ESG has grown massively in recent years, with the value of ESG-driven assets hitting a staggering $45 trillion in 2020.
However, despite the huge rise in ESG investing, there are still some issues when it comes to the collection of accurate ESG data. 53% of respondents to a BlackRock survey cited concerns about ‘poor quality or availability of ESG data and analytics’ as their biggest barrier to adopting sustainable investing.
There is an ever-growing need for investors to have better data on companies' non-financial performance. Luckily, IoT is on hand to provide a cost-effective solution to the collection of ESG data.
Before we get to the interesting stuff, it’s worth starting with the basics.
ESG stands for environmental, social and governance criteria, and it’s pivotal to the way today’s businesses operate. It’s all about a company’s business model, and how its products and services contribute to sustainable development.
In recent years, ESG investing has extended beyond financial investments and into real estate. The appetite for tracking and prioritizing ESG factors in buildings has exploded, and there are several reasons why:
It's clear that real estate is going to be one of the asset classes where the contrast between ESG winners and losers will be the starkest, as ESG is a measure of both impact and risk. 'Brown' assets and portfolios risk becoming obsolete, while 'green' assets will continue to increase in value.
Luckily, the outcome is not set in stone – technology can make it quick, easy and cost-effective for owners, managers and occupants to retrofit existing buildings and turn them into sustainable, efficient and healthy assets.
The Internet of Things (IoT) is the global network of physical assets – ‘things’, like sensors and devices – that are connected by the internet. These ‘things’ are used to monitor the world around them and to collect and exchange the resulting data.
Some ‘things’ collect and send information, some receive information and act upon it, and some can do both. What makes them smart is that they can talk to each other over the internet.
There are two main reasons ESG and IoT go hand in hand.
Firstly, IoT can help to make the collection and reporting of ESG metrics way more accurate and streamlined. Secondly, there are loads of ways that IoT can actually help to enhance ESG performance.
Both are set for huge growth in the coming years, and it’s clear that there are going to be some exciting opportunities for the relationship between ESG and IoT to develop.
ESG metrics can be measured and collated with precision with IoT sensors, including:
And importantly, a smart building platform like Metrikus brings all of this data into a single place so that performance can be traced with accuracy. It’s easy to see whether or not a company is hitting its targets, or if steps need to be taken to improve efficiency.
As we’ve mentioned already, IoT not only allows key ESG metrics to be tracked, but can also help to enhance performance across key environmental, social and governance factors.
For example, using IoT sensors to monitor indoor air quality is an easily quantifiable way to optimise occupant health, wellbeing and productivity. Smart alerts can notify you when key air quality parameters deviate from their optimal zone, so that steps can be taken to maintain a healthy indoor environment.
Real-time occupancy monitoring can also help to improve ESG performance in a variety of ways:
Companies can get secure and accurate data at their fingertips, documenting the improvements they’ve made and identifying any further opportunities for optimisation.
Outside of the built environment, there a lots of other interesting ways that IoT can help with sustainability:
If you’d like to find out more about this, check out our blog post with five interesting ways that IoT can help the environment.
ESG issues are becoming an increasing priority across the world, and regulation is constantly encouraging us all to become more sustainable.
Going forwards, companies will be subjected to an increasing set of non-financial reporting requirements, including disclosing their ESG impact. Using IoT technology is a great way to get started with ESG, helping you to collect accurate data and improve your rating.
If you’d like to learn more and speak to an ESG expert, get in touch with us today.