It’s said that “fortune favors the bold.” In 2022, you could also say that fortune favors those who embrace ESG.
Environmental, Social, and Governance (ESG) factors define Wall Street’s most profitable companies. Microsoft, Accenture, J.B. Hunt, and Salesforce are some of the high-performing stocks that also score highly in ESG ratings.
Even if your housing portfolio isn’t owned by a Fortune 500 company, you can still embrace ESG and capitalize on responsible investing.
In the final part of this three-part series, we’ll list questions to ask yourself when getting started with ESG and how to find a technology partner. We’ll also take a look at the future of ESG and where responsible investing fits in.
Did you miss the first or second installment of our ESG series? Check out our introduction to ESG and our blog about the connection between ESG and smart technology.
For more in-depth information and analysis, watch Chief Product Officer Mitch Karren’s recent Multi-Housing News Snap Session about ESG best practices and how to increase value with technology.
Getting Started with Environmental, Social, and Governance Factors
If your company is one of the many that will embrace ESG this year, you may be wondering how to get started. With thoughtful planning, you can lay the foundation for successful ESG alignment.
Here are a few things to consider when getting started with ESG:
What do you hope to gain from your ESG investing? Is there a particular outcome you hope to achieve with ESG investing? You might focus on reducing waste across your portfolio or improving job satisfaction among site teams.
How does ESG factor into your portfolio’s long-term goals? Achieving high ESG scores is a marathon, not a sprint. What do you want your housing portfolio to look like in a few years, and how does ESG fit into that vision?
Which type of technology provider will best meet your needs? When you've determined your ESG goals, think about which type of smart home technology provider will match your needs and budget.
Choosing the Right Smart Home Tech Provider
Smart home technology providers not only make owners’ and operators’ lives easier. The right supplier will also provide in-demand smart home connectivity while uncovering the data-driven insights you need to score well on ESG evaluations.
Look for a provider that has not one or two promising things to offer, but an entire ecosystem that can be built upon for a total smart home experience. For example, if you want to automate access control and effectively manage parking, you want to ensure that your service provider can do both.
Don’t overlook the software powering the supplier’s products, either. When it comes to getting started with ESG, Mitch Karren, Chief Product Officer at SmartRent, pointed out in this Multi-Housing News Snap Session that "hardware is half the battle." An ideal provider will also have robust software powering hardware functionality and data tracking features gathered by these devices.
A smart home technology provider should also have the structure to improve and innovate its products. ESG is bound to change over time, especially as responsible investing becomes an integral part of the financial sector. A provider that prioritizes innovation is a good choice if you want to feel confident they can meet future demands.
What’s Next for ESG?
As in the past, responsible investing will continue to evolve over time. According to Worth, early-stage responsible investing limited funding in industries like alcohol, tobacco, and firearms. Then, discussions about responsible investing centered on whether ESG factors played a role in a company's performance.
Now, we know that ESG factors contribute to overall performance. In 2020, 85% of investors considered Environmental, Social, and Governance factors in their investment decisions. But, will that always be the case?
The answer is yes, for the foreseeable future, with a greater emphasis on each of the factors and how investors, companies, and other entities can further impact the world with responsible investing.
In the housing and proptech industries, we are seeing an increased push for “healthy buildings.” These buildings prioritize residents’ and team members’ health with good air ventilation, circadian lighting, and outdoor areas with plenty of open, green space.
Incoming Environmental Laws
While the United States has yet to introduce any sweeping environmental or social laws, these laws are starting to take hold in Europe.
One such law is the United Kingdom’s Environment Act, a globally leading law poised to positively impact several environmental concerns, including air and water quality, waste management, and endangered species. The United States has no similar law but will feel the effects of the Environment Act and others in the coming years.
The demand for ESG-aligned technologies will increase as regulations spread. As supply struggles to match demand, ESG-friendly products will go to market rapidly. Environmental, Social, and Governance factors should be considered sooner rather than later, before demand for ESG outstrips the supply.
The Big Picture
ESG is a key consideration in investment decisions. Likewise, consumer demand for experiences that align with Environmental, Social, and Governance factors makes it hard for housing operators to ignore the rise of ESG.
Smart technology is a friend to ESG investing because of how easily smart home devices can cut back on needless energy spend and waste while providing the sustainable, socially responsible living experience that today’s renters want. Smart technology can also help companies in the area of governance, streamlining operations and revealing the health of a portfolio at any given time.
If you’re ready to embrace ESG across your portfolio, we’d love to hear from you. Request a demo with SmartRent and our experts will help you decide which smart devices are best for your ESG goals, now and in the future.