• 13th Apr 22

You may not be familiar with the acronym ESG or even why it applies to you as a potential tenant. But when you rent through Build to Rent, you can feel confident that the developer will be supporting the environmental and social governance, giving you many benefits.  

What is ESG

The abbreviation ESG refers to Environmental, Social and Corporate Governance. Its aim is that money is directed into sustainable investments with the objective that the European Union is climate-neutral by 2050. Real estate is one of the most significant markets affected by this with developers needing to make themselves ESG-compliant. However, the final structuring of ESG criteria is not yet known and there is no binding regulatory framework. Consequently, developers can draw up their own ESG ratings and sustainability strategies.

Why is ESG important

ESG is a key driver in investment decisions that are socially responsible. They force developers to address sustainability and societal issues, areas which are important to today’s tenants. The building industry must also address its impact on the environment.

The Chartered Institute of Building has identified the built environment in the UK contributes to 45% of its greenhouse gas emissions. This is on top of other factors such as air, water, noise pollution and destruction of natural habitats. As the first G7 country to legislate into becoming net zero carbon area by 2050, UK developers have a responsibility to reduce emissions.

How to check on ESG credentials

There are numerous ways in which developers can demonstrate their ESG credentials. These include:

  • WELL Building Certification – this assesses human health and wellbeing performance in buildings.
  • BREEAM – using standards developed by the Building Research Establishment, this assesses a building’s social and economic sustainability performance.
  • WiredScore’s Wired Certification – provides transparency on the quality of internet connection in office spaces and shared areas.
  • Modern Slavery Statement – a annual report made under the Modern Slavey Act 2018 about a business’ risks of modern slavery in their operations and supply chains and the actions they have taken to address the risks.
  • Gender pay gap – the difference between the average earning of men and women expressed relative to the men’s earnings. The statement must be published and available to view.
  • EDI Policy (equality, diversity, inclusion) – how does the company employ and engage with people who have a range of different backgrounds, experiences and ideas.

Social responsibility

In addition to the eco-elements, it is important to consider the social ways in which developers are fulfilling the other ESG credentials. Just as vital are the inclusion of community benefits, in fact, some funders now require community benefits to be delivered as part of construction projects.

Build to Rent leading the change

Many Build to Rent developers are putting sustainability credentials at the top of investment decisions.  The BREEAM In-Use Residential Certification scheme is the first of its kind and allows landlords to benchmark the sustainability performance of their Build to Rent development. Invesco is the first Build to Rent developer to submit a portfolio of residential assets for review. Elsewhere, L&G has announced a company-wide target of becoming operationally carbon net zero by 2030, 20 years ahead of the Government’s target.

Future proofing

As the ESG agenda grows in significance, there is a focus on ensuring that developments within the Build to Rent sector are built to withstand changes in regulation and shifts in tenant preferences. This means that developers are building higher quality homes that are more comfortable to live in and are less harmful to the environment.

Building communities

Whether you are living alone or with children, having the chance to form bonds with others is very important for your mental health and wellbeing. Creating communities is an important part of the Build to Rent ethos with many offering communal spaces for both adults and children. This can include anything from workspaces, gyms, games room, private cinema, roof terrace, reading rooms and children’s play spaces. At Wembley Park development in north-west London, renters can work from retro camper vans or sheds custom-made for home working.

Benefits to tenants

Tenants who choose a Build to Rent development will be able feel confident that they are living in a home that is not only kinder to the environment but is also ethically more responsible and providing them with a home that addresses their social needs. In the Government’s Ten Point Plan, targets include low carbon heating systems along with suitable walking and cycling routes, and electric car charging points, many of which can already be found in many Build to Rent developments. Younger tenants are especially clued up and keen to do their bit to reduce their carbon emissions and all renters want to save energy in their homes. It is thought that buildings with poor environmental ratings could become less desirable to tenants in the long-term. 


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