Canada’s real estate sector is at a crossroads where the urgency of sustainability and Environmental, Social, and Governance (ESG) compliance intersects with a pervasive housing affordability crisis. The ESG framework, although not new, has gained significant traction “all of a sudden,” with a particular focus on creating value from its social component in the real estate market. As the sector strives to meet these ESG imperatives, it simultaneously grapples with a housing affordability crisis that is recognized universally across the Canadian landscape.
Investing in ESG performance is already yielding many advantages for real estate companies, with quantifying social impact becoming an emerging trend. However, addressing the affordable housing shortage requires a systemic overhaul. There’s an acknowledged need for a drastic transformation of the housing sector, including rethinking government policies and processes with an ‘all-hands-on-deck’ approach to increase the supply of housing to meet the soaring demand.
The affordable housing crisis exacerbates economic inequality, deepening the societal divide. Research indicates that Canada has been losing affordable rental units, those available to individuals making $30,000 a year or less, far more rapidly than they are being replenished. This loss has significant implications for social equity and sustainability, as it undermines the ability to maintain diverse and inclusive communities.
To balance ESG priorities with the need for affordable housing, stakeholders are considering innovative solutions like prop-tech and sustainable infrastructure investment. The global emphasis on sustainable infrastructure ranges from clean transport to affordable housing, signalling a shift towards long-term economic, social, and environmental value.
Key trends in 2023 highlight a growing urgency around sustainability and real estate, along with other ESG matters and the need to find meaningful solutions to the housing affordability crisis. The real estate industry is focusing on solutions that enable the business to capitalize on new opportunities, even as it confronts rising costs and capital availability challenges.
The Canadian real estate sector, therefore, is seeking to find a balance where it can commit to ESG priorities without compromising the urgent need to provide affordable housing. This balance is not only a matter of regulatory compliance but also a pursuit of long-term value creation that fosters equitable and sustainable communities.
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