A certified success

‘Eurobuild CEE’: When and with what kind of activities did you begin implementing ESG in your company?

Olga Prokopiak, the head of marketing, Yareal Polska: Yareal has been active on the Polish real estate market for almost 20 years. During these two decades, we have completed a total of 27 residential and office projects, mainly in Warsaw, which have provided comfortable space for thousands of residents and employees, and dozens of businesses. We have also been present in the TriCity for several years.

In Gdynia, we completed the construction of a cosy apartment building in the city centre late last year. In Gdańsk, we are developing a low-key apartment development called Odea Park. We are also carrying out four residential developments in Warsaw, including multi-phase projects. In this city, we are also completing the Lixa office complex, near Rondo Daszyńskiego. And we are working on preparing more developments, both residential and offices.

Environmental issues have always been part of our strategy. From the very beginning, we have been aware of the great responsibility that comes from creating projects that introduce new functions to the urban fabric. This means that we are defining the reality and comfort of life, not only within our projects, but also in their immediate vicinity and farther away, for decades to come. This is why we always strive to stay ahead of the trends, to integrate Yareal’s projects into the existing surroundings in the best possible manner and make a positive contribution to the shape and development of the urban landscape as well as the life of the local community.

Development projects should not only meet specific human needs – they should also play an important role in the national economy, while leaving their mark on the urban fabric and the environment. Therefore, gradually reducing the impact on the climate, the rational use of resources, and the active creation of green solutions are vital in the planning and implementation of our projects. At the stage when we are selecting the location of the project, we scrutinise its connections with other residential areas, look into the public transport access, and check the availability of cycle paths and charging stations for electric vehicles. Our development activities also involve regenerating degraded, post-industrial sites, with a view to reintegrating them into the urban fabric. We design inclusive and welcoming urban space that fosters the emergence and integration of local communities. We cooperate almost exclusively with Polish suppliers and subcontractors, which supports the local economy. The revenue and employment created by our supply chains represent a significant contribution by Yareal to the Polish economy and society. When selecting suppliers, we consider the cost, quality and delivery time, but also environmental and social targets. To this end, we are guided by our Sustainable Purchasing Policy.

For years, we have built all our new developments from scratch in compliance with the strict requirements of the green building system. The BREEAM certificates issued for twenty of our projects not only confirm Yareal’s position as a leader in sustainable construction within this system, but above all represent proof of our attention to the environmental impact. Indeed, our TriCity residential project Odea Park has been dually certified, under the BREEAM and the Zielony Dom (Green Home) systems.

What are your company’s main ESG goals, and what are the main challenges you are faced with in achieving them?

ESG is made up of three pillars: Environmental, Social and Corporate Governance. Our main goals in the first of these areas are to further reduce and more precisely monitor negative environmental impacts, to work more closely with our subcontractors in this regard, to vet suppliers of materials and services more thoroughly for our environmental requirements, and to seek and implement new solutions and technologies. In several of our projects, for instance, we have used low-emission concrete for construction, and recycled aluminium for the Lixa office development. We also install solar panels and renewable energy sources. In the social area, we aim to intensify our dialogue with all stakeholders and further engage and educate our personnel. Transparent communication with stakeholders lies at the heart of our implementation of the sustainable development priorities adopted in our strategy. Through our priorities, we strive to provide the best possible working and development conditions for our employees and partners, as well as to continuously improve customer satisfaction.

We are now working to establish the goals of our detailed sustainability strategy to determine and fine-tune our course of action for the coming years. Yareal Polska’s ESG strategy will encompass all areas of the company’s impact, from the design stage of each project, through its implementation on the construction site, to the operation of the delivered building. In 2023, we prepared and published our first ESG Review, compiling and describing all the activities Yareal has undertaken in this area to date.

The main challenges we encounter along the way are the need to organise and formalise measures to reduce negative environmental impacts and to implement a circular economy as soon as possible. The circular economy is a closed loop, which minimises the consumption of raw materials and resources, extending the life- cycle of products and making the fullest use of the materials we consume. This is all linked with limited environmental resources and the reduced number of development opportunities in almost every area and at every level of the production and supply chain. It is becoming a must, not an option. In our projects that are currently underway, we try to use recycled materials whenever possible. For example, for two residential developments we have used pots made from material created from recycled textiles. For our Neowo development in Warsaw’s Bemowo district, we plan to use recycled furniture made from wind turbine blades.

