clearly articulable proposition on these issues. Two recent disclosures support this contention. Firstly, Blackrock chief Larry Fink has written letters to both CEOs and clients setting out paradigm changing commitments. The letter from the world’s largest shareholder with investments in most FTSE 100 businesses is worth reading in full here. In this Fink cites a ‘fundamental reshaping of finance’ which will call into question existing instruments, such as the 30-year mortgage, and result in ‘a profound reassessment of risk and asset values’. The impact of capital allocation, he states, will take effect sooner than the climate change itself, because ‘capital markets pull future risk forward’. Blackrock goes on to set various policies around disclosure, purpose (‘the engine of long-term profitability’) and ‘putting sustainability at center of how we invest’. Whilst this will cover many factors, the environment is a key focus. What standards will Fink expect from the businesses in which he invests? Perhaps another clue comes from Microsoft. Satya Nadella (blog here) has made a commitment that the tech giant will be carbon negative by 2030, which will include actions in its direct business, supply and value chains. They will achieve this by shifting to 100% renewable energy consumed by all occupied buildings, creating an internal carbon tax, and creating a new procurement regime for suppliers. Where these two businesses go, others will follow, and real estate suppliers are likely to be in sharp focus. This, together with technological change, are my top trends to watch for the next 5 years. #environment #sustainability #environment #sustainability #outlook ...
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