Real estate will miss critical targets if it fails to future-proof

Real estate is one of the biggest emitters of greenhouse gases. Housing alone is responsible for 15% of the UK’s greenhouse gas emissions. Tech has proven itself critical to the real estate sector’s progress in reaching sustainability targets, making it harder for innovation laggards in the industry to ignore. It’s often said “you can’t manage what you don’t measure”. New and innovative technologies providing real-time data and insights are enabling companies to better understand their ESG credentials and adapt to improve them. One realisation is becoming clear, at least to the larger, more institutional real estate owners: if you aren’t already looking to improve your ESG credentials and priorities through the future-proofing of technology, then you are at critical risk of losing out. Hopefully, the mid to small end of the market will soon follow suit as well. Investing in solutions This autumn, the world’s business, government and NGO leaders will look to the UK’s COP 26 to iron out the successor of the Paris Agreement, discussing solutions and setting environmental targets. Setting aside a £375m government fund, for “game-changing” UK tech firms, Rishi Sunak has already addressed a clear focus and attention on “clean technology”. According to the UN Environment Programme, construction is responsible for 38% of all CO₂ emissions. Being at the beginning of the real estate lifecycle, there is a clear need for accountability within the sector and for companies to make urgent and dramatic changes to their environmental activities. To date, over 50% of all of Pi Labs’ historical investments have been made into companies that help solve the ESG challenges in real estate and construction. Portfolio companies such as Switchee, Demand Logic, Built-ID, 720° and Qflow have launched innovative solutions that help monitor energy consumption, carbon emissions, air quality, sustainable development, and environmental risk – quietly changing the world for the better. As the sector continues to mature, key tech pioneers are emerging. Demand Logic is helping landlords like Grosvenor and L&G reduce their building energy costs and carbon emissions, Qflow is helping construction sites manage environmental risk and impact, and 720°, an indoor environmental quality platform, is a great example of a start-up that is helping landlords deliver “healthier” buildings. Focus is often placed on the “E” in ESG. However, as policymakers put pressure on real estate owners and investors to embrace innovation and technology, the importance of the “S” and “G” is being heightened. That said, although there are relationships between environmental, social and governance sustainability, we are cautious of conflating them. In fact, our upcoming research report on environmental sustainability in proptech shows that looking at ESG from an overly simplified perspective can actually mask unsustainable elements of an asset or organisation. For example, a fossil fuels corporation could earn ESG credentials for having a diverse board, while concurrently causing irreversible ecological damage. Driving take-up I am proud that we are investing in next-generation technologies to help address the environmental challenges emanating from real estate and construction. By bringing together global real estate firms with the most promising technology start-ups, we look forward to playing a leading role in increasing adoption of technology to tackle climate issues, enabling the industry to work towards environmental targets set by UK and European leaders at the upcoming summit. Faisal Butt is CEO, founder and chairman of Pi Labs