The ESG Momentum: Catalysts and Challenges

En recent years, global markets have shown a growing interest in driving Environmental, Social, and Governance (ESG) projects. What prompts this phenomenon, and what challenges does it present for organizations and investors?

Returns have ceased to be the most crucial factor for investors in the stock market. In recent years, concerns about Environmental, Social, and Governance (ESG) issues have gained greater significance, becoming a decisive factor for this sector when choosing where to allocate their resources. This shift has escalated the stakes and the pursuit of sustainable projects worldwide.

This change has led to a significant increase in commitment to sustainable projects around the world, with investments in ESG funds increasing every year, according to The Wall Street Journal.

In 2000, the United Nations (UN) established the Millennium Development Goals (MDGs), aiming for countries to make progress in eight global needs.

In 2015, as the deadline for achieving the MDGs passed without meeting the objective, nations agreed to promote a more extensive action plan: the 2030 Development Agenda. This includes the realization of 17 Sustainable Development Goals (SDGs), addressing major challenges for humanity and creating a better world for future generations through a collaborative effort involving the public sector, private sector, and civil society.

Following the definition of these goals, investors began to reconsider the structure of their portfolios, not only for financial purposes but also considering ESG criteria and the benefits they could bring. Simultaneously, companies started showing interest in adopting this new trend, seeking resources to enable institutional initiatives addressing major global challenges such as climate change or resource scarcity.

ESG in Action: Industrial Parks Embrace Sustainable Development

Industrial Parks in Mexico have not been an exception, navigating the realm of ESG. Certifications, reports, contracts, and renewable actions validate this new order.

Investments in sustainable industrial real estate development are set to increase in 2024, driven by advancements in environmental measures, corporate governance, and social impact within this segment.

The integrated evolution of ESG criteria in around 30 affiliated industrial park developers in the AMPIP (Mexican Association of Industrial Parks) is the catalyst for this change. Additionally, forecasts for the current year indicate $900 million in financing focused on supporting projects originating from nearshoring. These resources are generated by the International Finance Corporation (IFC) of the World Bank and the financial system. Both factors have facilitated the growth of policies and the generation of resources contributing to the expansion of nearshoring, estimated to yield revenues equivalent to 1.5% of the annual Gross Domestic Product (GDP).

The AMPIP’s ESG report stated that, by the end of 2023, 64% of surveyed companies had policies and/or procedures that included environmental issues, while 57% had certifications in their facilities. Collectively, the results focus on achievements in 215 industrial parks, 164 properties in various types of industrial parks, and 109 standalone properties.

Industry analysts believe these actions are the result of incorporating global criteria into the tenants of such spaces, aiming to preserve the environment. Currently, according to the report, developers regulate their actions through certifications such as EDGE (Excellence in Design for Greater Efficiencies), Green Lease Leader, and LEED (Leadership in Energy and Environmental Design), among others.

However, actions in favor of the environment go beyond sustainability and encompass corporate governance and social impact. “37% of companies with industrial real estate activity generate renewable energy from solar thermal and photovoltaic energy, and 73% include environmental, social, and governance clauses in their contracts,” details the document. The achievements at the end of the last year result from actions taken since 2018 when the AMPIP developed a roadmap for the new generation of intelligent and sustainable industrial parks by 2030.

Certifications base their criteria and commitments on the Global Compact, the Sustainable Development Goals (SDGs), and the Principles for Responsible Investment (PRI). These elements address the commitments established in the Sustainable Development Goals of the Agenda 2030. For industrial properties specifically, SDG 9 considers “building resilient infrastructure, promoting sustainable industrialization, and fostering innovation.” The sustainable impact on industrial parks is estimated through actions in energy efficiency, water usage, and waste applied to 6.7 million square meters of gross leasable area.