Yugo’s prevailing view on ESG is that it's about doing the right things for our people and our planet, which will have a self-reinforcing impact on our profit margins – realising the so-called triple-bottom line. The essential point here is that ESG and profit are mutually beneficial so there is no need to sacrifice one for the other. 

There is evidence linking the two, especially in the environmental area, but sometimes these links are more subtle. Yugo over time increasingly views ESG as a system of ‘wicked opportunities’ for its shareholders, employees, supply chain, consumers (students), customers (building owners) and the wider stakeholder group (universities, parents, etc.). 

Based on a research study done with over 10,000 students, Yugo has distilled three main themes which have become the pillars of our business: concern for the planet - YugoEco (E); professional concerns post-higher education - YuPro (S) and concern for holistic growth - YuGrow (S).

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Solving for ESG

During the Vienna session, we began by asking participants to explore the relationship of ESG factors along three vectors: Operations, Capital/Investment, and Construction. These relationships can be summarised as a series of intertwined trade-offs and opportunities (with multiple occurrences of cross-over from one to the other – hence the wicked nature of this area). 

For example, currently the most pressing topic is energy. Energy (production, transport, storage, and related emissions) is probably the single biggest challenge throughout the real estate life cycle.

As investors become more concerned with the environment and the environmental impact of their investments, there is increasing pressure from capital markets to minimise greenhouse gas (GHG) emissions. The technology and build-costs to achieve this minimisation of GHG are expensive, or at least more monetarily expensive than ignoring it. 

Likewise, in the operational phase, energy needs to be used to provide comfort and services for students and staff. Add to this the current energy-cost crisis and you have pressure coming from all directions. As a result, it begs the question: will we see individual metering of units or bedrooms (where legally permitted) and billing back to students within the PBSA industry?

This would transfer the consumption and cost risk from the operator and investor to the user (student). Arguably, with a more direct correlation between use and cost, the students could potentially become more conscious of their energy impact and may reduce their consumption as a result—which would be a good thing.

The flip side is that this would force students to take on the additional and uncertain risk of cost which then forces an affordability issue on them.  

Towards Social Value

In February 2021, in a debate hosted by The Class Foundation, the question was posed, “What is the business case for the move to ‘social value’?” 

In this climate, the business case for investing in alternative, green or on-site production of energy seems clear.  The question remains, do we need to wait for a crisis to act on all of the sustainability and social issues facing us?