ESG: A Smarter Way to Invest | John Burns Real Estate Consulting

ESG: A Smarter Way to Invest


You may not know what ESG is but you should. ESG is an investment strategy. It stands for Environmental, Social, and Governance. It is basically a method to account for the impacts of investment practices beyond the traditional financial measures and metrics. Some people say ESG is just a fad. If that’s true, it is a four-trillion-dollar fad and that’s bigger than wearing a hoodie under a blazer or doing “statement lighting” in your remodeled kitchen.

DuPont is one of the biggest companies in the world and they take ESG very seriously. To help us understand why and what that means, we have on the podcast two key people at DuPont, a bigger part of the housing sector than you might think. Alan Hubbell leads DuPont’s Performance Building Solutions residential marketing team, and Shawn Hunter is DuPont’s leader of sustainable solutions for their building and construction business unit. Some key points to help us define ESG and gauge how it impacts our industry and beyond follow.

What is ESG

  • ESG means “doing better” with respect to sustainability and climate, that you have policies to promote a healthy working environment, and that you are transparent and responsible. But at its core ESG is a way to manage the risk of your investments.
  • Being “green” is not just good for the planet. It is smart investing. It is long-term thinking. It is assessing risks and opportunities far more thoroughly.
  • Some estimates say ESG investing is a $4 trillion part of the financial world. It is the next big thing.

Why ESG

  • ESG investing is something not only customers are demanding, but so are employees. It can be a motivator; it can set you apart.
  • And we can’t forget the push factors. Governments are looking to move industries to more self-sustaining practices like zero-carbon emissions. ESG policies will be a big part of that.

ESG and Housing

  • DuPont is a lot more than just a chemical company. They are a big part of housing through products like Tyvek®, Froth-Pak™, and Great Stuff Pro™. They help form the skin of the house and how it breathes. They even touch the inside of your home with products like Corian.
  • More home builders are jumping on board the ESG train and hiring folks to help them navigate the issues inherent in ESG. Soon it will be the norm.
  • For DuPont, ESG impacts housing through things like energy efficiency, managing water and heating and cooling and air flow. 40% of greenhouse gases come from buildings. Here is where the housing zero carbon emissions goal rubber meets the road.
  • Sustainable building materials, recyclable materials, less toxic materials. All of these things are critical to homes and increasingly top of mind to buyers. Demonstrating how your home is better and healthier is fundamental.

Future ESG

  • Consumer interest in the issues that form the core of ESG will only increase. Governments will demand more as well. ESG will not just be an investment option, it will be a necessity.
  • ESG will be a way to balance doing what is “right” with what is “profitable.” Corporations and investors are at their best when those goals align, and ESG can help point out a pathway to achieve that.

For a full transcript of this episode, click here.

 

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Dean Wehrli If you have any questions about our podcast, please contact Dean Wehrli, Principal at (916) 647-3263 or by email.