Member Article
A leading property consultancy has helped a housing developer win an appeal to build up to 170 homes at a site in north Leicestershire after giving detailed evidence at a public inquiry.
Fisher German helped David Wilson Homes and Anthony Raymond Shuttlewood win its appeal against Charnwood Borough Council, which initially refused its outline planning application to create up to 170 homes at a site off Cossington Road, Sileby.
The Council initially refused permission on its officers’ advice as the site was in an ‘Area of Local Separation’ (ALS) between Sileby and nearby Cossington and that Sileby had already met the target growth as set out in the Council’s Development Plan.
However, David Wilson Homes appealed, and its case was bolstered by Fisher German’s expertise in planning matters.
Angela Brooks, Associate Director at Fisher German, was called as an expert planning witness by Paul Tucker QC, acting for David Wilson Homes, at the public inquiry.
The presumption in favour of sustainable development was engaged as the council were unable to demonstrate a five-year supply of housing.
Angela was able to successfully demonstrate that the any negative effects of the proposed development in terms of character and appearance and the conflict with the development plan were outweighed by the clear benefits.
Despite the Council’s disagreement, she argued that the development was in a sustainable location, would make provision for affordable housing and other infrastructure requirements as well as a significant over provision of open space ensuring that incursion into the ALS was minimised.
The Planning Inspector agreed with her submissions and David Wilson Homes’ case and allowed the appeal.
Angela said: “This is a fantastic result for David Wilson Homes – we felt its application did not contradict relevant guidelines and that there was a good chance the appeal would be allowed by the Planning Inspector.
“While the site was indeed in the ALS, under half of it will be developed with built form, and the separation between Sileby and Cossington would remain.
“We’re delighted the Planning Inspector agreed with our submissions and that David Wilson Homes will now be able to deliver much-needed housing in north Leicestershire.”
John Reddington, Managing Director at David Wilson Homes East Midlands, said: “Winning the appeal for a new development in Sileby is fantastic news as it brings the delivery of 170 much needed new homes ever closer for Leicestershire property seekers.
“The plans for the development include a mix of housing and will form part of a major investment in this part of the county. Our development would also underpin approximately 340 jobs for local people.”
The landowner’s Strategic Development Consultant, John Edmond of Silver Fox Development Consultancy, said: “This detailed proposal was an important test of the Council’s Area of Separation Policy. The Inspector noted that the perceptual reduction in the Area of Separation would be limited to relatively small sections with the area of different routes around the site, while the significant area of public open space proposed would retain a meaningful break in the built form.
“It was a great result that will meaningfully assist the Council in its delivery of market and affordable housing. It was a pleasure to work with a great professional team led by Paul Tucker QC.”
This was posted in Bdaily’s Members’ News section
by
Matt Joyce
.
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Perth has the highest-ever number of suburbs in the million-dollar club, after prices in 15 new suburbs recently exceeded the milestone median.
Research from CoreLogic shows there were 56 suburbs in Perth with median house prices above $1 million in May this year, compared to 41 a year previously.
Adding to fears about the affordability of Perth property, the new research shows in the year to May, 13 per cent of sales recorded a price of at least $1 million.

CoreLogic research analyst Kaytlin Ezzy said the suburban median in the million-dollar-club is almost twice Perth’s overall house median of $555,538, following a 5.6 per cent price rise across the metropolitan area in the year to May.
The new million dollar suburbs appear to be popular for many of the same reasons as those that lead the pack — close proximity to water, big blocks, good schools and proximity to the city.
Suburbs close to either the beach or the river include Fremantle, South Fremantle, Hillarys, Karrinyup, Iluka, Como, Alfred Cove, Shelley and Burns Beach.

Good schools and proximity to the city are likely to underpin the popularity of some of the inner-city suburbs on the list, including Gwelup — which increased from $859,5549 a year previously — as well as Inglewood, and Mount Hawthorn.
Como specialist for The Agency, Vanessa Naso, said her patch enjoyed the benefit of a riverside and central location as well as big blocks and good schools.
Nine of Perth’s top 10 most expensive house markets were located in the city’s inner region, with Dalkeith recording the highest median value at $2.96 million.
