Why Social and Governance are Transforming the Real Estate Industry
Sustainability has long been a key topic in the real estate sector. However, the focus is often heavily placed on the environmental dimension – the "E" in ESG. Yet, the social and governance aspects are equally crucial for a future-proof and responsible real estate industry.
As part of the real estate management module at IU International University, Gunnar Gombert had the honor of welcoming Karin Barthelmes-Wehr, Managing Director of the Institute for Corporate Governance in the German Real Estate Industry, as a guest lecturer. Her presentation provided valuable insights into the importance of “S” and “G” in ESG and demonstrated why corporate governance and social governance are key levers for sustainable success.
Why Corporate Governance is More Than Just Compliance
Corporate governance goes far beyond mere legal compliance. It encompasses transparent and responsible corporate management, risk minimization, and a value-oriented corporate culture. Key aspects include diversity in leadership teams, sustainable compensation systems, and ethical business practices. Particularly in the real estate industry, which deals with long-term investments and societal responsibility, strong governance structures can enhance investor and stakeholder trust.
Social – An Underestimated Potential
The social dimension of ESG is often overlooked, yet it can significantly contribute to a company’s value creation. Issues such as working conditions, social justice, human rights, and diversity are not only relevant to society but also have direct economic impacts. Companies that take social governance seriously benefit from higher employee retention, an improved reputation, and long-term resilience against societal changes.
Social Impact Investing as a Future Opportunity
One particularly exciting area highlighted in the lecture was social impact investing. This approach focuses on investments that generate not only financial returns but also measurable social impact. In the real estate sector, this could mean developing sustainable and affordable housing or creating districts with added social value.
The Real Estate Industry Needs to Rethink Its Approach
Increasing regulatory requirements, such as the Social Taxonomy and Sustainable Finance regulations, make it clear: ESG is not a trend but a necessity. Companies must actively engage with social and corporate governance to remain competitive in the long run.
Gunnar Gombert STRATEGY CONSULTING supports companies as a specialist in the real estate sector in strategy and operations – including the implementation and optimization of ESG strategies.