Environmental, social, and governance (ESG) considerations have grown increasingly important in real estate investing. In addition to prioritising environmental sustainability, real estate investors are using metrics on governance, community impact, and many related factors to evaluate properties.
The shift toward ESG comes as recognition that these considerations improve investment outcomes by helping maximise operational efficiencies, align stakeholder interests, and reduce overall risks. As ESG rises in importance, these measures can also add value by helping create portfolios of assets suitable for sale in the future.
An increasing set of real estate investors understand that incorporating ESG factors into decision-making is more than just a check-the-box exercise. Rather, there is an emerging appreciation that ESG is a highly important component when evaluating long-term real estate investments.
For data centres, ESG considerations have proven to be particularly vital. These facilities account for an estimated 1% of worldwide electricity use, so the impact to global energy demand is significant.1 And data demand will only increase—from consumers, businesses, and emerging technologies such as artificial intelligence, driverless car technology, and 5G networks.
We expect the rate of demand to grow exponentially. This is a key driving factor why data centre landlords and tenants are taking important steps to ensure that ESG considerations are a priority.