It eclipsed Peppermint Grove, were the median is $2,824,616, and Cottesloe ($2,689,912)
Yallingup houses in the picturesque south west town remain the west’s only regional market to make the million-dollar list with a current median value of $1,620,473
The research found that nationally, 1,367 or 30.4 per cent of house and unit markets analysed in May recorded a median value of $1 million or more.
“High consumer sentiment, tight advertised supply, and low interest rates fuelled strong home value growth throughout 2021, resulting in a new record high annual growth rate of 22.4 per cent nationally over the 12 months to January,” Ms Ezzy said.
An M&E consultancy, which has more than 50 staff in offices in Manchester, Liverpool and Birmingham, is moving to become an employee-owned trust (EOT).
Crookes Walker Consulting (CWC) was founded in 2004 by Dave Walker and Paul Crookes.
The majority shareholding will move to an employee-owned trust, which will manage CWC on behalf of its employees.
The company said the move to an EOT was seen as the best way to secure the future of the business and reward the staff for their hard work and dedication during the last 18 years.
The board of directors will remain unchanged with Chris Skinner as chief executive, Andy Ringland as chief technology officer, and Steve Plant as chief financial officer. The board will work with the Trust to bring continued growth and development plans and safeguard the ethos and core values that underpin the business, it said in a statement.
Chris Skinner said: “It is a privilege to have the opportunity to lead this great business through its next stage of evolution and the EOT structure will perfectly reflect and secure the principles upon which the company is founded.”
Explaining how they came to this decision, founders Paul Crookes and Dave Walker, said: “CWC is a knowledge based business, with a reputation for team working and excellence. We are only as good as the people within the practice and we wanted to ensure that with any succession plan, their future was not just secured but enhanced. EOT is the ideal way to achieve both goals whilst helping to attract and retain the best talent in the industry.
“As a forward facing business CWC needs to ensure it has the ability to be agile and open to change. EOT provides the opportunity for the next generation of engineering expertise and business ideas to flourish in an environment where openness and creativity benefits everyone.”
The firm added it will be consulting with its employees during the next few months to “ensure a smooth transition”, and said it was “very excited” to move together into a new era for Crookes Walker Consulting.
Details of the advisers who worked on the deal were not disclosed.

The proportion of new-build completions coming via the build-to-rent sector has grown in the last year, now accounting for over 7% of all new homes reaching the market, according to the latest rental sector insight by rental platform, Rentd.
Analysis of the total new-build completions over the last year found that build-to-rent has become an increasing focus of the new-build sector. In fact, last year, 7,123 new rental homes came via the build-to-rent sector, a 25% uplift on the volume of build-to-rent completions seen in 2020. This growth is some 7% higher than the increase seen in total new-build completions during the same period.
As a result, build-to-rent completions accounted for 7.2% of all new-build homes delivered last year, up from 6.8% the previous year.
However, the sector’s impact has been far greater in London. The 21,000 new homes delivered in the capital in 2021 account for just 10% of the UK total. The 7,123 build-to-rent completions, on the other hand, account for just shy of half (48%) of the national total.
As a result, build-to-rent completions accounted for 34% of all new-build delivery across London in 2021, with this market share increasing from 29.2% the year before.
This growth has been more muted elsewhere around the UK, with build-to-rent market share increasing from 4.1% to 4.2% between 2020 and 2021.
Ahmed Gamal, founder and CEO of Rentd, commented: “The new-build sector has evolved to deliver more than just bricks and mortar, with the lifestyle offering provided by new-build developments becoming as pivotal to their appeal as the property itself.
“So it’s hardly surprising that this focus on better quality living to suit the modern resident has transferred so well to the rental sector and, in fact, it’s more surprising that it’s taken so long to happen.
“Despite its relative infancy, the build-to-rent sector has grown rapidly and there’s no doubt it will continue to do so over the coming years, as it becomes a greater area of focus for the nation’s housebuilders.
“Of course, we remain a nation of aspirational homebuyers and so while more of us are choosing to rent until later in life, we’re unlikely to see build-to-rent eradicate this appetite to own our own homes entirely. But the sector does provide a fantastic alternative for the smaller proportion of the population who prefer the flexibility and easier freedom of movement that renting can provide.”
Shimizu (OTCMKTS:SHMUY – Get Rating) and Orion Oyj (OTCMKTS:ORINY – Get Rating) are both construction companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, risk, earnings, analyst recommendations, institutional ownership and valuation.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for Shimizu and Orion Oyj, as reported by MarketBeat.com.
