ESG for Office Buildings in Israel — What It Actually Means for the Building Owner and Manager

The three letters ESG have in recent years become a magic word in the commercial real estate world — and, unfortunately, also a source of real confusion. Many building owners hear "ESG" and imagine a pretty presentation for investors, or solar panels on the roof that photograph nicely. In the field it looks completely different. I have managed buildings where we made zero "green" investment — and still managed to improve electricity consumption by 15 percent within a year, simply by starting to maintain the chillers properly and seal leaks in the cooling water. Good ESG is exactly the opposite of a slogan: it is a measurable work plan that rests on preventive maintenance, real measurement of consumption, and orderly, documented management. A building that is not properly maintained cannot be a "green" building — no matter how many panels it has on the roof.

What Do the Three Letters Actually Mean

ESG is an acronym for three axes by which a commercial asset is examined today — beyond its direct financial return:

• E — Environmental: the building's environmental impact. Electricity and water consumption, carbon emissions, waste management, energy efficiency of the air-conditioning and lighting systems, and indoor air quality.
• S — Social: the impact on people. Accessibility for people with disabilities, health and safety of the users, thermal comfort and the quality of the work environment for tenants and their employees.
• G — Governance: the manner of management. Transparency, documentation, regulatory compliance, risk management, and a clear chain of responsibility — who is responsible for what and how it is documented.

The most common mistake is to focus only on the E and forget the S and the G. Precisely in Israel, where the management culture tends to act only when a regulator or an event forces it, the letter G — governance and documentation — is usually the weakest link. And without it, both the E and the S remain declarations without backing.

Something important to understand from the start: ESG is not a single label you receive and forget. It is a management state that is measured continuously — and therefore a building manager who is not part of the process will not produce real ESG.

Why It Is No Longer Voluntary — Who Demands ESG from an Office Building

Even before talking about "doing good for the world," it is important to understand that whoever ignores ESG loses in the pocket. The pressure comes from three directions at once:

• Tenants: large companies — and especially international and hi-tech companies — are themselves obligated to sustainability reporting. They choose buildings that provide consumption, accessibility and air-quality data, and are willing to pay a premium for it. A building without this data loses quality tenants — not because of image, but because the tenant needs the numbers for its own reporting.
• Lenders and investors: institutional bodies and institutional investors increasingly check the sustainability profile of an asset before financing or investing. An asset with high energy consumption and no improvement plan is today considered an asset at risk — not only environmentally, but economically.
• Regulation: the direction is clear. Requirements for energy efficiency, accessibility, and green-building standards are only tightening. Whoever starts measuring and documenting today will meet the requirements tomorrow without upheaval. Whoever waits — will meet them under pressure and at a higher cost.

In practice: ESG has turned from a "nice to have" factor into a factor that directly affects the rent, the occupancy rate, the value of the asset and its financing ability. This is an economic matter of the first order — not a green agenda.

E — the Environmental Axis: Where It Meets Maintenance

Here lies the connection most people miss. An energy-efficient building is not necessarily a building with the newest technology — it is a building whose systems are properly maintained.

A few examples from the field that I encounter again and again:

• Chillers and air conditioning: a chiller with clogged filters or with a non-standard gas pressure consumes far more electricity for the same cooling output — sometimes 20-30 percent more. Cleaning filters and checking the gas charge are steps of a few work hours that pay back very quickly.
• Lighting: an old lighting system without timers or occupancy sensors burns electricity during the hours when the building is empty. This seems trivial, but in a building of a hundred units this amounts to significant sums every month.
• Water: a leaking valve in a main pipe wastes water in quantities that go unnoticed until you look at the meter. I have seen buildings with reading discrepancies of tens of percent between the entrance meter and the sum of the unit meters — all that discrepancy goes down the drain.

That is why the first step in E is not a large investment — it is orderly preventive maintenance. Only after the base is sound does it make sense to talk about upgrades. We expanded on this in air conditioning maintenance in office buildings and in the annual preventive maintenance checklist.

