Corporate governance – an integral part of sustainable development

Corporate governance is an integral part of ESG, which is why we have been exercising due diligence for years to meet standards and put the principles of sustainable development into practice. This ensures security for our transactions, the best solutions for tenants, and the desired stability and return on investment for investors in our warehouse portfolio,” says Tomasz Mika, Chief Financial Officer at 7R.

ESG is most commonly associated with environmental, climate, and social issues. However, corporate governance standards and practices—, or the “G”—are no less important for the implementation of sustainable development policies in companies, and this final component of the acronym is also having an increasingly significant impact on the warehouse market. These include issues such as: transparency of operations and transactions, responsible oversight and strategy, compliance, anti-corruption policies, and ethical leadership and business relationships.

Browse and shop

For 7R, attention to each of these aspects is evident at every stage of a project’s development. The work begins with the selection and preparation of the land. When reviewing plots, the company—which currently has approximately 70 projects at various stages of development—examines ownership, legal, economic, and environmental parameters. Potential land acquisitions are evaluated by a dedicated team that conducts the necessary pre-acquisition analyses.

Due diligence is particularly important before purchasing challenging land that requires significant effort to bring it up to a usable condition. One example is the revitalization of brownfield sites, which require, among other things, proper remediation—such as one of 7R’s latest projects on the site of the former Szopienice steelworks in Katowice— 7R City Flex Katowice I.

Between the investor and the tenant

However, it doesn’t stop at the land, because in order to meet ESG standards, financial transactions, the compliance of contracts with contractors, completed facilities, and day-to-day operational processes are all scrutinized with similar rigor. All of these must meet numerous requirements, also with a view to future buyers of the warehouses.

“Our role as a developer is to acquire land, build the property, bring it to market, and sell it to investors, and they—like us—are increasingly looking at ESG criteria. Corporate governance and compliance are also very important to them,” says 7R’s CFO.

The number of informed investors who expect compliance with ESG requirements is growing rapidly. Just how quickly this is happening is illustrated, among other things, by the results of EY’s global survey, “Is your ESG data unlocking long-term value?”, conducted among institutional investors. As many as 90% of them admitted that they now place greater emphasis on the ESG activities of companies they are interested in—in terms of investment strategies, actions taken, and decisions made—than they did before the pandemic. 74% stated that they are currently more likely to exit an investment due to unsatisfactory ESG performance than they were before 2020.

A sustainable partner

7R is currently preparing its first ESG report.

“ We are receiving an increasing number of inquiries regarding ESG from interested investors, tenants, and business partners, as well as financial institutions. We are aware of the challenges associated with this topic, and we know that ESG is not a passing trend, but a lasting change that is affecting how companies operate around the world,” says Tomasz Mika.

ESG also concerns and is of interest to the company’s other stakeholders, such as employees and local communities.

– Our stakeholders look not only at our products, but also at what kind of company we are and what values and principles guide us. That is why our internal policies—and the fact that every employee joining 7R is required to accept and sign, among other things, a code of ethics, best practices, and compliance guidelines—are of the utmost importance. Similarly, maintaining smooth cooperation with local authorities and governments is crucial—it affects not only the success of our investments but also how the company is perceived and its value,” adds 7R’s CFO.