Understanding ESG and Sustainable Investing
The Basics of ESG
ESG stands for Environmental, Social, Governance. It is a crucial term in the financial and investment sectors, referring to a company's internal practices and extending to parameters that evaluate a company beyond its financial performance. The health and stability of a company are often discernible through metrics that span beyond mere financials.
Why ESG?
On April 21st 2021, the European Commission adopted the sustainable finance package of measures which includes the proposed CSRD which reforms and greatly increases the scope of reporting required compared to the NFRD disclosure requirements. The increase in scope means that since January 5th, 2023 almost 50,000 companies in the EU now have to report on ESG issues. This is because the new directive includes a broader set of companies, including more SMEs, which are now required to report on sustainability. Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS). These implementations have had global ramifications and impacts across companies worldwide - for the better!
Why does this matter?
With the ever-changing unpredictability of the global landscape companies are seeking stability, and they are finding it through implementing ESG strategies in their corporations in order to increase their robustness. “Addressing environmental, social & governance (ESG) risks is becoming increasingly essential for businesses to foster resilience and ensure long-term sustainability.”(Dibra, 2023)
In 2022 KPMG found that 96% of the world’s largest 250 companies by revenue publicly report on ESG or sustainability matters. “Businesses are accelerating their proactive measures and are seeking to invest and integrate third-party solutions that, in part, help businesses stay abreast of international regulatory requirements and keep up to date with ESG global news,” The 2023 State of Corporate ESG: How companies are embracing ESG for resilience and growth.
ESG and Urban Farming: A Synergistic Relationship
Urban farming—a practice of cultivating, processing, and distributing food in urban areas—closely aligns with ESG principles, offering a sustainable model that addresses environmental challenges, promotes social well-being, and requires responsible governance.
Environmental Stewardship
Urban farming significantly conserves resources, reduces carbon footprints by localizing food production, and enhances urban biodiversity, thereby improving air quality and mitigating the urban heat island effect. For more detailed insights, refer to our blog on Urban Agriculture: The Solution to Urban Pollution.
Social Well-being
Urban farms enhance urban food security, foster community engagement, and contribute to health and wellness by providing access to green spaces and fresh produce.
Governance
Initiatives like MicroHabitat's emphasize ethical sourcing and fair labor practices, setting standards for responsible business conduct. Transparency and accountability are also pivotal, with clear reporting on environmental impacts and community engagement efforts.
Adding Value Through Sustainability in Real Estate
Integrating ESG into real estate assets not only enhances their sustainable profile but also adds substantial value, attracting investors and increasing the asset's market value. A study by CBRE highlighted that buildings with strong sustainability and ESG credentials can command higher rents and sale prices, reflecting the growing demand for environmentally and socially responsible investment properties. For a deeper look into how sustainability can drive real estate value, read this article by CBRE.
Conclusion
Adopting ESG principles in urban farming and broader corporate practices guides urban establishments towards a more sustainable, equitable, and responsible future. This strategic alignment not only enhances the value of properties but also positions them as leaders in the global shift towards greener, more livable cities.