Upgrades That Pay for Themselves

When the base is sound and we have consumption data, we can rank the investments by return:

• LED lighting: one of the upgrades with the clearest return — significantly lower consumption and a long lifespan. See the return on investment in an LED lighting upgrade.
• Solar energy: using the roof area to generate electricity. It depends on the engineering, regulatory and contractual feasibility of the roof — it is important to check who owns the roof and what the building plan allows.
• Smart building management (BMS): a system that shuts down systems by occupancy and identifies waste in real time. See the guide to building management systems.
• Cleaning materials: switching to environmentally friendly materials, which also affects indoor air quality and is relevant to tenant requirements.

S — the Social Axis: the Building as a Place Where People Work Every Day

The letter S is often forgotten, but it touches directly on Israeli law and on the health of the users. It is also the part that is easiest to improve without large investments — if managed correctly.

• Accessibility: compliance with the requirements of the Equal Rights for Persons with Disabilities Law and the relevant accessibility standards. This is not only a legal obligation — it is the heart of the S. Poor accessibility is a legal risk and harm to the users. In practice this means: a sound and certified elevator, standard-compliant ramps and approaches, accessible restrooms and adequate lighting at the entrances.
• Indoor air quality: proper ventilation, clean air-conditioning filters, and cooling-tower maintenance — important for preventing Legionella and for the health of employees. A cooling tower that has not undergone the required chemical treatment is not just a maintenance failure — it is a health risk regulated by Ministry of Health regulations.
• Thermal and acoustic comfort: a work environment that is not too hot and not too cold, and in which the noise of the systems (pumps, chillers, roof equipment) is controlled and reduced.
• Safety: sound and authorized fire detection and extinguishing systems, clear escape routes and working emergency lighting. Fire safety is an inseparable part of the building's social responsibility, and is required under the Business Licensing Law and the fire-extinguishing regulations.

Note that every item in S rests on the same infrastructure: maintenance and measurement. You cannot "declare" good air quality — you need to maintain the air-conditioning systems and test. You cannot declare accessibility — you need to maintain the elevator and the access routes. See more in elevator maintenance in office buildings.

G — the Axis Without Which Everything Collapses

If I had to choose the most important letter for an Israeli building owner, it would be G. Governance is not bureaucracy — it is the proof that everything you declare is actually happening. Without G, the E and the S are just pretty words in a presentation.

Good governance in an office building is expressed in several tangible things:

• A written maintenance plan for every system, with a defined frequency and responsible party.
• A documented logbook that shows what was done and when — not on WhatsApp, but in a document that can be presented.
• Valid statutory approvals — business license, elevator approvals, cooling tower, extinguishing systems — concentrated in one place and quickly retrievable.
• A clear chain of responsibility — who is responsible for each system, and whom to contact in every emergency scenario.
• Risk management — early identification of equipment approaching retirement age, of potential structural problems, and of regulatory deviations before they turn into fines.

All of this is exactly what Israeli Standard 1525 for building maintenance defines. In that sense, a building that complies with Standard 1525 already fulfills a significant part of the G of ESG — even without calling it that. See the guide to Standard 1525 for building maintenance.

Why is this so critical? Because every party that examines your ESG — a tenant, an investor, a lender or a regulator — will ask to be shown proof. It will not be satisfied with "the building is well maintained." It will ask to see the logbook, the approvals, the consumption data. A building managed without orderly documentation may be excellent in practice and fail every ESG examination — simply because it has no way to prove itself.

A story from the field: in a building I managed for several years, when a large international tenant came to tour before signing a contract, it specifically asked to see three years of maintenance logs, elevator approvals and the fire authority. Not the elevator itself — the papers. The building was excellent. But without the orderly logs, the deal would not have gone through.

