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Emerald Group Publishing Limited
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Corporate social responsibility at a crossroads
Article Type: Guest editorial From: Journal of Property Investment & Finance, Volume 27, Issue 5
During the late 1990s and early 2000s, corporate social responsibility (CSR) has gradually established itself as one of the main tenets of any respectable company's mission statement. Different companies have different strands to their view of CSR but generally it has fallen into five main categories. Environment, Workplace, Diversity, Community and Corporate Governance. Obviously, it is the first of these five that impacts most strongly upon the property world through a commitment to environmental sustainability, energy management and sustainable development/investment but within the industry each category has its part to play.
Having said that, the world has changed. At the top of the market three years ago, it was relatively easy to commit to CSR. The financial cost of so doing was marginal when looking at the company's bottom line and, it could be argued, that it was an essential business strategy to match the commitment of the company's main competitors in CSR. To do otherwise was, at best, foolish and, at worse, detrimental to the standing of the company. But in today's recession, it is harder to commit CSR (and other such laudable initiatives) when the financial position of a company is being buffeted by the market downturn. Many companies have entrenched to a position of expenditure on essentials only and the knee-jerk reaction when the credit crunch hit was that issues relating to environmental sustainability could be put on hold. However, it would appear that this has not manifested itself in a long-term capitulation. The mind set of the early 2000s has changed and, even within the constricts of financial austerity, companies have, at least in words, reaffirmed their commitment to sustainable and social responsibility. The question is whether this commitment will be reflected in future actions? In part, legislation has taken away the option of ignoring sustainability. The construction industry in most major economies has embraced green issues and energy efficiency to match market demand and meet the new legal and quasi-legal obligations. There are now benchmarks to measure corporate sustainability intelligence and we have a generation of decision makers who want to ensure that their industries and services do not impact adversely on future generations. There is also the strong argument that the apparent failure of capitalism in its purest “market rules” form has been so discredited by the events of the last two years that a new social/financial order of “caring capitalism” is coming to the fore which will have CSR as a foundation stone to its new global cathedral.
As a subset of CSR, there is the role of sustainable and socially responsible in property investment. That is the theme of this special issue of the Journal of Property Finance & Investment. To maximise the return of any property investment, the investor needs to match the property to meet the demand of the occupier. It has been argued that “green” buildings (with ancillary “green” leases) will command higher rents and thus capital values will be higher. The question three years ago was “how much more would occupiers and investors be willing to pay for buildings which meet this sustainable requirement?” The reality of today is that it is difficult, if not impossible, to assess any value change directly attributable to sustainability. But what is being observed is that where lettings are happening, in most major markets, the properties which are being let are those with green credentials or with good energy efficiency or sustainability in any another from. In other words, investors who ignore sustainable and socially responsibility are more likely to end up with empty properties.
In this issue, we have four main papers that consider sustainable and socially responsible property investment. In the first paper “Business and marketing strategies in responsible property investment” by Ulrich Kriese, he looks at the business and marketing strategies pursued by responsible property developers and investors in the USA over the past few years and suggests how this may continue in the future. This leads into the paper by Philip Kimmet entitled “Comparing ‘socially responsible’ and ‘sustainable’ commercial property investment”. This paper addresses the central theme of language and our understanding of what we mean by sustainability and how this relates to social responsibility.
The last two papers, “Social and environmental metrics for US real estate portfolios: sources of data and aggregation methods” and “Developing a socially responsible property investment index for UK property companies” by Gary Pivo and Graeme Newell, respectively, look at the way in which social responsible can be benchmarked and measured. As with all facets of investment, investors need the comfort of being able to gauge their performance both internally and externally and as these benchmarks are established and standardised, it is argued that, the industry will embrace sustainable and socially responsibility even more.
So what now for CSR? Will the good intentions of the early 2000s dissipate and fade or will the global wish to do things differently in the 2010s mean that CSR is embraced more strongly and with even more commitment in all areas of the property industry but particularly with the property investors? As with everything, only time will tell.
Claire RobertsGuest Editor