Beyond Profit: Cultivating Sustainable Finance Leaders for Tomorrow’s Real Estate

Imagine, for a moment, the quiet hum of an empty office building.

Its expansive floors, once bustling with activity, now stand as a testament to a world transformed by flexible work.

Or perhaps, visualize a familiar high street, once vibrant, now lined with vacant storefronts, a silent echo of changing shopping habits brought on by the internet.

These are not merely minor shifts; they represent profound unintended consequences that ripple through our lives, shaping our cities, our economies, and our very futures.

Associate Professor Kristle Romero Cortes, from the School of Banking and Finance at UNSW Business School, has dedicated her career to understanding these seismic shifts.

She is particularly fascinated by how financial systems, often perceived as distant and abstract, profoundly influence people’s lives.

It is this deep curiosity that fuels her innovative approach, an approach now earning accolades for teaching future leaders how to integrate sustainability and ethics into the very fabric of financial decision-making.

Associate Professor Kristle Romero Cortes’ award-winning course equips UNSW students with critical and ethical thinking skills.

These skills enable them to merge financial profit with sustainability and social equity in real estate finance, preparing them for the complex boardrooms of the future.

Why This Matters Now: The Shifting Sands of Finance

The traditional lens through which we have viewed finance, especially in real estate, has predominantly focused on immediate financial upsides.

In Australia, for instance, there is a historical obsession with property’s potential for capital gains, often sensationalizing financial returns in both commercial and residential sectors (UNSW Business School, 2024).

This intense focus, while driving prosperity for some, has also inadvertently obscured a much larger, more critical picture.

It has cultivated a generation of professionals primarily trained in quantitative analysis and return metrics.

Consequently, these professionals are often ill-equipped to grapple with the complex ethical, environmental, and social challenges that increasingly define our world (UNSW Business School, 2024).

However, the landscape is shifting.

The real estate and finance sectors are at an inflection point, demanding a new kind of leadership.

This new leadership must understand that true value extends beyond monetary figures, encompassing resilience, liveability, and long-term societal well-being.

This is more than an academic exercise; it is a critical business necessity for organizations to thrive in an era where climate risk and social equity are no longer peripheral concerns but central to economic stability and opportunity.

The Unseen Risks: Why Traditional Finance Falls Short

For too long, the narrative in real estate has revolved almost exclusively around profit.

Associate Professor Cortes observes that the capital gains one can make in both commercial and residential real estate have been sensationalized (UNSW Business School, 2024).

This singular focus often blinds investors and developers to the broader implications of their decisions, creating vulnerabilities that are only now coming into sharp focus.

The conventional risk-return model, while foundational, has inadvertently narrowed our perception of what risk truly entails.

It has conditioned us to see risk primarily in financial terms, such as market volatility, interest rates, and capital depreciation.

Yet, the real estate landscape, particularly, is increasingly susceptible to forces that extend far beyond these traditional metrics.

We are witnessing a profound recognition that the true risk profile of an asset must encompass its environmental and social context.

The Underwater House: A New Definition of Risk

Associate Professor Cortes challenges us to think differently.

When evaluating a property, she poses a stark, yet essential question: Will the house be standing in 20 years?

Or will it be underwater? (UNSW Business School, 2024).

This query is not merely about gentrification or market demand, but fundamentally about liveability.

It represents a powerful reframing, suggesting that while the underlying risk-return model remains valid, what defines risk needs to be significantly broadened (UNSW Business School, 2024).

This broadened perspective highlights a crucial insight: doing the right thing from a sustainability point of view could actually reduce one’s exposure to risk (UNSW Business School, 2024).

Investing in climate resilience, ensuring social equity, and considering long-term environmental impacts are not simply altruistic gestures.

Instead, they are strategic moves that protect assets and unlock potential growth opportunities, steering clear of areas destined for decline.

This understanding forms the bedrock of a more robust, ethical investing approach for future leaders.

What the Research Really Says: Merging Purpose with Profit

Associate Professor Cortes is not merely asking questions; she is actively building solutions.

Her award-winning elective course project, Embedding the Sustainable Development Goals (SDGs) into Real Estate Finance, directly addresses these challenges.

It reshapes how UNSW students, the future leaders of finance, approach property development and ethical investing (UNSW Business School, 2024).

