Valuers’ Insights on Incorporating ESG Factors into Commercial Property Valuation Process

Abstract

This study explores how Environmental, Social and Governance (ESG) factors are incorporated into the three core stages of the commercial property valuation process, from the perspective of Sri Lankan valuers. Although the RICS Red Book Global Standards emphasize the ESG factors consideration, the traditional valuation process hasn’t incorporated those factors. As a Qualitative study, descriptive analysis was conducted. Data were collected through face-to-face interviews with 10 valuers, accredited by RICS and/or IVSL, each possessing ten or more than 10 years of experience in the valuation field. Findings reveal that, while Environmental and Social factors are increasingly incorporated into the valuation process, Governance factors remain less emphasized. Further, among three core stages of valuation process, in the Inspection and Reporting stage most of the ESG factors are being incorporated rather than in the calculation stage. This study contributes to the literature, regarding ESG and
commercial property valuation process in Sri Lankan context. The study calls on regulatory authorities to establish a standardized framework or upgrade to the traditional valuation process to incorporate ESG factors.