ESG development puzzle – are lawyers the hidden piece?

As the EGI ESG Summit kicks off next week, this is an excellent piece from EGI looking at the delivery of net zero real estate. As John Davies, head of sustainability, at Derwent London says: “it is like inflating a balloon and trying to stop the air from leaking out”. Good intent can seep out between design and operation. 

Notably, Davies comments on the role that professional advisors have to play – as the industry pays more attention to the “operational” phase on the net zero journey (e.g. with the increasing prevalence of NABERS). 

He cites the typical dichotomy between occupier aspirations (e.g. for sustainability certifications) and the natural aversion, which can often be advisor-driven, to lease provisions that are perceived as intrusive or onerous. 

I think it’s a valid point. All parties must align on the same pathway, with an understanding of motivations and rationale for specific provisions e.g. the sharing of operational data. This is all the more true with an increasing focus on operational performance, where all parties must buy into the process – even if that includes the acceptance of lease provisions that were once never encountered. 

Plus, it is not just Davies that makes the point. Kathryn Barber, head of ESG, Orchard Street Investment Management: “When it comes to leases, it is vital to work with the solicitor to make sure they have understood the CRREM scorecard the fund must maintain and then work out what that looks like in terms of requirements on the lease and incoming occupier.”

So perhaps stating the obvious – lawyers and agents have such a significant piece to play in the puzzle. We can’t afford to be the missing piece. We must keep that balloon afloat. 

  

“It is a unique situation that we are trying to work out and the transactional services – the agents and the lawyers – are all very critical in helping decode that for an occupier and explaining that they do not need to be afraid of it.”

https://www.egi.co.uk/news/piecing-together-the-esg-development-puzzle/
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