Social Awareness in Real Estate Investment: What Should Investors Do about the "S" in ESG?

The social aspect of environmental, social, and governance issues-the S of ESG-is the least well understood due to common misunderstandings, a lack of clarity in terminology, and the complexity and multidimensional nature of social factors. Nevertheless, all real estate investments are affected by social factors and also, in turn, affect society. Many investors would benefit from incorporating social considerations in their investment strategy, whether or not they consider themselves impact investors. Developing social awareness within the real estate investment process does not need to sacrifice financial returns and can, in some cases, enhance risk-return performance. Because of their complexity, however, any approach to incorporating social factors into investment decisions must be bespoke to the specific investor; there is no off-the-shelf approach that will work for all. Despite the idiosyncratic nature of social considerations, there are certain commonalities that all investors should consider before building a portfolio or program that includes awareness of social implications.