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
Shimizu | 0 | 2 | 0 | 0 | 2.00 |
Orion Oyj | 0 | 0 | 0 | 0 | N/A |
Volatility & Risk
Shimizu has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, Orion Oyj has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.
Earnings & Valuation
This table compares Shimizu and Orion Oyj’s top-line revenue, earnings per share and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
Shimizu | $13.21 billion | N/A | $425.06 million | $2.24 | 9.49 |
Orion Oyj | $1.23 billion | 4.58 | $229.29 million | $0.81 | 24.69 |
Shimizu has higher revenue and earnings than Orion Oyj. Shimizu is trading at a lower price-to-earnings ratio than Orion Oyj, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Shimizu and Orion Oyj’s net margins, return on equity and return on assets.
Net Margins | Return on Equity | Return on Assets | |
Shimizu | 3.18% | 3.98% | 1.66% |
Orion Oyj | 18.71% | 27.42% | 17.56% |
Dividends
Shimizu pays an annual dividend of $0.30 per share and has a dividend yield of 1.4%. Orion Oyj pays an annual dividend of $0.49 per share and has a dividend yield of 2.5%. Shimizu pays out 13.4% of its earnings in the form of a dividend. Orion Oyj pays out 60.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Summary
Orion Oyj beats Shimizu on 6 of the 10 factors compared between the two stocks.
About Shimizu (Get Rating)
Shimizu Corporation engages in the building contracting, civil engineering, machinery, and other construction works in Japan. It is also involved in the research, planning, study, evaluation, diagnosis, soil analysis, surveying, design, supervision, management, and consultancy related to regional, urban, ocean, space, resources, and energy developments, as well as construction works and environment improvement; and purchase, sale, letting, brokerage, management, appraisal, and consultancy of real estate. The company constructs, lets, sells, and caretaking of residential houses and other buildings; plans, constructs, possesses, maintains, and operates public office buildings, roads, harbors, airports, and parks, as well as educational and cultural, medical and welfare, and water supply and sewerage facilities; generates and supplies electricity and heat; undertakes purification works; collects, disposes, and reutilizes waste; and designs, installs, leases, sells, and maintains information communication and building management system. It also engages in the cultivation, production, management, sale, and consultancy of agricultural produce and seafood, and forestry work; maintenance and upkeep, security, and cleaning of buildings, equipment, and machinery; and design, manufacture, sale, lease, and brokerage of construction machinery and materials, concrete and wooden products, furniture, and interior fitting. The company offers industrial property, copyrights, and computer software; pharmaceutical, medical care material, and medical machinery and equipment; and advertisement, publication, printing, images and other information media, business event, inland transportation, warehouse, distribution center, insurance and travel agency, manpower supply, loan, guarantee, and factoring services. It also engages in the management and consultancy of sporting, hotel, restaurant, nursing, and resort facilities. The company was founded in 1804 and is headquartered in Tokyo, Japan.
About Orion Oyj (Get Rating)
Orion Oyj develops, manufactures, and markets human and veterinary pharmaceuticals and active pharmaceutical ingredients (APIs) in Finland, Scandinavia, other European countries, North America, and internationally. It provides prescription drugs and self-care products, including Nubeqa for the treatment of prostate cancer; dexdor and Precedex for intensive care sedative; Stalevo and Comtess/Comtan for Parkinson’s disease; Simdax for acute decompensated heart failure; and Fareston for breast cancer, as well as Salmeterol/fluticasone Easyhaler, Budesonide/formoterol Easyhaler, Formoterol Easyhaler, Budesonide Easyhaler, Beclomet Easyhaler, and Buventol Easyhaler drugs for the treatment of asthma and chronic obstructive pulmonary disease. The company also offers veterinary drugs comprising Bonqat, Clevor, Domosedan, Domitor, Antisedan, Dexdomitor, Domosedan Gel, Sileo, and Tessie; and APIs for generic and proprietary drugs, as well as provides contract manufacturing services. In addition, it markets and sells veterinary drugs manufactured by other international companies. The company serves various healthcare service providers and professionals, such as specialist and general practitioners, veterinarians, pharmacies, hospitals, healthcare centers, clinics, and laboratories, as well as consumers with pets. Orion Oyj has partnership with Propeller Health to connect the Easyhaler(R) product portfolio for the treatment of asthma and COPD; and a research collaboration and license agreement with Alligator Bioscience AB (publ) to discover and develop new bispecific antibody cancer therapeutics. Orion Oyj was founded in 1917 and is headquartered in Espoo, Finland.
