It’s a case of adapt and improve

‘The opportunities are huge for companies who recognise the value of ESG’ says Eoin Leonard, founder and CEO at i3PT.

18th November, 2021
It’s a case of adapt and improve

What is your name and what position do you hold?

My name is Eoin Leonard and I am the founder and CEO at i3PT.

What are your day-to-day responsibilities?

As CEO, I’m principally responsible for leading and communicating the strategic direction of the business. I’m also accountable to the staff and the executive board for the overall effective management of the company.

From an operational perspective, I work with the sectoral and operational leads within our team, setting specific, measurable goals and creating the conditions for these goals to be realised.

I work closely with our key clients and partners to ensure that we stay ahead of markets trends and protect their interests. Above all else though, my real passion is contributing to the development of our software and services. ESG, building safety and digitalisation are passions of mine and I read about these topics obsessively.

We recently signed a major partnership agreement for ESG with Savills and I work directly with Mark Reynolds and his senior team to make sure that our services merge seamlessly.

What is your professional background?

I have a varied professional background, which includes training and qualifications in Data Centre Design and Project Management, as well as holding an MBA from UCC. I’m a perennial student though and I’m constantly learning. I hope to return to executive education next year to complete further studies in sustainable finance.

We could see significant changes in the design and construction of buildings post-pandemic. What do you anticipate will be priorities for owners and tenants?

The pandemic itself is already having an impact on the design of buildings with respect to common areas, layouts and spaces as well as ventilation considers and other considerations. However, the pandemic will not be the most significant change driver in 2022 and beyond. The most significant change agent for building design over the next decade will be the EU Taxonomy. This new regulation sets new baselines for the definition of sustainable buildings and anyone who wishes to claim that their buildings are “sustainable” needs to understand it.

Will certain traditional property strategies require a rethink? Which, if any, real estate sectors run the risk of becoming obsolete?

I think that the tendency to demolish assets to make way for new builds will require a major rethink. I say this whilst noting that in some cases it does remain the most feasible option. Soon, adaptive reuse of existing assets will be far more attractive because it will be less harmful to the planet.

The more we set science-based targets and track the true whole life-cycle cost of their activities, the less attractive demolition will become. This will create opportunities for creative building designers who can optimise existing assets with embodied carbon.

Also, I believe that poorer performing buildings with poor adaptability potential will find themselves facing obsolescence soon. EU states are increasingly introducing Minimum Energy Performance Standards (MEPS) for new and existing assets. This will make it mandatory to either invest in assets which do not meet minimum energy performance standards, or face disruption to the business model. It’s a case of adapt and improve or die. There is no “do nothing” scenario!

Where are the opportunities / risks?

The opportunities are huge for companies who recognise the value of ESG and move early. People are setting Net Zero targets left, right and centre, but I don’t see many of them understanding how they are going to achieve that target. Those who treat it as a marketing exercise or a fad will be facing major risks, as funders and investors increasingly screen for greenwashing and bluff.

The reality is that the large blue-chip investors, many of whom are clients of ours , are dedicated to doing the right thing. They see climate risk as investment risk and they will align themselves with smart developers who treat ESG strategically. Sustainable assets will increase in value as we approach 2030 and beyond.

Countries and companies are lagging too far behind now, despite promises and as non-financial disclosures become mandatory, pressure will increase to improve firm’s Green Asset Ratios.

The opportunity is there for companies who understand where the world is headed and get out in front.

What are the ramifications of climate change on the real estate sector in the short, medium and long-term?

Short term we will see three types of companies in real estate. “Laggards,” who want to wait and see where it will all go and treat ESG as a tactical challenge. “Evolving” companies who seek advice and try to modify their existing operating model to meet minimum standards. And “Integrated” companies who recognise that their firms need ESG sponsorship at board level, a meaningful ESG strategy and who treat ESG as a lens through which they view all operations, rather than simply adding another layer.

Medium term, verifiably sustainable assets will see a price premium attached to them, as demand increases for same. Government will be likely to introduce a combination of “carrot and stick” to drive the real estate sector towards COP26 targets. We will see grants for deep retrofit, making such interventions more viable. We will see low-cost finance for green development and access to green bonds for projects which align with EU Taxonomy. We will also see minimum energy performance standards introduced, which will force people to either invest or divest.

Long term, price premiums will normalise as more green assets reach the market. Insurance premiums are set to increase for less sustainable assets. Non-financial discloses or corporate ESG reports will be subject to audit in the same manner that financial accounts are. Greenwashing will be an offence which people are prosecuted for, and there will be some major losses for those who fail to recognise the significance of the challenge.

Eoin Leonard is speaking at The Business Post’s 2021 National Property virtual Summit on Dec 1. Visit www.propertysummit.ie for full details and to book.

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