Brexit, the modern office and ESG
Aviva Investors spoke on real estate and ESG at our 2019 Predictions Forum
As Brexit discussions rumble on, predicting the future of the UK economy has been challenging, especially in the financial services industry, which helps to support vital investment across infrastructure and real estate.
At our Predictions 2019 event at One Angel Court, City of London, we discussed with Aviva Investors, the growing influence of environmental, social and governance (ESG) teams on how investments are made across real assets by major pension funds and long term investors. See video above.
ESG Analyst in Aviva Investors' Responsible Investing team and a specialist in real assets, Stanley Kwong, said he found it very valuable to join our forum to hear differing views on the use of office space by large corporates and agents.
Stanley highlighted the problem of risk when offices are sub-let, not knowing whether the subsequent tenant's activities are in line with Aviva's chosen ESG principles:He also introduced the discussion point on how climate change is now material in the way that long term investors assess companies.
'We have metrics so that we can assess climate change management at each company, especially in the oil and gas sector. Shell was recently challenged on carbon emissions and they understand that investors are concerned about their strategy. Are they moving to a low carbon CapEx future? Are they embedding it into the whole business model or is it just a bolt-on? There has been a big shift among our clients towards asking far more questions on environmental, social and governance (ESG) themes.'
At the forum, we chose to focus on the insurance sector and asked how that would fare post Brexit, with numbers employed and the demand for office space in the capital, an area which has seen a major change in business models towards flexible working..
Former General Counsel at Willis Towers Watson, Oliver Goodinge, joined our discussions on this topic. He predicted that Brexit will signal the end of London's pre-eminence as a global insurance hub, and this will impact on demand for high grade office space in the capital and some regional cities.
He cited the 50,000 people employed to service the London-based insurance market but that this number would decrease as other hubs in Europe grow in power. Watch him speaking in the video clip above.
South Bank office acquisition and disposal expert at Union Street Partners, Mark Anstey, also joined our discussions and reflected that there had been a sea-change in how work spaces are now configured and used. Watch Mark above commenting on the sustainability of the WeWork flexible work space model in London and whether this would push office landlords towards different behaviour.
Union Street Partners suggests that 'planning changes, infrastructure upgrades and amenity improvements need to be closely tracked to ensure that purchase opportunities are not missed in growth areas. Our office in the heart of Bankside ensures that we know the streets that we advise on'. Watch Mark speaking above.
Thank you to all our contributors to this interesting forum, content of which will be referred to in our programme of events next year.