We talk a lot about technological developments that enable real estate owners and operators to make their properties more sustainable. While there is a lot of value for individual companies, the investment side is often left out of the conversation. Is sustainability real estate software for investors something that is needed? Let’s get into it.
While stakeholder needs, including investors, are often thought about when it comes to sustainability, it is not always a hot topic when evaluating technological solutions to aid in building a more sustainable industry. That being said, the rising focus on ESG or sustainability in the investment space should not be understated. It is integral that those working closely with investors, especially in real estate, understand the need for ESG data for investors, why they are demanding it, and how choosing the right solution provider can enable your team to work seamlessly with investors.
The Rising Role of ESG in Real Estate Investments
When looking at sustainability through the lens of a property owner or operator, the value is right in front of you. From success stories on how focusing on energy efficiency has reduced operational costs to successful initiatives that have appealed to their tenant’s needs. When looking at investors and their needs for ESG data the same value isn’t inherent. It is much more complex in how investors use this data to make decisions, what they are looking for, and why.
Bringing ESG data into the real estate investment space allows investors, or potential investors, to gain a bigger picture. Historically, financial data has been the focus of investment decisions. While this still matters, it is clear that financial performance is not the only focus anymore. That is not to say that you can appeal to investors without a great economic outlook, we are still in the money game. The introduction of ESG into the decision-making process allows for a more holistic view. Allowing investors to dig deeper and understand the outlook from more available data. There are also the regulatory changes that have been seen or may be seen soon. From mandatory reporting to sustainable investment guidelines, many firms may be preparing to report in a variety of jurisdictions.
The Current Challenges
The desire for this data has led to the reliance on ESG scores and ratings as well as regulatory reporting to meet investor needs. This comes with flaws and data challenges as “ESG ratings can tell vastly different stories about the same company. But this demonstrates the immaturity of the current rating environment and highlights the need for improvements.” There is a need for consistent and reliable data to inform decisions. Real estate software for investors is not a priority and while sustainability is key for property owners and operators, the needs are not the same.
What Real Estate Investors Look for in ESG Data
Real estate investors increasingly rely on ESG data to make informed investment decisions that balance profitability, sustainability, and risk management. This includes:
- Climate Risks: Understanding exposure to natural disasters and climate change helps investors prioritize resilient assets and mitigate potential losses. Tools like MSCI’s Climate Risk Assessments are commonly used for this purpose.
- Energy Efficiency: Properties with strong energy performance reduce operational costs—by up to 30%—and meet increasing regulatory and market demands, making them attractive investments.
- Regulatory Compliance: Staying ahead of ESG-related regulations, such as the EU’s SFDR, protects against penalties and ensures long-term marketability and financing opportunities.
- Stakeholder Alignment: Aligning investments with stakeholder priorities, such as tenant preferences or institutional ESG mandates, boosts reputation and market appeal.
- Governance: Strong governance practices, such as transparent reporting and ethical management, signal lower operational risks and increased accountability. Investors value properties owned or managed by organizations with robust governance policies that ensure long-term stability and compliance.
ESG data empowers investors to make informed decisions, balancing sustainability with profitability and risk management.
Data Use: A Comparison
A key difference in the data priorities is the way that the data is being used to inform decisions. These different data priorities do not undermine each other but rather work together if managed correctly.
When it comes to ESG or sustainability, owners or operators focus much more on the operational aspects. This isn’t to say that investor priorities are not also felt within the company itself, but a lot of the work is focused on operational improvements. This includes energy cost reductions through energy efficiency improvements, waste management initiatives, and initiatives to increase tenant and other stakeholders’ satisfaction. This operational data drives day-to-day decisions, improving the property’s environmental performance and cost-effectiveness.
Investors on the other hand focus on high-level metrics that assess risk, resilience, and long-term portfolio value. They want to understand the overall trajectory of the asset. They need to see that the risks are being understood and acted on so as not to be jeopardized by them in the future. Investors prioritize data that helps them evaluate the sustainability and risk profile of their portfolio across multiple properties or regions.
ScriptString bridges these priorities by providing a scalable platform capable of delivering both high-level ESG insights for investors and actionable operational data for owners/operators. By integrating diverse data sources, ScriptString empowers stakeholders to align their sustainability goals with measurable results, whether optimizing a single property or managing a global portfolio.
The Risk Management Angle
Risk management is central to ESG strategies, and data plays a critical role in identifying and mitigating potential threats:
- Physical Risks: ESG data helps assess vulnerabilities to physical risks, such as climate change impacts, natural disasters, and extreme weather events. For example, properties in flood-prone areas or regions experiencing increased heat stress are flagged, enabling proactive measures to mitigate damage and maintain asset value.
- Transitional Risks: Future regulations, evolving market demands, and shifting tenant preferences all pose risks that ESG data can help address. Data insights enable organizations to prepare for compliance with upcoming sustainability standards and adapt to market shifts favoring environmentally responsible properties.
Proactive, data-driven strategies are essential for protecting assets and reducing financial exposure. By 2050, climate risks could cost real estate portfolios billions globally, underscoring the urgency of integrating ESG data into risk management frameworks.
Real Estate Software for Investors & Professionals
ScriptString’s data intelligence platform empowers both investors and property operators by delivering comprehensive, actionable insights and views tailored to their unique needs. For investors, it provides high-level metrics on risk, resilience, and compliance, enabling smarter portfolio decisions and long-term value creation. For operators, it offers detailed, property-level data to drive operational improvements, from reducing energy costs to enhancing tenant satisfaction.
By bridging these priorities, ScriptString simplifies ESG data management, helping stakeholders align sustainability goals with measurable outcomes. The answers for both parties are in the data. If looking for investors, this should be a priority. If looking to meet investor needs, this should also be a priority. Having all data needs met is what ScriptString is best at, real estate software for investors and professionals.
Ready to make data-driven decisions that benefit both the planet and your bottom line? Contact us to learn how ScriptString can support your journey.