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The 68-year-old former Boy Scouts of America building is set to become the new headquarters for local architecture firm 3North. (Mike Platania photo)
Stan Anderson has gone from dealing in woodchippers and mulch to diving into real estate with a prominent building off West Broad as one of his initial deals.
The longtime head of Powhatan-based Virginia Wood Properties bought the former Boy Scouts of America building at 4015 Fitzhugh Ave. for $4.9 million last month.
The 13,300-square-foot building is currently being converted into a new headquarters for local architecture firm 3North.
Anderson’s leap into real estate follows his sale of Virginia Wood Properties about 18 months ago. He said he thinks the 25-year-old wood processing and mulch company was the first to offer colored mulch in the region.
“Whenever someone cleared any big property, they’d log and pile (the timber) all up. We’d come in with grinders and grind it all up, take the raw material to Ashland to process and color it, then sell it as colored mulch,” Anderson said.
The business grew gradually through its early years until Anderson began seeking out acquisitions of other mulch companies in the last decade. “It was a struggle at first,” he said. “But when it took off it really took off.”
The company eventually caught the eye of regional competitor Yard Works, which made an offer to Anderson. He accepted and sold his business and assets to Yard Works about a year and a half ago.
Since the deal included some real estate in mulch yards that Virginia Wood Properties owned around the region, Anderson planned to reinvest the proceeds into another property in a so-called 1031 exchange, a financial device through which individuals can defer paying capital gains taxes on a recent real estate sale.
That led him to Fitzhugh Avenue, which Petersburg-based Waukeshaw Development had bought in fall 2020 for $1.5 million. After putting in around $1 million for the 3North renovation, Waukeshaw owner Dave McCormack put the building on the market in January.
The sale to Anderson closed May 27, with One South Commercial’s Tom Rosman and Ken Campbell representing Waukeshaw in the sale. The parcel was most recently assessed at $1.5 million.
McCormack, who also owns Trapezium Brewing Co., said he had a good feeling the building would draw buyer interest.
“A lot of people know us for doing the adaptive reuse stuff and our reputation is really about that. This one may be a little more high-profile,” McCormack said. “You could really tell that it had a lot of potential and was in a good place. (The redevelopment and sale) went pretty much as we expected it to.”
Anderson, meanwhile, said he’s looking to continue adding to his portfolio.
“We’re just kind of getting started but the Fitzhugh property was a big deal. That was a cool, cool deal,” Anderson said, noting that he owns two other properties in Chesterfield and has a fourth under contract.
McCormack also has other projects in the pipeline in the region. Work continues on the former Richmond Association of Masonic Lodges building in Church Hill, which McCormack is converting into a Trapezium taproom. After initially aiming to open this summer, McCormack said he’s pushed the opening date back to the fall.
“We’re trying to open in a way that won’t stress out our upper management. We’re moving forward, but just a little slower,” he said.
Another Waukeshaw project on the horizon is Jenkins Park, a 10-acre riverfront entertainment park along the Appomattox River in Petersburg. The project been in the works since 2019 and though more remains to be done, McCormack said next week the park will be hosting the City of Petersburg’s official Independence Day fireworks show.
When Nick Slater started selling houses in King Creek on the NSW Mid North Coast a decade ago, a seven-figure price tag was “unthinkable”.
Key points:
- CoreLogic report finds median house prices in nine Mid North Coast suburbs have risen above a million dollars for the first time
- Regional Development Australia Mid North Coast chief executive Kerry Grace says unattainable house prices are exacerbating a homelessness crisis
- Regional housing markets showing stronger growth compared to capital city markets
Now, he says, it is the new norm.
“Around five years ago in the King Creek market, we would have seen the first property exceed a million dollars,” Mr Slater said.
“Then gradually, we started seeing the first properties sell for over two million.
The semi-rural area saw the median value of homes sold jump by $425,000 in the year to May, according to the latest data from CoreLogic.