Most businesses are only just beginning to familiarise themselves with the EU’s ESG reporting requirements. Data collection procedures and clear guidelines and tools for processing data are still lacking. The biggest challenges for our company in this area include access to data, processes for collecting and processing data, and the continued alignment of our organisation with ESG implementation. This is because we are committed to taking an integral approach to this task while maintaining an optimised company structure. Indeed, the experience of other industries shows that implementing ESG entails some organisational pitfalls. Some businesses, for example, may treat sustainability as just a marketing feature, and tend to fall into the “greenwashing” trap, failing to approach the issue with the consistency and seriousness it requires. Other organisations might focus on maximising achieving their ESG goals, but then incur huge financial and organisational costs and weaken the efficiency of their operations. An example would be the kneejerk replacement of car fleets with 100 pct electric cars for salespeople travelling hundreds or thousands of miles between customers. That could translate into an increase in capital expenditure and a radical decrease in efficiency, because the range of electric vehicles due to the current state of charging station infrastructure is, unfortunately, far smaller than the range for hybrids., for instance.

How does your company engage employees in ESG-related activities?

We strive to engage our employees in all areas and phases of the company’s operations: the design and specifications of each project and their implementation, the company’s environmental impact, and customer relations. We also pay a great deal of attention to the daily operations of the office. We reinforce environment-friendly attitudes among our personnel by making small changes and introducing good habits. With the move to our new headquarters in the Lixa B building developed by Yareal, we have completely dispensed with the purchase of bottled water in favour of treated drinking water from the tap. We have also removed rubbish bins at desks and instead sort the waste in a separate room. In our offices, we have five different ways of segregating the rubbish, and we also use LED lighting as well as a programmed HVAC system to avoid heating the office during off-hours. We use only glassware to reduce the use of plastic. Our offices are located in new-generation buildings with fully glazed façades, so we can enjoy natural light. In addition, in the Lixa building, where we are located, we have specially-designed tilt windows that allow us to limit the use of air conditioning while still having access to fresh air. We also encourage employees to commute by bicycle – we have locker rooms for cyclists and numerous bike racks in the grounds of our office buildings.

In addition, workers on our construction sites are trained in the rules of waste sorting and management, handling hazardous waste, minimising environmentally harmful waste, and the efficient use of construction and auxiliary materials to minimise waste. And sustainability clauses are included in all our agreements with contractors.

We also engage our employees in charity events. For several years, our HR department has organised charity collections, including donations for single mother’s homes and for victims of the war in Ukraine, as well as periodic campaigns to support veterans of the Warsaw Uprising.

What do you think is the main reason for greenwashing? And will ESG reporting obligations put an end to it?

ESG has become a fashionable trend, and there is a strong temptation to show one’s best side and communicate extensively about pro-environmental measures, even illusory ones that don’t really carry over to the natural environment or show up in the solutions actually applied by companies. Greenwashing means misleading consumers about a business’s environmental activities or the green qualities of its goods and services. The tremendous interest in environmental and ESG topics represents an attractive opportunity to improve your image, to showcase yourself, to differentiate your business, to attract clients and to increase profits. Like any unethical activity, greenwashing carries a high risk of undermining a company’s credibility and tarnishing its reputation. The ESG reporting obligations being introduced in the EU will certainly reduce this kind of abuse to a large extent, but won’t eliminate it completely. Despite the defined framework for non-financial reporting, it still contains arbitrary elements that can be exploited to misleading effect. What will definitely help to curb greenwashing is a range of certifications attesting to the solutions and technologies used, along with the auditing of companies’ reported ESG activities.

Are you not afraid of an increase in expenditure and investment costs due to ESG implementation, especially as the investment market slows down?

The implementation of ESG principles is mandatory and, like any change, comes at a cost – in terms of personnel, consulting and implementing new reporting tools, as well as tangible solutions employed in the manufacturing process. The use of new technologies and pioneering solutions is costly, but also generates value for clients and thus translates into profitability for the business. Customers are focusing more and more on ESG solutions, asking about certifications and their benefits. Their awareness in this area has been growing rapidly. Certification is costly, but in the long run it translates into tangible savings and financial benefits, including lower service costs, extending the life of the building, or not having to make frequent renovations, along with the use of high-quality certified materials or partial water and energy recovery. And we should bear in mind that green solutions will be promoted by the banks and other financial institutions, which already examine these areas in detail when making financing decisions.

What do you consider to be your company’s greatest ESG achievement? Which unique ESG development or activity can your company be proud of?

At Yareal, we are proud of all our progress to date in the ESG field, our analysis and anticipation of market trends, and all the solutions we have introduced: BREEAM certifications for residential projects (now all our residential developments are certified), the pioneering use of recycled materials, and revitalising neglected urban areas and restoring them for residential use. It is undoubtedly gratifying and a source of pride that we have been implementing these measures for many years, long before the market or regulators even began considering their relevance. This makes us even more aware of the many challenges and tasks ahead of us when it comes to ESG, but we hope to successfully implement our plans and achieve 100 pct green company status in the future.