There has been a significant structural shift and momentum in the real estate sector to become more sustainable. Real estate – the world’s largest asset class – generates 39% of total global carbon emissions including 11% from construction and 28% from operations [1]. With this, leading owners and operators of built assets are striving to be carbon net zero; with carbon targets publicly declared from now until 2050. This primary focus on sustainability presents a challenge to organisations needing to strike a balance within their overall ESG strategy, which comprises environmental, social and governance concerns.

Capital providers are demanding change, and whilst the ‘Environmental’ considerations are important, more awareness and action is needed on ‘Social’ and ‘Governance’ concerns.

At Taronga Ventures, we are seeing a growing interest in ESG technology solutions to address such challenges and believe that organisations must start thinking across all three ‘E’, ‘S’ & ‘G’ domains to deliver effective, balanced, and measurable ESG outcomes.

ESG has always been core in what we do – over 90% of Taronga Ventures’ investments and pipeline are in ESG-related technologies. From 2022, our innovation program will be dedicated to creating ESG Impact, supporting our corporate partner network to drive better environmental, social and governance outcomes through the delivery of innovation projects. In this article, we specifically highlight solutions that are addressing social and governance challenges and driving real impact in the built environment.

Innovating for better social outcomes

Social factors within ESG are concerned with relations between a company and its employees, partners, customers, investors, and the communities it operates in. Key social issues include stakeholder management, health and safety, human rights, equality, diversity and community engagement.

One innovation with a social focus is Spacecube – a modular building system that provides temporary or transitional assets for accommodation, healthcare, retail and public spaces activation. Spacecubes are designed to be flat-packable, customisable, re-locatable and re-usable. Up until the pandemic, Spacecube had been a leader in the event marketing sector, using their modular, highly versatile building system to build pop-up event and activation spaces. Within days of COVID-19 spreading into Asia Pacific, Spacecube pivoted the use of its innovative building system from events to build a COVID-19 testing facility and treatment clinic. Impressively, this temporary hospital facility was designed within days and fully constructed in just 16 hours. Coming out of this period and into a new normal, Spacecube is providing outdoor dining to get people back into hospitality outlets and creating unique placemaking experiences for city reactivation. Spacecube has solved many of the pandemic infrastructure issues and continues to play a pivotal role in post-pandemic placemaking.

Spacecube COVID-19 testing facility and treatment clinic, Monash Hospital, Melbourne Australia.

Another social innovation is Dash Living, a co-living residential solution that creates a global accommodation community through the sharing economy, technology, and unique tenant experiences. This empowers discerning urban professionals to live and thrive in the most expensive cities in the world. Its unique business model involves upgrading existing and underutilised residential assets, increasing occupancy to buildings which would otherwise be vacant, whilst solving the affordability, flexibility, and community aspects of residential living. Additionally, Dash Living creates significant value for real estate owners by enhancing yields through rebranding residential and neighbourhood assets and connecting to locals’ favourite nearby amenities and community services.

Technology to digitise governance

Governance considerations within ESG include decision making within responsible investment and operations, regulation and compliance, supplier transparency, employee OH&S, data analytics, cyber security, and crisis management.

OpenSpace is an innovation addressing governance challenges within construction. The technology uses off-the-shelf 3600 cameras combined with advanced artificial intelligence (AI) and machine learning technologies to capture a complete visual record of construction sites, share it via the cloud, and track progress remotely. This enables greater collaboration and risk mitigation between project stakeholders, whilst creating an extensive digital record. OpenSpace has expanded to 35 countries around the world and is pioneering a new class of AI tools that provide unprecedented insight into project status and progress.

OpenSpace technology at a construction site.

OpenSpace’s ability to capture a complete, layered digital record of a construction site at each step of the build is important, as having access to rich data creates a historical record for asset owners into the future.

A building with a comprehensive and inspectable set of historical data attached is easier to operate, as this data enables predictive maintenance, better capital planning, and drives operational savings on efficiency and costs.

Voyage Control is a governance focused technology for supply chain and logistics. Its software platform controls delivery scheduling and logistics by managing capacity inbound from the supply chain to the site. The technology, which can be used across construction sites, seaports, retail & facilities assets and exhibition centres, enables real-time management, tracking, communication and optimisation of materials deliveries. Voyage Control’s visibility into logistics activities proactively prevents bottlenecks by analysing peak capacities of loading docks, tower cranes, and hoists. It effectively streamlines operational processes; enhancing security, reducing congestion, improving driver compliance, and benefiting the environment through measurably lower transport carbon emissions.

Innovating equally across ‘E’, ‘S’ & ‘G’

The greatest challenge for advancing technology in the real estate sector is the status quo. To counter this, we must ask two key questions: how do we combat resistance to change, and how can leadership teams be encouraged to innovate for greater ESG impact? Despite frictions in adopting new technologies, continuing operational savings and rich data collected will ultimately make assets more valuable and sustainable.

Global capital providers have recognised that a greener, cleaner building is a more valuable building. This has in turn driven owners and operators to re-evaluate their decarbonization and environmental strategies.

Over the coming years, we expect owners to extend their focus beyond carbon, energy and sustainable resource technologies, to introduce novel social and governance solutions, rounding out the opportunity that exists within the ESG innovation spectrum.

 

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[1] United Nations Environment Programme 2019