King Creek is one of 170 regional house or unit markets across the nation to record a median value at or above $1 million for the first time.
The total number in regional areas is now 270.
It is a common trend in the area, with eight other Mid North Coast suburbs also joining the million-dollar median club: Sapphire Beach, Moonee Beach, Korora, Bellingen, Bonny Hills, Lake Cathie, Emerald Beach and Bonville.

Mr Slater said the rise was likely due to the shifting buyer demographic, with the area’s “acreage lifestyle” in a hinterland location near a coastal regional centre attracting Sydney’s retirees.
“The proportion of city buyers has increased immensely,” he said.
He said younger families were priced out of the area.
“These large homes on acreages are absolutely perfect for families,” Mr Slater said.
“However, over recent years, as prices have grown substantially, the market has become disproportionately skewed towards semi-retired and retired couples.”

Housing affordability crisis deepens
As house prices rise, the issue of affordability continues to plague many prospective buyers.
Regional Development Australia Mid North Coast (RDAMNC) chief executive Kerry Grace said unattainable house prices were exacerbating a homelessness crisis and an essential worker shortage in regional areas.

“There’s just such a lack of availability of housing in the market whether that’s the dire shortage of rentals or the amount of houses that are actually affordable for people to buy,” Ms Grace said.
RDAMNC’s survey of key workers across industries including healthcare, aged care, childcare, hospitality and agriculture showed many had been looking to buy property in the region but found it impossible in the face of low availability and skyrocketing prices.
“We’re hearing some harrowing stories of people who can’t find rentals or get into the property market,” Ms Grace said.
Ms Grace said the organisation’s research on the housing affordability crisis revealed not only a shortage of available accommodation but a problem of empty spaces in large homes.
Byron Bay continues to be popular
The Byron and Tweed region of NSW took out four of the top five median values in regional NSW.
Byron Bay houses topped the list with a median value of $2,741,847, up approximately $400,000 from this time last year.
Casuarina, Myocum and Suffolk Park also made the top five, with medians of above $2 million. Burradoo in the Southern Highlands had the fourth-highest median at $2,416,897.
The majority of the new regional million-dollar markets are concentrated in the regions Southern Highlands and Shoalhaven,18, Illawarra,16, and Newcastle and Lake Macquarie, 23 regions.
Posted , updated
What is ESG?
The term, which is widely used as ESG in practice, is the abbreviation of the initials of the English phrase “Environmental, Social and Governance”. ESG, which has developed as the concept of sustainability and social impact performance of an investment, covers one of the main the issues that investors should research and consider before making an investment decision.
The areas touched by ESG practices can be grouped as follows, without being limited thereto:
- Environmental: Pollution, Waste, Water, Natural Resource Management, Supply Chain Management, Emissions and Carbon Footprint, Land Use and Non-Destruction of Forests, Energy, Renewable Energy, Climate Change and Its Impacts
- Social: Health and Safety, Human Rights, Gender Equality, Consumer and Product Responsibility, Modern Slavery, Human Trafficking, and Child Labor, Employee and Customer Relations, Stakeholder and Community Engagement
- Governance: Anti-Bribery and Anti-Corruption, Anti-Money Laundering, Risk Management and Audit, Reputation Management, Crisis Management, Use of Sustainable and Green Finance Tools, Financial and Corporate Reporting, Gender Non-discrimination, Diversity and Inclusion in Employment, Managers and Management Duties and Responsibilities of Board Members, Data Protection, Cyber Security, Compliance with Legislation
Considering the titles above, it is a fact that environmental awareness, social relations, and corporate governance principles are the focus of ESG-oriented investments. In order to create a consistent and sustainable investment, the relations between ESG applications should be evaluated with a holistic approach.
