Corporate governance – an integral part of sustainable development
Corporate governance is an integral part of ESG, which is why for years we have been exercising due diligence in meeting standards and putting into practice sustainable development principles. This ensures security for our transactions, tenants – the best solutions, and investors – the desired stability and return on the investment product, in our case, warehouses, says Tomasz Mika, the Chief Financial Officer at 7R.
ESG is generally associated with environmental, climate and social issues. However, the standards and practices of corporate governance, i.e. the ‘G’ at the end the acronym, which has also increasingly been having an impact on the warehouse market, are of no less importance when companies come to implementing sustainable development policy. These include such issues as the transparency of operations and transactions, responsible governance and strategy, compliance, anti-corruption policy, and ethical leadership and business relationships.
Find out and buy
For 7R, attention to each of these aspects is evident at each stage of the development of the facility. The work begins with the selection and preparation of the site. When viewing plots, the company, which currently has approx. 70 projects at various stages of development, examines each of the ownership, legal, economic and environmental factors. This evaluation of potential land acquisitions is carried out by a dedicated team that carries out the necessary pre-acquisition analyses.
We have to be sure that the location is right for any of our investments and unburdened with legal impediments, because these could lead to problems at a later stage, such as when it comes to obtaining permits. We also look at the geographical area, its demographics, the interests of the local community, its full development potential and the ESG risks for each given place. Projects in large metropolises and urban centres make up a large proportion of the projects we develop, and this also has a significant bearing on this analysis.
Tomasz Mika
Chief Financial Officer at 7R
Due diligence is especially important before buying what might be regarded as difficult plots that require more work to bring them up to the required state. Examples of these include revitalised post-industrial sites, which require, among other work, extensive remediation, such as 7R’s very recent project on the site of the former Szopienice steelworks in Katowice – 7R City Flex Katowice I.
Between the investor and the tenant
However, this process does not end with just the plot, because in order to be able to meet ESG standards, similar care needs to be taken to scrutinise the financial transactions and contracts with the contractors, as well as monitoring the construction of the buildings themselves and their everyday operational processes. All these requirements have to be met with regards to securing future buyers of the warehouses.
“Our role as a developer is to acquire land, construct a facility, commercialise it and sell it to investors, who are increasingly often – like as we are – looking at the ESG criteria. Corporate governance and compliance are also very important to them,” says the CFO of 7R.
More and more aware investors expect compliance with ESG requirements. How much this is happening is revealed in EY’s ‘Is Your ESG Data Unlocking Long-Term Value?’ global survey of institutional investors. As many as 90% of them stated that they now attach more importance to the ESG activities of companies of interest to them in terms of their investment strategies, actions and decisions, than before the pandemic, while 74% stated that they would now be more inclined to exit an investment due to unsatisfactory ESG performance than before 2020.
We follow the best practices, while attending to investors’ needs and the changing demand from tenants. We can see that more and more of them are looking for sustainable offers and partners. That is why we apply solutions that help them achieve their ESG goals, e.g. photovoltaics, natural lighting of facilities, energy efficiency and optimal water cycle management.
insists Tomasz Mika
A sustainable partner
7R is at the moment preparing its first ESG report.
“We have been receiving an increasing number of inquiries regarding ESG from interested investors, tenants, contractors as well as financial institutions. We are aware of the challenges related to this issue and we also know that ESG is not a passing trend but represents a permanent change to the functioning of companies around the world,” says Tomasz Mika.
ESG is of interest to other stakeholders of companies, e.g. employees and local communities.
“Our stakeholders not only look at our product, but also at what kind of company we are, and the values and principles that guide us. Therefore, our internal policies are extremely important, together with the fact that every 7R employee is obliged to accept and sign codes of ethics and good practice and comply with them. Similarly, the attention we pay to ensure smooth cooperation with local authorities is required for the success of not only our investments, but also how the company is perceived and the goodwill it generates,” adds the CFO at 7R.
