ESG (Environmental, Social, and Governance) is an acronym heard more and more frequently in the business world, including in the real estate sector. However, to date the focus has largely been on the E and the G. So why has the S been left behind?

As pointed out by Philip Hirst (JLL) at the recent JLL webinar 'Unlocking Social Impact Trends in 2022' social impact can be positive, negative or neutral. What we are really interested in is what social value (i.e. the positive) real estate can offer.  Any social value from real estate is most likely to be delivered on a local scale, however, that does not make it an unimportant measure of the value of a building. 

Syreeta Bayne (JLL) noted at the webinar that there is increasing recognition that all organisations have a social responsibility. Investors, landlords and tenants need to work together to create social value throughout the life cycle of an asset.

Perhaps the main reason that the real estate sector is falling behind on the 'S' is not an unwillingness to contribute but a difficulty in measuring the unquantifiable. Quality of life and wellbeing are key measures of social value (Eleanor Boyce (UKGBC)). However, the social impact of any aspect of a building or any measures taken will vary depending on the locality and also on the individual. In addition, difficult decisions need to be made in situations where social value may conflict with sustainability. An example given by Edward Dean (Landsec) at the webinar is that more jobs are created by demolishing old buildings and replacing them with new, however, it is far more sustainable to repurpose existing buildings. There is currently no grading or benchmarking system for social impact and it is difficult to see how any such system could account for all the many variables that might affect any measure of social value, which will also evolve day by day.

However, social impact and the sense of community might be exactly what is needed to transform the high street and shopping centres. It is likely that the future of the high street will not revolve around how many products are sold and how much revenue is taken in any particular store. Might the high street become more of a community space? A space to showcase brands (big and small) which may drive people online to make their purchases? In order for this to become viable, we need to find a way to measure the value of these spaces by more than just the cash taken in-store. This will require change from all of the stakeholders involved. It seems flexibility will be key in order to flourish in the ever-changing demands of society.