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What is ESG? Timber Frame Construction Could Be the Answer

March 11, 2022 3 Minute Read

Environmental, Social, Governance: What is ESG?

Environmental, social, and governance (ESG) are moving from concept to reality. These factors will become increasingly important as businesses plan to meet the 2050 and collective goal of a net zero world. But, what is ESG? And how will it change your business and decision making?

ESG factors are the criteria used by potential investors to evaluate a company’s sustainability. ESG is a way for socially conscious investors to align their capital with their values.

  • Environmental factors, such as a company’s carbon emissions, consider conservation of the natural world.
  • Social factors examine how a business treats people, including employees and customers.
  • Governance considers how a company is run, such as executive pay and board diversity.

As CBRE Vice Chairman Paul Morassutti noted in his Market Outlook keynote - ESG factors are becoming increasingly integrated alongside financial factors in the investment decisions of a growing number of businesses, particularly those working in commercial real estate.

The embodied carbon of construction, refurbishment, and fit-out is becoming a more prominent issue, as is the operational performance of buildings. Nearly 40% of global greenhouse gas emissions are produced by the real estate sector, a significant portion of which is due to a reliance on unsustainable construction materials.



Tim-ber!

An ESG-friendly solution for commercial real estate? Mass timber.

Timber buildings are far more environmentally sustainable than any other building typology. Compared to traditional steel and concrete buildings, timber offers carbon emissions savings of as much as 70%.

While it may seem counterintuitive to cut down trees to achieve sustainability, North America grows enough timber to construct one seven-storey building every 20 minutes. And all reputable timber companies only source material from sustainably managed forests, in which more trees are planted than harvested.

The carbon sequestration of building with sustainably harvested timber, combined with the carbon avoidance achieved by not building with steel or concrete, is equal to taking approximately 1,500 cars off the road – permanently.

ESG timber building - T3 Bayside

Demand for Timber is Growing

Timber will not be a hard sell to office investors and occupiers – the demand is already there.

Brick-and-beam office conversions have been all the rage in Vancouver, Toronto, and Montreal as businesses, particularly tech companies, seek spaces that will inspire employees to return to the office.

Timber buildings offer the same authenticity and aesthetics as old-school brick-and-beam, but also provide new-build features such as sound attenuation, natural light, and modern elevators and HVAC systems.

One noteworthy timber frame project is Hines' T3 Bayside: Designed by world-renowned Danish architecture firm 3XN, T3 Bayside is the latest in a series of creative modern workplaces built with Hines’ T3 concept: Timber, Talent, Technology. Phase I will bring 251,000 sq. ft. of contemporary, innovative office space to Downtown Toronto’s eastern waterfront in early 2023.

Timber does not equal tinder. Any concerns about flammability are extinguished by modern design safety elements, like flame retardants, which make modern timber frame buildings self-extinguishing.

While the construction costs for timber frame builds tend to be higher, they can be constructed faster than their steel counterparts. So the final project costs for timber buildings can end up being equivalent or even cheaper than steel frame construction.

Timber buildings are one solution. To meet the goals of the Paris Agreement and limit global warming to 1.5 degrees Celsius by 2050, a whole host of other ESG practices will have to be widely adopted throughout the commercial real estate industry over the coming years.

As Paul Morassutti put it, “We have work to do.”

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