ESG is spreading across all industries, including proptech. Idriss Goossens, founder and chairman of the Belgian PropTech Lab shares the latest insights on the topic.
ESG has established itself as one of the buzzwords of the past few years. How is it currently shaping the Proptech sector?
Recently, I was speaking with a decision-maker of one of the largest developers in BeNeLux, and she was saying “ESG is like an avalanche for us”. What she meant is that it has become the number one priority on the Executive Committee’s agenda of many organizations and became their most important innovation focus. Although ESG is not new, it has now reached a certain maturity and organizations have been pushed to incorporate ESG factors in their strategic decision-making, transformation, and reporting. Today, regulators command it, investors require it, and society expects it. This being said, where do we stand today? We surveyed 100 construction and real estate firms in Luxembourg and Belgium (with revenues ranging from EUR 40M to EUR 700M) and found that although 100% of the respondents said that they will further analyze the ESG in the coming 12 months, only 18% of the respondents were financially incentivizing their FTEs with the ESG performances of the company.
The European Climate Law forces the real estate sector to reduce its emissions by 55% by 2030 and become climate neutral by 2050. What are some of the best ways corporates in can adapt to this law?
ESGs are a moving target, with constant new trends, solutions and requirements. So, at the end of the day for construction and real estate corporates the main challenge is to develop an efficient strategy of agility, allowing them to adapt their tools, processes, and operations to a fast-changing environment.
In terms of agility strategy, a couple of companies are very visionary: Vinci Immo launched the innovation platform Leonard (a similar approach as BESIX did with Unleash and their acceleration programme, and similar to what D’Ieteren has done with Lab box), Icade launched Urban Odyssey, Nexity launched Nexity Lab Bouygues Immobilier, launched the BIRD investment fund.
Regarding ESGs more specifically, there are different levels of operations we should differentiate (and the ESG strategy for each of them is different): the existing real estate stock, or the new built, as well as at the company level or at the project level (construction site/real estate asset).
For the newly built, the strategy could be the following: first define your ambitions (circularity, carbon neutrality, energy positivity, etc). You can define your ambitions at the project level as well as at the company level. Second, define your ESG issue area you want to focus on.
Third, list all the proptech startups that can help you to meet your ambitions and analyze (1) can you install them in retrofit or should it be installed at the design phase? (2) Then think of the financing: Is it part of the company budget or is it part of the project level? (3) start collaborating with startups on a pilot-project base, before generalizing the usage on all the pipe of projects
Strategy for the existing stock, a retrofit strategy should be implemented. Luckily, currently, many proptech solutions are “plug and play” and can be implemented really quickly. I would recommend to start by measuring the performances of the existing portfolio (energy efficiency, vacancy rate, amount of GHG emissions generated, etc) and then define a budget allocated to the ESG strategy.
Buildings account for 40% of all energy consumed. Green Buildings, whose market potential is estimated to be $24.7 trillion by 2030 by the IFC, are supposed to tackle this issue. How far along is Europe/Luxembourg in making the switch to Green Buildings?
Newly built buildings are performing highly in terms of energy efficiency, the main problem is the existing building stock, which is the elephant in the room. In Germany, for instance, there are currently millions of homes which are below the minimum energy efficiency standards and which are stranded assets (can not be rented oit anymore). Currently, the renovation rate of the existing real estate stock in Europe accounts for 0.2% per year on average. If the EU wants to achieve both its 2030 climate target and climate neutrality by 2050, this figure must increase by a factor of 15 to reach 3% by 2030.
“One of the new spaces I discovered recently is energy storage, which is a very important issue.”Idriss Goossens, Founder & Chairman of the Belgian PropTech Lab
RecAp is the first resilient cities accelerator launched the Belgium Proptechlab. What does a resilient city look like and what are some of the opportunities startups can explore in your accelerator?
RecAp is the first ESG accelerator for both proptech startups & construction/real estate corporations. It’s a joint venture between PropTech Lab and Revive (a developer of urban neighbourhood) and it’s quite unique because we combine these 2 tracks!
For startups (they must be ESG related), it’s a 6-month funnel of sales acceleration. For corporations, it’s a 12 months track to increase the ESG maturity. We start by defining/refining the ESG ambitions, sourcing the right startups to deploy in order to meet the ambitions, and close pilot projects and collaborations between the corporations and the startups. The first cohort will start on October 12th, StartUps can apply on RecAp.
What are some ESG-related topics in proptech that you think deserve more attention?
One of the new spaces I discovered recently is energy storage, which is a very important issue. Storing energy coming from alternative energy streams allows buildings to do peak-shaving, self-consumption, grid arbitration, and potentially create smart grids.
According to the European Commission, if we want to decrease GHG emissions by 55% by 2030, we will have to have an infrastructure of 200 GWh of energy storage, which represents more than 100 times the current installed capacity. This is why I am super excited about the StartUp Octave (which recently raised EUR 2m): they offer real estate landlords and tenants the opportunity to store energy, in second life batteries of electric vehicles, with a real-time battery performance software.
Which proptech innovations do you hope to be embraced more in Luxembourg?
I think Luxembourg has some flagship projects that are pioneers in terms of ESG. These include the IKO Real Estate HQ, certified Well, or the project Wunne mat der Wooltz of the Fonds du Logement. What I would be super excited to see, given the fact that Luxembourg has a high population of expats, staying a couple of years in the Grand Duchy, is more scalability in the offering of real estate: if we could have buildings with scalability, offering to the end-users a possibility to expand the size of the square meters (buying/renting adjacent rooms), changing the configuration of the square meters (the set-up of the walls for instance) based on their needs and the size of their family, that would be a game-changer. This is what startups like OWWI and HabX are doing!