Property knows all about the challenge of (re)building trust
The World Economic Forum this year is billed as being about ‘rebuilding trust’. Whether the optics of the global elite holing up in Davos for what is one of the world’s most exclusive events support that theme or not is open to debate.
But for business, the issue rebuilding and strengthening trust amongst stakeholders is undoubtedly critical. Those who work in property feel this perhaps more strongly than other sectors. Property has long been one of the least trusted sectors among the public, with developers often maligned in the public imagination.
Yet as anyone who works in the sector knows, property can be transformational when it comes to improving the lives of people and communities – whether through decent homes, better public realm, or greener and more dynamic workspace, the impact can be profound.
While this gap between the good a company or sector is doing and how it is perceived is not unique to property, it’s hard to think of another industry where the potential for positive transformation is so out of step with its public perception. And in the age of ESG, where the public increasingly expects businesses to be good corporate citizens and use their power and influence in positive ways, this gap – or “great disconnect” as we call it – is only widening.
That was one of the key findings of SEC Newgate’s Global ESG Monitor, published last year. Our landmark global study surveyed more than 12,000 people across 12 countries to understand community awareness and perceptions around ESG issues and actions by corporates in this space.
High expectations around green and good agenda
The research found that despite a growing backlash among certain parts of the investment community and on the ‘anti-woke’ political right, public expectations for authentic action on ESG issues remains high and is only increasing. And yet the lack of trust in companies and the disconnect between their actions and public perceptions is widening, particularly in the UK. What can be done to bridge this divide? And specifically, how should property companies respond?
While (unsurprisingly) the research shows a general lack of public awareness about what the term ESG means — with just 13% saying they have a good understanding – when the term is unpacked, the findings show ESG issues are rapidly gaining momentum, with almost half of the community stating an interest in ESG issues – a significant gain on last year’s results.
This is coupled with a growing expectation that companies should act decisively on ESG, with seven in 10 feeling it is important for companies to act on ESG issues, and six in 10 agreeing that companies have a responsibility to use their platforms to speak out on ESG issues — findings that are even more pronounced among Gen Y and Gen Z.
Yet alongside this growing interest in the issues around ESG and an increasing expectation of companies to take authentic action, there is also increasing distrust. Half of the community lacks trust in companies’ claims about their ESG activities and performance – a significant increase from 2022. A similar number also worry about companies providing misleading information about the impacts of their operations. Half of those surveyed distrust what companies claim about their environmental impacts and almost three in five consider greenwashing to be a big problem in the UK, with Gen Z the most likely to hold this perception (65%).
In fact, of the 12 countries surveyed, UK citizens are the most distrusting, with only a third believing that companies in the UK are using their power and influence for positive change. And which sector is right at the bottom of public perception when it comes to taking action on ESG? Property, which lies second last, level with fashion and the chemicals industry and only just ahead of mining and resources. This means property companies struggle to gain cut-through when communicating the good things they are doing around the ESG agenda.
Bridging the ‘Great Disconnect’
So how can companies bridge this gap? Our research shows that better communication of ESG actions is needed to bridge the divide (and given the lack of awareness among the public of the term, avoiding the use of “ESG” itself would be a good start), along with a more consistent approach to measurement and reporting of ESG. This is particularly salient to property, where there is an alphabet soup of ESG-related ratings and certifications, while the term “net zero” is used and abused to the point of meaninglessness.
What is clear is that the response should not be “green hushing”, where companies go silent on their ESG actions for fear of being called out for greenwashing on the one hand or woke capitalism on the other (or both at the same time). That would be the wrong conclusion to draw. Our research shows the public does want companies to act on ESG and communicate more clearly what they are doing in this space, even if they are distrustful of what they are told.
Careful, consistent, and considered communications about authentic ESG actions, grounded in evidence and proof, must be the starting point in bridging the great disconnect. But this must be with an acceptance that there is no quick fix, as property is starting from such a low base when it comes to public perception. After all, reputation takes a lifetime to build, something those in Davos this week would do well to remember.