Etienne Cadestin

Four Questions to Louise Ellison

Etienne Cadestin interviews Louise Ellison – Sustainable Development Director at Hammerson Group, Chairman of the Better Building Partnership (BBP) and EPRA Sustainability Committee : 


Do you think the Covid Pandemic will increase the need for addressing ESG matters in the property sector?

The ‘need’ will not increase as it is already there, but the attention is gets might. The pandemic has focused attention on many things but a common thread running through them is often risk.  Business approach to risk will likely change as a result of the shock of the pandemic so I would expect climate risk to become more specifically referenced in business strategy – if we have learned anything.  The scale and speed of the impact of the COVID Pandemic took businesses by surprise and yet pandemics are an understood risk, particularly ‘flu related.  It was clearly a recognised risk as the Government had already run scenarios, but it seems the information these scenarios produced was not acted upon.  If we apply this to climate change and specifically to the property sector, we can see clear parallels. Businesses are increasingly expected to produce climate risk scenarios to understand how our assets would perform under different climate outcomes to inform our wider business strategy and thinking.  We can articulate both transition risks and physical risks over different time-frames.  We have access to increasingly sophisticated levels of information on climate change and are able to reflect upon what this means for our businesses. The question is: is all this knowledge being applied within short, medium and long-term business strategy? Are we acting up on it? 

Another element driving greater focus on ESG is the number of notable environmental impacts flowing from the lockdown, not least the improvement in air quality. The awareness this has generated of the impact we can have by changing behaviour is raising expectations of businesses to walk the talk in terms of environmental impacts.  Our buildings are a strong manifestation of corporate impacts so it is increasingly important for businesses to make sure our real estate performs really well and can be demonstrated to do so. 

The Covid 19 crisis brought social impact to the forefront of the ESG agenda. Do you think the S part of ESG will become a mandatory element to address for investment managers ?

Mandatory is a very strong word and can create unexpected consequences – we can all find a way to demonstrate we have ticked a box.  Investors taking the time to understand what a company or fund is actually delivering and engaging with them to improve it can create more meaningful outcomes.  As real asset owners and asset managers we have an important role to play within the communities where we operate.  The immediate challenges the pandemic has presented for the most vulnerable and the longer-term challenges that it will create, particularly for the young, make it imperative that businesses step up and find creative ways to help. There is an increasing expectation again that businesses look to ensure their impacts are positive at the broadest level, not simply financial.  Those business that do this successfully are more likely to flourish.  Not understanding your role therefore becomes a risk and I can see a point at which investors expect investee companies to articulate their social impacts and take action to ensure they are positive. 

Hammerson have pledged to become net positive by 2030, how’s that going?

It is as challenging as you would expect a target that ambitious to be.  However, it has focused the businesses attention on working towards a very specific goal and this has driven change faster than even I was expecting.  Hammerson had a strong sustainability programme before we set these targets but this has triggered a number of changes particularly in internal processes.  These make the sustainability implications of decisions more explicit which, in turn, then colours what we choose to do.  These targets have, for example supported our investments in technology and renewables.  Our development teams are focused on how we achieve net zero carbon buildings, both embodied and operational, and are setting a very strong agenda for the design teams to deliver against.  Setting Net Positive targets so early allowed us to get ahead of the curve in our thinking so we are ready to look at net zero carbon trajectories for our assets.  I think that has been one of the most important lessons – Hammerson having acted early in taking climate change seriously means we are able to respond to the rising challenges it is presenting and the related demands of our investors and wider stakeholders. So, setting that ambitious target to become Net Positive has wider benefits than simply achieving that target. 

If you had one message to give to the property industry leaders, what would it be? 

That there is no vaccine for climate change so give it the respect it deserves.  We are experiencing what happens when a major, identifiable risk manifests itself without warning.  We are already experiencing climate change and can see the risks to the global economy but still seem unwilling or unable to take the big decisions necessary to get ahead of it.  Understand what climate change is likely to do to your assets and to your business and, if you haven’t already done so, make a plan.

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