Less than 20 years ago, ESG was launched as a social responsibility initiative by the United Nations which is now a global phenomenon with a growth rate of 34 percent worldwide since 2016, reaching more than US$30 trillion in assets at the start of last year[1]. However, ESG did not become a major focus all at once, nor was this development disconnected from the needs of the business world and the environment. Since the beginning of the 20th century, the social pressure created by various crises, claims, boycotts, and actions in the business world has given ESG its current meaning. Some researchers even trace the history of ESG, according to some sources, to those who, in the 18th century, opposed the slave trade, smuggling and luxury consumption and boycotted companies that produced liquor, tobacco, or allowed gambling[2]. As it can be seen, despite the advancement in the environmental, social, and governance aspects of the business world and capital, regardless of the consequences, took place with consumer demands, the main feature that distinguishes today’s ESG concept from similar social responsibility initiatives is that it has begun to be seen that ESG sensitive business strategies also have a positive effect on company profitability. Indeed, the main motivation for the adoption of this concept and the transition to fast and fundamental applications in this field is the deep need for a sustainable economy, the support of this need with government policies, the increasing awareness of ESG and the integration of ESG into the way companies do business has become an inevitable element both ethically and commercially.
Why is ESG Important?
The climate crisis, epidemics, social inequalities, and the reflections of the practices experienced in the global economy in connection with these situations, have inevitably increased the importance of ESG applications. The green economy, which has been growing for years, has continued to develop its unique tools. Especially in recent years, with the impact of the Covid-19, the International Monetary Fund (“IMF”) has repeatedly called for green recovery. The actors in the market realized that economic development and progress would not be possible with unsustainable growth models, therefore investment instruments such as green bonds or green lease certificates were given priority. While there was a slowdown in standard investment and borrowing activities due to the effect of the Covid-19, the sustainable bonds and loans market continued to grow. For example, the Turkish Capital Markets Board (“CMB”) recently observed that, taking into account the above-mentioned developments, regulatory and supervisory institutions like itself in the world have introduced regulatory frameworks for the healthy growth of these markets and the protection of investors within the framework of their public disclosure obligations. Thereupon, the CMB prepared a regulatory framework with Green Debt Instrument and Green Lease Certificate Guidelines Draft (“Guide”)[3] in accordance with the provisions of Article 1 and Article 128/e of the Capital Market Law, within the framework of the 11th Development Plan, the 2021 Economic Reform Package and the Paris Climate Agreement priorities and actions. Thus, with the Guide, the CMB has taken a concrete step towards increasing the issuance of green debt instruments and green lease certificates in the Turkish capital market, strengthening investor confidence in transparency and external evaluation (such as second-party opinion/verification) obligations and diversifying investment opportunities in projects that contribute to sustainable development. The Ministry of Treasury and Finance published the Sustainable Finance Framework Document (“Framework Document”)[4] on its website on 12 November 2021 to set the standards for green, social and sustainable transactions in financial markets. The Framework Document lays down the standards of sustainable finance instruments such as green, social or sustainable bonds, loans and debt instruments, and appropriate green and social projects. In the light of the developments in the world within the framework of the green economy, it is necessary to state that green debt instruments have emerged as a “result” and “mentality” beyond being a “tool” for the revival of green markets in Turkey. Because this is a reflex shown to ensure sustainable development and economy. The development of these instruments and the growth of their markets will contribute significantly to the climate crisis. In particular, the fact that this issue is subject to supervision by a regulatory and supervisory institution such as the CMB and that the treasury borrowings to be made in this field will lead the way for many companies to contribute to the development of the economy without sacrificing social and governance factors, as well as the fight against the climate crisis[5].
To avoid the devastating effects of the climate crisis, sustainable investment portfolios and private initiatives in the form of effective ESG investments have been developed as ways in which people, businesses and investors of all sizes can contribute to making the world a healthier place. These methods also provide investors with a transparent and comprehensive disclosure of climate-related financial risks. In this regard, it is possible to say that public-private cooperation has increased noticeably. The COP26 Summit is an international example of policies implemented to slow and ultimately reverse climate change[6].
In addition, considering that investments always have inherent risks, ESG investment instruments that provide long-term confidence in direct proportion to sustainability will be able to eliminate many risks, including reputational risks. ESG instruments can shape the market by finding its reflection not only in investor behavior but also in consumer behavior. For example, ESG investment tools have become the focus of consumers and therefore investors in a wide range from companies that adopt the Green IT[7] approach in their production and service delivery processes to energy-saving smart systems or from sustainable approaches in the textile sector to electric charging stations.
