ESG – What Is It? Should Assessors Care About Its Influence on Property Valuations?

E-nvironmental, S-ocial and G-overnance issues and risks are increasingly recognized in property markets. However, criteria / metrics for quantification of their relative impact on property values may not be consistent across geographies, between major real estate investors or over time. In one example, office buildings have been on a roller-coaster due to the Covid pandemic and labour issues around working from anywhere. How might ESG differently impact Class A, B & C office buildings? This paper will explore a value creation frame and challenges to help measure the potential for added value due to ESG factors in property markets. It will briefly examine what HBS calls the related 'seven sins of ESG'.