Environmental social governance (ESG) has been one of the major themes of 2018 and it has become such an intrinsic part of an investor’s decision-making criteria that neglecting to give proportionate value to ESG immediately weakens your ability to compete in a highly active market.
It goes beyond that. A company’s ability to attract and retain the most talented employees, to work with the best advisers and to appeal to the widest pool of customers can be strengthened simply by its reputation to do good.
The wider social impact of the property industry is generally understood in terms of delivering better places for people to live and work in, and a whole planning system is in place to promote not only appropriate but sustainable – in every sense of the word – development.
The sustainability of individual buildings is well covered and easily measured through the likes of BREEAM ratings and enlightened funds are monitored for best practice by benchmarking agencies such as GRESB.
Despite this, in the UK there is some £1trn of standing commercial stock that does not have regular intervention of redevelopment or refurbishment, and where owners and occupiers can make a simple and lasting impact, extending their fiduciary duty to their contract with society.
This can be as simple as adopting a policy to enforce the real living wage.
In many of these buildings, people work as cleaners, receptionists or security guards, all jobs that traditionally pay low wages. The government’s national living wage provides some protection, but the real living wage goes beyond this by providing a subsistence living, an appropriate wage to remove reliance on government benefits.
The halo effect is immeasurable, promoting positive wellbeing and health for the employee as well as any dependants.
Moreover, commitment to paying a real living wage can encourage staff retention, productivity and loyalty for an employer and improves a firm’s reputation with clients, in addition to wider stakeholders. People want to work for and with companies that, simply put, do the right thing.
First Living Wage property fund
The BMO UK Property Fund, managed by BMO Real Estate Partners, is proud to be the first UK property fund to have received accreditation from the Living Wage Foundation as a Living Wage Employer.
This stems from its decision, on behalf of the fund, to ensure that each and every employee that falls within scope at all its third-party contractors are paid the real living hourly wage of £10.55 in London and £9.00 across the rest of the UK.
The fund has achieved this accreditation through a process of reviewing all contracts and, where appropriate, intervening with the contractor to ensure its employees receive a pay rise to meet the living wage threshold.
What was the cost? It was limited; of the 50 properties in the fund’s portfolio, in many instances interventions were not required and the impact was a negligible increase of 0.25% on the overall service charge. This marginal expense for the business and occupiers can make a significant difference to the employees who we rely on every day to care for our buildings. They deserve a real living wage.
Paying the real living wage is a simple intervention that makes a big societal difference and is a standard we should adopt across the real estate industry, because it is the right thing for us to do.