Moreover, although corporate governance and corporate ethics have always been a part of good governance, especially after the global economic crisis that started in 2008, it has become a “must-have” condition for investors. Beyond where corporate social responsibility is regulated, investors also need to adopt ethical corporate governance practices. Because the actions of companies that lack these practices may have direct or indirect social effects. In this context, fundamental problems of companies such as lobbying, data privacy, tax transparency, fight against corruption and bribery are taken as indicators. ESG encourages investors to take a stand against companies that lack transparency towards each other (peer pressure). The driving force here is the risk of serious environmental, social, financial and human rights violations, which may occur due to the violation of the UN’s Sustainable Development Goals[8] and applicable due diligence laws, as well as the risk of reputational damage.
New Investment Approaches Within the Scope of ESG
Along with the concept of ESG, concepts such as responsible investment, socially responsible investor, and impact investing came to the fore.
Responsible Investment
Responsible Investment is defined as a strategy and practice that integrates ESG factors into all evaluation criteria, from the investment decision to the end of the investment.[9] First of all, it should be noted that socially responsible investments have different investment approaches such as ethical investing, social responsibility investing, or impact investing. These different approaches aim to combine financial return with moral or ethical considerations; therefore, responsible investment is an ESG-oriented investment strategy that can be implemented by investors whose primary aim is financial return in a sustainable manner in terms of ethical and social issues in business. In this context, responsible investment argues that ESG factors are not abstract concepts that only consider ethical and environmental principles, and companies that do not take these principles into account, in fact, have significant risks on the financial returns provided to investors. The development of this understanding includes i) greater recognition in the financial community that ESG factors often play an important role in determining risk and return; ii) increasing demand of transparency of the beneficiaries and investors about how and where their money is invested; and iii) increasing regulatory recommendations that integrating ESG factors as part of an investor’s duty to clients and beneficiaries. The growing number of academic studies support the idea that integrating ESG factors is not costly[10].
Socially Responsible Investment
Socially Responsible Investment (“SRI” – also known as Value-Based Investment or Ethical Investment) uses negative screening to avoid investing in companies that have negative impacts on the environment or society. Negative screening refers to the deliberate avoidance of investing in companies or organizations with activities that conflict with the investor’s non-financial values. After this screening, certain titles are removed from the investment options, and in this way, it is aimed to prevent the investment portfolio from causing negative results.
Impact Investing
The Impact Investing approach, similar to Responsible Investment and SRI, includes social and environmental factors in the investment analysis. However, it takes the responsible investment approach a few steps further by prioritizing investing in companies or funds that prioritize social or environmental impact over financial return. Impact investments are expected to have a positive impact. Thus, the purpose of impact investing is to help a business or organization achieve specific goals that are beneficial to society or the environment. While creating financial returns is the primary expectation in ESG-focused Responsible Investment and SRI strategies, Impact Investing puts financial concerns behind social impact concerns. Making a nonprofit investment in clean energy research and development projects, regardless of how successful they will be, can be given as an example of Impact Investing.
In addition to the aforementioned practices, thanks to the intense interest in ESG, the number of applications for other similar concepts such as sustainability investment instruments, responsible investment funds, and sustainability indices is increasing day by day.
ESG Applications in Turkey
While ESG investments and regulations in Europe are developing rapidly, although ESG investments in Turkey have started to attract attention, it is possible to say that Turkey is at an early stage in the establishment of ESG regulation. Prior to the publication of the Guide announced by the CMB above, the Office of the President of Turkey established a partnership with the United Nations Development Program (“UNDP”) in the preparation of two important reports. These reports were created under the titles of “Impact Investment Ecosystem in Turkey” and the “Turkey Sustainable Development Goals (“SDGs”) Investor Map”, and these reports took the UN SDGs as a benchmark to provide an overview of the current state of sustainable investment in Turkey. These developments are important proof that the regulatory authorities in Turkey also follow the global ESG developments regarding sustainability and will make regulations on ESG when they deem necessary.
Beyond these reports, Turkey’s incentive for ESG investments led to the creation of advisory legal regulations at the beginning. Accordingly, in October 2020, the CMB has amended the Communiqué On Corporate Governance[11]. In connection with this Communiqué, CMB has also published the Sustainability Principles Compliance Framework (“Framework”) for publicly traded companies[12]. According to the CMB, the main purpose of this text is to “encourage companies to take a larger share of global sustainable investment flows”[13].