Standard 5281 for Green Building — Where It Enters the Picture

In Israel, the central standard for sustainable construction is Israeli Standard 5281 for green building. It defines criteria for the environmental aspects of a structure — energy, water, materials, indoor environmental quality and more — and allows certification at various levels. For an office building, 5281 certification is a formal way to prove the E (and in part the S) of ESG to tenants and investors.

It is important to understand the distinction between the two:

• Standard 5281 is a label usually measured at the construction stage or a major renovation, and focuses on the environmental and planning aspects of the structure.
• ESG is an ongoing management concept for the entire life of the building — including social aspects (S) and governance and documentation (G) that Standard 5281 does not cover.

They complement each other, they do not replace. You can hold 5281 certification and still manage the building poorly in terms of ESG if the ongoing maintenance is crumbling. For those comparing the various certification systems, we expanded in LEED versus the Israeli green-building standard.

From Declaration to Measurement — ESG Starts with Numbers

The difference between real ESG and "presentation ESG" is measurement. You cannot improve what you do not measure, and you cannot prove improvement without a baseline to measure against. Here are the practical steps I recommend to every building owner:

• Measure consumption: electricity, water and gas — not just the total bill, but a breakdown by systems and floors if possible. Even without a BMS, separate meters for the chillers and the shared lighting provide a very useful picture.
• Set a baseline: average consumption per year, by season, normalized to occupancy. Without a baseline, every "improvement" is just a gut feeling.
• Set targets: a percentage of reduction in electricity consumption, water reduction, a rate of waste diversion to recycling. Measurable targets are what separates an intention from a plan.
• Document and track: exactly like a maintenance log — measurement that is not consistently documented is worth little. Designate a specific party responsible for the consumption data.

Note how similar this is to orderly maintenance management. This is no coincidence — ESG is an extension of the same management discipline: measurement, documentation, target, control. A building that already manages its maintenance professionally is well on the way to real ESG.

A Practical Work Plan — How to Start Without Panicking

ESG sounds big, but you start small and orderly. Here is a sequence that works in the field, from the simple to the substantial:

• Stage 1 — order in the base: make sure the preventive maintenance and statutory approvals are sound and documented. Elevator, fire extinguishing, cooling tower, business license — all valid, concentrated and made accessible. This already gives you most of the G and a basis for the E and the S.
• Stage 2 — measurement: install or arrange measurement of consumption, and set a baseline of at least a year. Without this there is nothing to improve and nothing to prove.
• Stage 3 — quick wins: maintaining systems for energy savings, sealing water leaks, arranging waste management with a recycling contractor. A quick return and almost no investment.
• Stage 4 — focused upgrades: upgrading lighting to LED, smart lighting controllers, improving window insulation — investments with a clear return that can be calculated in advance.
• Stage 5 — large investments: solar, air-conditioning upgrade, a full BMS — after the base is sound, the measurement exists, and there are data that justify the investment.
• Stage 6 — proof and certification: concentrating the data for reporting to tenants and investors, and if needed 5281 certification or documentation per international frameworks such as GRESB.

The central message: you don't start from the roof (literally and figuratively). You start from the foundations — orderly management and maintenance — and only on them do you build the "green." This is how ESG turns from a slogan into a real and proven asset value.

The Connection Between ESG and Professional Property Management

If you have read this far, it is already clear that most of ESG is in fact good property management with high discipline: measurement, preventive maintenance, documentation, compliance and risk management. A building owner who manages his asset in a fragmented way — each supplier separately, without a party that concentrates and measures — will struggle greatly to present a credible ESG profile, simply because he does not have the full picture and the data in one place.

This is exactly where the value of concentrated, documented management comes in: one party that holds the entire fabric — the maintenance schedule, the approvals, the consumption data and the targets — and can turn them into a report that speaks the language of tenants, investors and regulators. See more about the approach in comprehensive property management.

At Domera we build a practical ESG infrastructure for every asset — consumption measurement, documented preventive maintenance and concentrating the data into a report that can be presented. Get a proposal for a review of your building's ESG status.