The project is now in its fourth year, demonstrating a sustained commitment to this vital educational shift.

The core finding from this initiative is clear: real estate finance can and must be reframed.

Practitioners need to move beyond purely quantitative analysis and integrate sustainability, climate resilience, and social equity into every financial decision.

This means utilizing traditional valuation and investment tools not in isolation, but alongside ESG considerations (UNSW Business School, 2024).

A practical implication for any business or educational institution is the power of experiential learning.

Cortes’ project divides the learning into two distinct stages, allowing students to viscerally experience how SDGs intersect with financial outcomes.

In Stage 1, students adopt the role of an individual property buyer.

They grapple with the personal aspects of affordability, financial and climate risk, and resilience planning.

This stage explicitly links individual housing access and financial decisions to broader social outcomes, making the abstract personal (UNSW Business School, 2024).

Cortes notes that buying a house is a very personal thing.

She emphasizes that students must consider not just if they can buy a house, but if they should, asking if it will be standing in 20 years (UNSW Business School, 2024).

Stage 2 elevates this perspective.

Students re-evaluate the same property, but this time as a real estate investment manager or trust.

Here, they apply institutional tools, focusing on environmental, social, and governance (ESG) analysis and fiduciary decision-making.

They delve into tangible metrics such as a building’s LEED certificates or Green Star rating.

This helps them to appreciate what it means to operate in the built environment from an ESG perspective (UNSW Business School, 2024).

This dual-perspective approach ensures a comprehensive understanding, preparing students for varied roles within the sustainable finance landscape.

Your Playbook for Ethical Investment Leadership

Integrating profit with purpose is not just a buzzword; it is a strategic imperative.

Here is a playbook, inspired by Associate Professor Cortes’ SDG education framework, for cultivating ethical investing practices in your organization or for training future leaders:

• Broaden Your Risk Lens: Challenge traditional financial literacy by expanding the definition of risk beyond market fluctuations. Incorporate factors like climate vulnerability, resource scarcity, and social inequality. As Cortes states, risk needs to be broadened to include whether an asset will be viable in 20 years (UNSW Business School, 2024).
• Embed SDGs from the Start: Do not treat Sustainable Development Goals (SDGs) as an afterthought. Integrate them into the initial assessment phases of any project or investment. This ensures that environmental protection, social equity, and good governance are foundational, not optional.
• Think Like an Individual, Act with Conscience: Encourage decision-makers to consider the personal impact of their investments. This includes evaluating affordability pressures, community impact, and the long-term liveability of locations, as students do in Stage 1 of Cortes’ project (UNSW Business School, 2024).
• Adopt an Institutional ESG Framework: Move beyond simple compliance to proactive Environmental, Social, and Governance (ESG) analysis. Use tools and ratings like LEED certificates or Green Star ratings, as taught in Stage 2, to objectively assess the sustainability performance of assets (UNSW Business School, 2024).
• Debunk the Good vs. Well Myth: Actively promote the understanding that doing the right thing from a sustainability point of view could actually reduce one’s exposure to risk (UNSW Business School, 2024). Frame sustainable choices as pathways to long-term value and growth, not as concessions.
• Foster Critical and Ethical Thinking: Prioritize educational and training programs that go beyond quantitative skills. Encourage deep questioning, interrogation of assumptions, and the development of an ethical compass for complex financial decisions, mirroring Cortes’ academic philosophy (UNSW Business School, 2024).
• Champion Student-Centred Learning: For educational institutions or corporate training programs, adopt methodologies that actively engage learners. Cortes’ philosophy emphasizes high expectations with clarity and fairness, ensuring people engage with the material (UNSW Business School, 2024). This fosters a deeper understanding and passion for sustainable change.

Navigating the Nuances: Risks, Trade-offs, and Ethics

The journey towards ethical investing and sustainable finance is not without its complexities.

One significant challenge lies in overcoming entrenched mindsets.

The ingrained sensationalization of capital gains (UNSW Business School, 2024) makes it difficult for some to look beyond immediate financial returns.

This often creates a cultural resistance to new metrics and broader considerations.

Furthermore, ESG integration can appear daunting due to the perceived complexity of data collection and analysis.

There can be trade-offs, real or perceived, between short-term profits and long-term sustainable outcomes.

