ESG initiatives in Property Management

The Hong Kong Government announced the Hong Kong Climate Action Plan 2050, which outlines strategies and targets for achieving net zero greenhouse gas emissions by around 2050. Hong Kong is also committed to taking action under the Paris Agreement, which calls upon the Parties to cooperate with the private sector, civil society, financial institutions, cities and regions to mobilize stronger and more ambitious climate actions in the world.

Over the past decade, environmental laws and regulations have been applied across various areas in Hong Kong, including the Air Pollution Control Ordinance, Ozone Layer Protection Ordinance, Product Eco-responsibility Ordinance, Water Pollution Control Ordinance, and more. Undoubtedly, such guidelines and ordinances will continue to be made stricter in the future, therefore, boards of directors and C-suites must ensure they address ESG issues and embed ESG factors into their business strategy to meet the changing regulatory requirements.

Environmental, Social, and Governance (ESG) has taken center stage across industries and sectors in recent years, and it is likely to impact every aspect of a business — from human resources management to investment decisions. Not only has it become one of the pivotal non-financial factors in investment decisions — helping investors and stakeholders alike assess an organization’s sustainability and ethical impact, but it also fosters greater corporate resilience and a positive reputation, which are considered key drivers of long-term business success.

According to the Government, buildings account for around 90% of electricity consumption and more than 60% of carbon emissions in Hong Kong. Therefore, the real estate sector and the property management industry play vital roles in ESG. To ensure long-term business success, it is crucial for property management professionals to prioritize ESG initiatives for sustainable and ethical business development in the future.

Property managers can meet their ESG goals through green building. Green building is the practice of reducing buildings’ environmental impact and enhancing the health and well-being of tenants. Incorporating green building features into the commercial lease life cycle can help property managers reduce buildings’ environmental impact, thus achieving sustainability.

1. Energy Optimization

Lighting, cooling, heating, and other systems account for most of the costs of offices. Effective energy management brings several benefits, in addition to optimizing energy consumption, it can also lower operational costs, enhance property value, and reduce greenhouse gas emissions as well as carbon footprints. Energy efficiency requires modern property management, in other words, property technology (PropTech).

PropTech refers to a wide spectrum of digital technologies to simplify property management or real estate business processes on a daily basis. Property managers can leverage energy-efficient systems and appliances such as lighting controls, smart thermostats, and IoT energy management and monitoring systems to achieve substantial energy savings.

2. Waste Management

Offices generate several different types of waste such as paper, food, coffee cups, broken electronic items, and used ink cartridges of photocopiers and printers. To reduce waste and achieve efficient use of resources, property management companies can implement green leasing and waste reduction and recycling measures in offices and buildings.

Waste reduction and recycling measures include waste sorting and recycling. Recycling facilities can be provided in the building in order to facilitate the tenants or occupants to practice waste separation and recycling with ease. On the other hand, property management companies or landlords can implement green leasing proactively. Green leases vary, and they are not legally required in Hong Kong. A green lease is a form of lease or supplement document that includes provisions to impose duties and obligations on the landlord and the tenant to share the responsibility of reducing the environmental impact of a property through various measures.

3. Water Conservation

Commercial buildings use a significant amount of water. Water efficiency is a critical step towards a sustainable future. Implementing water-saving strategies can help conserve water and avoid water shortages, resulting in cost savings and sustainable development. Property managers can start saving water by taking actions like engaging with tenants and occupants to foster a culture of water-conscious behaviors, installing water-efficient fixtures, and implementing a smart water monitoring system to detect irregular water usage, burst pipes and leaks.

4. Renewable Energy

Most energy resources are derived from fossil fuels such as coal, oil and natural gas, leading to greenhouse gas emissions and air pollution. By harnessing clean and natural resources such as solar energy, wind power and hydropower, benefits can be created for humans and the environment. What’s worth mentioning is that some renewable energy sources are inexhaustible and free. Real estate companies can integrate renewable energy sources like solar panels, wind turbines, or geothermal heating and cooling systems to reduce the use of fossil fuels, leading to lower greenhouse gas emissions and utility bills.