Can property follow where Goldman leads?

The news that US investment bank Goldman Sachs will no longer run stock market listings in the US or Europe for companies with only white men on their boards has been welcomed as a bold step, including by property players. “Bravo for shining a spotlight on this issue,” says Tyler Goodwin, chief executive of investment firm Seaforth Land and a former employee of investment banks JPMorgan and Deutsche Bank. “It’s a really powerful message coming from a powerful organisation, showing that they have values and they’re prepared to leverage those values to help effect change.” How ambitious could companies in the real estate industry be in their own business when it comes to addressing a lack of diversity in the corporate world? If they follow the lead of Goldman, the answer is: very. Creative thinking Goldman chair and chief executive David Solomon told CNBC the bank will put a policy in place from July under which any company the bank takes public must have “at least one diverse board candidate, with a focus on women”. “We realise that this is a small step – but a step in a direction of saying, we think this is right,” Solomon said, adding that from 2021, companies taken public by the bank will need to have at least two diverse board members. “Goldman’s move is an interesting one,” says Andy Martin, UK chief executive of BNP Paribas Real Estate. “To me it’s indicative of the creative thinking that we are seeing from many corporates now, looking deep into their operations to see where they can create the biggest impact on their ESG goals. If we are really going to build a sustainable future, we all need to do things differently.” What would such a policy look like in the real estate industry? It could be an agency turning down a mandate from a big corporate occupier looking for a new office if its board lacks diversity. Or a large landlord declining to lease space to a company with only men on its board. “I would love that,” says Seaforth Land’s Goodwin in response to those suggestions. He thinks there is an argument to be made that prioritising work with diverse clients with modern governance regimes will be better for real estate firms’ businesses in the long run. “I believe there is a direct relationship between sophistication of tenant and covenant of tenant,” Goodwin says. “If they are sophisticated and enlightened, they arguably are aspiring to be better corporate citizens. That would suggest that they’re hiring better talent and employing their efforts to greater meanings than just making profit. It’s a better tenant, it’s a better covenant.” Will to change Jessica Hardman, head of UK real estate at asset manager DWS, agrees that firms looking to encourage a significant impact on industry governance issues should look carefully at the businesses they keep company with. “As an asset manager, the most natural way to support change in the industry is supporting those businesses that show a like-minded approach to shared business priorities, including diversity topics,” Hardman says. However, Hardman adds, the change needs to start inside a business. “The will to change needs to infiltrate the organisation’s culture from senior leaders to the newest recruit,” she says. “DWS has a highly diverse team in terms of the multiple nationalities and pathways – and with gender diversity we continue to improve the numbers with numerous senior roles held by ambitious homegrown female real estate talent to ensure that gender balance is achieved within our future leadership population.” DWS is not alone in starting its journey close to home. Several companies have focused efforts on diversity within their own businesses and those in their supply chains, as opposed to launching initiatives that, like Goldman’s, could result in them turning away work from prospective paying clients. Landsec’s group HR director, Barry Hoffman, says: “For the property industry, there’s still a way to go in becoming truly diverse – and we need to focus on diversity from the inside-out.” Hoffman adds that the listed landlord holds recruitment firms to account in delivering diverse shortlists for roles. But he also highlights the company’s supply chain charter, which sets out expectations for firms doing business with Landsec. “Working with responsible, diverse and inclusive companies and project teams helps us avoid group think in our decision-making,” Hoffman says. “It also fosters creativity and enhances the way we consider and manage risk. By making our teams more representative of the diverse customers and communities we support, we’re more likely to be able to anticipate and respond to people’s needs.” To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette