Driving Sustainable Retail with ESG 

Jan 18, 2024

The retail industry has been experiencing significant shifts over the last several years due to the rise of e-commerce, changing consumer preferences, and the implementation of ESG regulations.

This evolving landscape requires careful consideration from corporate retailers, property owners, and commercial real estate investors to ensure the long-term health and profitability of their assets.

Driving Forces Behind the Retail Shift

In today’s retail environment, sustainability and ESG practices play a crucial role in shaping industry trends. Major retail players such as Patagonia, Ikea, and Home Depot are leading by example, investing in renewable energy, promoting sustainable sourcing, and implementing initiatives to reduce waste and water consumption.

The increasing focus on sustainability among retailers can be attributed to several factors, including a growing consumer preference for eco-friendly products and the proliferation of government regulations aimed at reducing carbon emissions in commercial real estate.

Regulatory bodies are tightening their oversight, particularly in terms of ESG and energy sustainability. For instance, ordinances like [Boston’s Building Energy Reporting and Disclosure Ordinance (BERDO)], which applies to commercial buildings of 20,000 square feet or larger, and [New York’s Local Law 97], affecting most buildings over 25,000 square feet, set stringent emissions standards, driving companies worldwide to intensify their efforts toward achieving net zero emissions.

Transition Risk for Retail Properties

According to our partner, GRESB, transition risks are business-related risks that follow societal and economic shifts toward a low-carbon and more climate-friendly future, including policy and regulatory risks, technological risks, market risks, reputational risks, and legal risks. Retail owners and investors are becoming increasingly aware of these risks as they navigate the intersection of consumer preferences and ESG regulations. Without proper assessment and planning, owners and investors run the risk of owning stranded assets that are losing value due to climate change.

Identifying overall transition risk associated with your retail portfolio can seem like a huge task to tackle. However, expert environmental, property, and climate assessments can help identify your property or portfolio’s overall risk, ESG score, and building performance so you can actively avoid having stranded, or brown, assets in your real estate portfolio.

Partnering with EBI for Success

At EBI, we recognize the pivotal role of ESG in the retail sector and offer comprehensive consulting services to help businesses in the retail industry, from corporate brands to real estate investment trusts (REITs). We collaborate closely with our retail clients to enhance their ESG performance, develop customized plans to reduce carbon emissions, achieve net neutrality, and enhance energy efficiency and sustainability across their real estate portfolios.

Elevate your retail ESG Program with EBI’s comprehensive support, guiding you through navigating transition risk and mitigating regulatory risks with precision. Our seasoned experts provide tailored solutions to ensure a smooth journey, empowering you to thrive in today’s dynamic market environment while safeguarding your investments for long-term success.

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