The CRE sector is embracing the Environmental, Social, and Governance approach as investors and tenants alike are demanding projects with a focus on sustainability, social responsibility, and governance. It’s a phenomenon of realization that the sector contains within it the ability to react to the most pressing concerns facing the world, from climate change to social inequality. Adding ESG to its existence is not an option anymore but a must for the sector’s future, according to real estate developer Dov Hertz.
Environmental: Building a Sustainable Future
Sustainability has become one of the cornerstones of ESG for real estate. Developers are seeking green building certifications such as LEED (Leadership in Energy and Environmental Design) and WELL, using renewable energy solutions and incorporating energy-efficient technology to reduce their impact.
“Environmental sustainability is the secret to the long-term success of any commercial real estate development,” states Dov Hertz. “Developers who focus on green initiatives not only cut operating costs but also create value for tenants and investors.”
By incorporating sustainable design features—such as solar energy panels, climate-friendly heating and cooling systems, and water-saving measures—developers can enhance the appeal of a building while meeting regulatory requirements and enhancing climate goals.
Social: Building Inclusive Communities
The social component of ESG considers the impact real estate developments have on occupants and communities. That means making communities inclusive and accessible, improving occupant and surrounding community well-being.
“Real estate is not buildings; it’s people,” Hertz says. “Developments that prioritize social equity and community care ultimately have a bigger, longer-lasting impact.”
Some of the socially responsible elements include low-cost housing units, community facilities, and health promotion activities in office buildings. In meeting these needs, developers can place their developments in the context of the needs of society and secure tenants who have a high respect for corporate responsibility.
Governance: Encouraging Transparency and Accountability
Good governance is essential to the success and integrity of real estate developments. This includes ethical decision-making, transparency in operations, and compliance with legal and regulatory standards.
“Good governance is the backbone of any successful project,” Hertz adds. “It instills confidence among investors, tenants, and society as a whole, ensuring stability and growth in the long term.”
Developers are now putting in place governance frameworks that encourage accountability, such as robust reporting on ESG factors, stakeholder dialogue, and adherence to ethical business conduct. These not only contain risks but also enhance the image of a company in the market.
ESG as a Competitive Advantage
The integration of ESG principles is not only a moral obligation—it’s an advantage. Investors now turn to ESG-compliant projects with the knowledge that projects that are sustainable and socially responsible pay dividends in the long term.
“ESG is not a cost, it’s an investment for the future,” Hertz insists. “The projects that adopt these principles are the ones that will last.”
Tenants are also creating demand for ESG-compliant properties, especially as corporations try to match their real estate footprints with their own sustainability ambitions. Green and socially responsible properties also attract high-quality tenants, minimize vacancy, and increase asset value.
The Way Forward
As ESG becomes the focus of commercial property, developers must adapt to meet shifting expectations. This requires integrated solutions that tackle environmental, social, and governance concerns at every stage of a project—design and construction, operations, and management.
“ESG integration is no longer an option—it’s the future of real estate,” Dov Hertz concludes. “By making these values a priority, developers can create projects that not only enrich their bottom line but the world as a whole.”
Because the industry is changing so rapidly, ESG provides a blueprint for sustainable development, stakeholder cooperation, and responsible stewardship. It is a chance for developers and investors to construct not just buildings but a sustainable future.
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