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In our latest Impact Chat, Social Invest Director, Luke Cross, spoke to Alex Notay, Placemaking & Investment Director at PfP Capital.

Alex has around 20 years of experience in strategic advisory and investment, particularly across the built environment. She is also the Chair of the British Property Federation’s (BPF) working group on ESG and a member of the Association of Real Estate Funds’ (AREF) ESG and impact committee.

Below are some highlights of the conversation.

The challenge of measuring ESG

Alex explains that ESG has gone from being a “nice to have, to something people are desperate for”. This is something she has picked up on from her work with the BPF, which gives her insight across much of the built environment sector.

Alex notes that the appetite for measuring and reporting ESG credentials is obvious but that defining a consistent set of metrics can be a challenge. She says that because there is “no standardised metric” the various sectors have to make do with various frameworks and standards.

The language around ESG matters

“There is a lexicon around ESG that everyone uses and because it hasn’t been set down and agreed, it does allow for confusion,” Alex suggests.

She also references Investment Association research which previously found that, although ESG-related finance was widespread, much of it was open to scrutiny upon closer analysis.

Alex explains that the language that we use around ESG and impact reporting must be clear in order to prevent greenwashing.

People want numbers

Alex highlights the challenge within ESG reporting of mixing quantitative and qualitative data. This is particularly the case as many organisations are now trying to move towards impact reporting, as opposed to ESG reporting.

“The challenge is that people want a number of social value and it can quite quickly become a magic number accelerator,” she says.

She notes that impact reporting is useful but it is more about real life stories, which leaves less room for hard data.

ESG reporting across jurisdictions

The conversation looked at the various frameworks and legislation that are in place, or coming into place, globally and where the UK sits within this context.

Alex says that the UK would have needed to adhere to the European Union’s Sustainable Finance Disclosure Regulation (SFDR) but that post-Brexit we have created our own guidelines: the Sustainability Disclosure Requirements (SDR).

She says: “The advantage we have in the UK is that we have seen the SFDR in action when we were in the European Union. There were some gaps in real estate that hadn’t been factored in. We can look at that and say ‘let’s avoid that’”.

Weaknesses in ESG measurements

The discussion also turned to specific measurements and metrics used by the built environment sector in ESG reporting. Specifically, Alex talks about the limitations of EPCs and what this meant for their validity when reporting.

She says: “We know that EPCs are a redundant measure but we need to acknowledge that that is what the government has to use.”

Alex explains that you can’t manage what you don’t measure adding “there is a way to go to find a reasonable measurement in reporting but it is going to take time and money”.


Click here to watch the Impact Chat in full