In the first session of the Property Webinar Series: Corporate Social Responsibility in Real Estate in Times of Crises – three expert panelists Mendel Giezen (Associate Professor in Sustainable Urban Development & Planning at the University of Amsterdam), Lisette van Doorn (Chief Executive at Urban Land Institute Europe), and Hans Op ‘t Veld (Head of Responsible Investment at PGGM Investments and Research Fellow at Amsterdam School of Real Estate) were invited to reflect on the social dimensions of CSR in relation to planning and property development from a theoretical and practical lens.
A growing emphasis on social dimensions within CSR
For the past 8 months, cities have faced harsh realities of the Covid-19 pandemic. The pandemic uncovered vulnerabilities prevalent within many urban societies, such as social isolation, small homes, and the lack of accessible urban amenities. Challenges to employment security, personal health and well-being have accelerated issues related to the availability of affordable housing and the quality of public space. Simultaneously, large property industry players have accentuated the need to consider the impact of their practices on the wider society: They brought CSR to the forefront of their agendas (Savills 2020, McKinsey 2020, JLL 2020, Bouwinvest 2020).
Within the property industry, increasing awareness of the social and environmental impact of investments have led to the emergence of Environmental, Social, and Governance (ESG) standards. ESG standards aid investors in their decision-making processes by allowing them to evaluate the sustainability of their investments. In 2020 alone, the Global Real Estate Sustainability Benchmarking organization (GRESB) covered infrastructure funds and real estate assets of over 1,200 property organizations, worth $5.3 trillion in value. This novel approach towards investing is clearly bound to influence the shape of property developments and eventually urban areas at large.
With the growing importance of ESG standards, it becomes crucial to understand the extent of its impact on urban areas. More importantly, we need to explore if and how planning can benefit from it. As Heurkens et al. (2015) indicated, in the changing urban governance context, planners and urban policy makers need new and innovative instruments to play an influential role in steering property markets. Campbell et al. (2014) also highlighted how planners should identify opportunities to advance the development of better built environments. With this in mind, approaching CSR from a planning and policy context creates an opportunity to ensure urban built environments successfully connect to the social value of urban communities.
With emphasis placed on the social component of CSR and its impact on property development practices, the objective of the first webinar session was threefold: First, to recognize how CSR is interpreted in the property industry. Second, to identify the various drivers of CSR in property development. And third, to determine the possibility of regulating CSR for the advancement of social value in property development.
Unpacking the complexity of CSR
Theoretically, social responsibility is not clearly defined. What responsibilities do corporations need to take on? There needs to be a distinction between normative responsibility and formal responsibility…Mendel Giezen
To advance CSR in property development we first have to know what it essentially means. The absence of a clear definition is fundamental to the complexity of CSR. It creates a sense of vagueness as to what kind of responsibilities businesses are expected to follow and to what extent. Furthermore, when centralizing the ‘social’ aspect, it produces another layer of complexity due to the qualitative nature of the social dimension in different urban contexts.
As highlighted by one of the experts, the concept’s ambiguity stems from the fact that CSR is principally a moral obligation that businesses take on to improve their competitive advantage. Particularly since CSR is a voluntary initiative. Thus, it creates a dilemma, specifically in times of crises, as businesses may disregard their informal responsibility of addressing urgent societal issues to preserve their formal responsibility of maintaining the economic performance. As such, CSR needs to be formally defined to transition the concept across the field and foster social change.
On the other hand, within the property industry, CSR is instrumental for the profitability of property investments. Social considerations such as affordability and inequality undeniably impact the return on investment of real estate assets. However, to tackle these issues, a clear framework that defines and measures social impact is required to progress the integration of social value considerations into property development. To address this issue, industry experts have taken the responsibility of developing their own frameworks to address these gaps.
Past, present, and future drivers of CSR
I think it’s a combination of things [that are drivers of CSR]. Perhaps we have to find other ways of generating return. Secondly, our constituencies tell us to get moving on this issueHans Op 't Veld
Alongside global factors such as the Sustainable Development Goals and Paris Agreement, the experts highlighted the role of investors in advancing CSR. External factors such as climate change are driving investors to enforce ESG standards in investment portfolios. An example given during the session was the impact of climate on waterfront investments. Concerns over its implication led investors to pressure investment managers to draw out non-financial key performance indicators (KPIs) to assess long-term financial impacts. Furthermore, crisis situations such as Covid-19, have accelerated CSR through increasing awareness on issues such as public space and housing affordability.
Internal factors such as private actors’ self-awareness of the societal impact of their practices, play a big role in driving CSR forward too. As highlighted during the session, the key challenge industry experts face is that they need to ensure that the transition they make is a just transition. This means that the decisions made within property companies need to reflect the changing trends and expectations of society. Conversely, the Covid-19 outbreak was expressed as a temporary driver with no long-term influence on CSR. Despite this, several internal and external factors seem to play a role in influencing CSR and are bound to alter its course in the future.
From corporate social responsibility to shared social responsibility
…providing affordable housing, for example, requires very strong leadership from the public sector, because they need to state the vision and strategy for the private sector to deliver.Lisette van Doorn
During the discussion, the experts expressed the need for public sector bodies to actively participate in progressing social responsibility in property development. Theoretically, regulating CSR would provide a framework for property actors to effectively implement social value into property development processes. From a practical viewpoint, the experts emphasized the need for public private partnerships to define a long-term vision for CSR. More importantly, there is a need for public and private sector actors to define their responsibilities to one another to avoid any expectation gaps. Despite CSR being a private sector led initiative, public sector involvement is crucial for its progression.
Keeping this in mind, multiple variables need to be taken into consideration before addressing the viability of CSR in property development. As the “social” aspect is central to the concept, it clearly calls for the involvement of public sector engagement to create a unified vision of social responsibility. It also calls for developing a societal understanding (i.e. public, private and civil society) of social value to integrate CSR standards in property development processes. As property developments do not exist in silos, we need a framework to capture and measure its wider societal impacts. Thus, property development actors and public sector actors need to jointly define the boundaries of social responsibility, which essentially means that corporate social responsibility becomes a shared social responsibility between both parties.
Lastly, as planners struggle to tackle challenges such as social exclusion and inequality in urban areas, planners require novel instruments to aid them in their mission. Furthermore, as crisis situations such as Covid-19 continue to impact the lives and wellbeing of people, planning systems will have to adapt to the rapid changes occurring in urban areas. Therefore, I urge planning and urban studies scholars to engage with CSR and aid in its advancement.
Nagwa Kady is currently working on her PhD research on CSR in property development within the framework of a Writing Fellowship Grant from the Centre for Urban Studies. She is a co-organizer in the Property Webinar Series and an active member of the Urban Governance Research Network (UGoveRN).