Commercially Minded | From ethics to earnings: is ESG for real estate just risk and reward?

In this episode of Commercially Minded, Will Matthews, Knight Frank’s Head of Commercial Insight, is joined by Flora Harley, Head of Energy & Sustainability Research, to bring the conversation back to fundamentals. The focus isn’t on labels or compliance, but on what reduces risk and protects value, and what doesn’t.

While our (Y)our Space survey of almost 300 global corporate occupiers showed that ESG ranks relatively low as a standalone priority, its components, such as cost management, brand, and employee wellbeing sit firmly at the top. Energy efficiency, air quality and resilience to volatility have become everyday considerations, sharpened by the energy price shocks of recent years and a growing need for certainty.

What about investors? Again, the conversation has moved on, in this case to one of liquidity risk. Buildings that can demonstrate performance rather than just credentials are more likely to meet future lending, insurance and buyer requirements. As sustainability standards rise, what was once considered a “green premium” is increasingly the baseline, leaving underperforming assets exposed to a potential brown discount.

Data remains the enabler, and the pinch point. Years of disclosure and reporting have created a clearer picture of risk, but the real value now comes from using that information to act. Better data‑sharing, smarter buildings and emerging technologies offer a route to prioritising retrofit decisions, managing costs and reducing long‑term exposure - provided they’re used with intent.

The takeaway: ESG today isn’t about doing everything. It’s about focusing on what’s measurable, material and meaningful, and recognising that sustainability, like any other driver of value, only matters if it works in practice.

Listen to the latest episode of Commercially Minded for a grounded discussion on where ESG is heading, and why resilience, risk and reward are now inseparable in commercial real estate. Follow the podcast for monthly insights, and subscribe to Will’s newsletter for a weekly take on commercial real estate markets.  

Catch up on previous episodes of Commercially Minded here.