The framework includes more than 50 principles that fall into four categories: (i) general principles, (ii) environmental principles, (iii) human and employee rights principles, and (iv) corporate governance principles. Enforcement of these principles is currently optional. However, the reporting obligation of all listed companies in Turkey according to the Framework is currently within the scope of the “Comply or Explain” principle. As a result, non-financial disclosures of publicly traded companies should now include explanations on whether or not sustainability principles are applied.
In terms of green and sustainable bonds, Turkish companies have reached an issuance size of approximately US$ 5 billion until this date[14]. A significant portion of these issuances were issued by banks or large companies called blue-chip. While a significant portion of the issuances are issued to foreign investors in eurobond format; a small portion was issued to domestic investors in the form of local bonds. Looking at the equity markets, it has been observed that some companies have received an ESG rating during the public offering phase, and through this rating, they aim to attract the attention of institutional investors with high ESG sensitivity.
ESG themed instruments in our country lag behind global practices both in terms of export frequency and size. Although Turkey lagged behind a bit in these processes, it is not left behind, and with increasing awareness, it is a candidate country to catch up with the level of developed countries in the shortest time.
A Rising Trend in Merger and Acquisition: ESG
Increasing ESG-focused investments have also made advanced ESG due diligence (“DD”) processes a growing part of merger and acquisition (“M&A”) negotiations. Indeed, the M&A market has started to see ESG as an important dynamic in Financial and Legal Due Diligence Reports (“DD Report”) in M&A projects, especially when it comes to investment in a global company or business idea, regarding value chains. Accordingly, companies are expected to include new provisions in their purchase agreements regarding their ESG profiles. In addition, as the legislation -which is likely to be developed and published- diversifies, examining the compliance process of companies with the relevant legislation in the field of ESG will also be considered as an important part of the DD Report.
A legal and compliance-oriented DD and the resulting DD report form the backbone of most merger and acquisition projects. Because the identification and measurement of risks and the management of these risks can only be realized after a careful examination. These risks may be legal, as well as commercial and financial risks on which the company builds its values. ESG risks, on the other hand, can take their place among the risks that may arise in almost every field and need to be managed. Many areas from climate change to human rights and modern slavery, from diversity to data privacy and corporate governance can be given as examples of ESG-based risks. In measuring these risks, the ESG Rating scores obtained as a result of the analyses made by the ESG Rating Agencies (although not standardized) are evaluated by making use of the developing technology[15]. It would be appropriate to emphasize that ESG-focused investments are an investment approach beyond purely profit-oriented. Because ESG investors are now asking questions that address their own value chains and looking for answers. In this direction, an investor wants to know which company he invested in, to know about it, to analyze customer relations, to see whether it has duly procured its financial resources, to understand how it behaves towards the environment and its employees and to monitor working conditions and compliance conditions. Although this behavior of the investor may result from his own will and the driving force of the market he is in, it should be emphasized that comprehensive and detailed ESG compliance laws are now being implemented on a global scale. It should not be ignored that ESG compliance will become a legal obligation beyond a business and investment model for many companies in the near future.
Conclusion
Today, ESG has become a criterion that significantly affects both the way of doing business and the behavior of investors. It is an inevitable fact that ESG criteria will become an “indispensable” evaluation criterion in the future for both investors and customers. While this reality is fed by the increasing awareness of individuals and companies; it concurrently becomes a basic principle that is supported by state policies and constructed on legal grounds day by day. These processes were first led by the European Union countries; Subsequently, this current spread to the USA and then to all other countries. Turkey has started to make significant progress in the field of ESG by taking the necessary steps under the leadership of regulators and well-known leading companies.
Investors are integrating more and more ESG criteria into their investment decision processes. The important reason for this integration is that investors want to do the right thing in terms of environmental, social, and governance issues, as well as avoid the negative effects of behaviors contrary to these principles on company profitability and investment returns. In other words, ESG-focused investments outperform other alternative investments. Investors who are aware of this pay attention to place ESG at the top of the evaluation criteria they use when making investment decisions in both capital markets and M&A markets. It is thought that some of the legal regulations summarized above will become mandatory in the very near future, taking into account the global ESG practices in Turkey. For this reason, first of all, increasing ESG awareness within the company in all areas, supporting this awareness with various company policies and objectives and most importantly, making ESG practices a principle by creating necessary strategies will make a great contribution to sustainable success.
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