The ethical imperative is to articulate clearly how these long-term benefits—reduced climate risk, enhanced social license, increased resilience—ultimately contribute to superior, stable financial performance.

Education, such as Cortes’ course, serves to bridge this gap, demonstrating practically how doing good by doing well is not a paradox but a synergistic pathway (UNSW Business School, 2024).

Risk mitigation stems from a proactive, holistic view, rather than a reactive, narrow one.

Cultivating Competence: Tools, Metrics, and Cadence

Effective sustainable finance requires specific tools and a consistent cadence for evaluation.

While the research does not outline a comprehensive tech stack, it highlights the importance of established benchmarks.

For real estate, this includes utilizing certified ratings such as LEED (Leadership in Energy and Environmental Design) certificates and Green Star ratings (UNSW Business School, 2024).

These tools provide standardized ways to assess a building’s environmental performance.

Key Performance Indicators (KPIs) in this context might include:

• Environmental Impact: Energy consumption reduction, water usage efficiency, waste diversion rates, carbon footprint reduction.
• Social Impact: Affordability metrics, community engagement scores, occupant well-being assessments, access to essential services.
• Governance Quality: Transparency in reporting, ethical supply chain practices, board diversity, stakeholder engagement.

The cadence for review should be integrated into existing financial reporting cycles, perhaps quarterly or annually.

This ensures that ESG factors are routinely considered alongside traditional financial metrics.

This continuous integration helps embed sustainable practices into core operations and strategic planning, making sustainability a continuous journey rather than a one-off project.

FAQ

• Q: What is the Embedding the SDGs into Real Estate Finance project?

  A: It is an award-winning elective course project for third-year UNSW students, developed by Associate Professor Kristle Romero Cortes.

  It teaches them to integrate Sustainable Development Goals (SDGs) and ethical considerations into real estate financial decision-making (UNSW Business School, 2024).

• Q: How does this course redefine risk in real estate?

  A: It broadens the definition of risk beyond traditional financial metrics to include liveability, climate resilience (e.g., whether a house will be underwater in 20 years), and social equity.

  It argues that sustainability can actually reduce exposure to risk (UNSW Business School, 2024).

• Q: What skills do students gain from this project?

  A: Students learn to apply traditional valuation and investment tools alongside ESG considerations, think critically and ethically.

  They assess affordability pressures, financial and climate risk, resilience planning, and understand the link between housing access and social outcomes (UNSW Business School, 2024).

• Q: Why is it important to merge profit and sustainability in finance?

  A: Merging profit and sustainability ensures long-term viability and reduces exposure to new forms of risk, such as climate and social risks.

  It allows for investment in growth opportunities that are both financially sound and ethically responsible, moving away from potentially declining assets (UNSW Business School, 2024).

Glossary

• SDGs (Sustainable Development Goals): A collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030, covering social, economic, and environmental issues.
• ESG (Environmental, Social, and Governance): A framework used to evaluate an organization’s performance in sustainability and ethical practices beyond traditional financial metrics.
• Liveability: The quality of a place to live, encompassing factors such as safety, access to resources, environmental quality, and resilience to climate change.
• Capital Gains: The profit made from the sale of a capital asset, such as real estate, calculated as the difference between the selling price and the purchase price.
• Risk-Return Model: A fundamental concept in finance that posits a direct relationship between the level of risk taken and the expected return on an investment.
• Ethical Investing: An investment approach that considers not only financial returns but also the ethical, social, and environmental impact of the investment.

Conclusion

Associate Professor Kristle Romero Cortes’ work at UNSW Business School is not just about teaching finance; it is about shaping mindsets.

It is about passing on a profound passion for harnessing finance as a force for positive social and environmental change (UNSW Business School, 2024).

Her philosophy, simple yet powerful, resonates deeply: she teaches the way she hopes someday someone will teach her own children, with high expectations, clarity, and fairness, ensuring people engage with the material (UNSW Business School, 2024).

This commitment to student-centred learning, coupled with an unwavering focus on the bigger picture, is precisely what tomorrow’s boardrooms demand.

The future of finance leaders lies not in narrowly defined profit margins, but in their ability to see the world as interconnected, where a resilient environment and a thriving society are integral to sustainable wealth creation.

As we navigate a world of complex, sometimes unintended, consequences, empowering leaders who can truly do good by doing well is not just an aspiration; it is our clearest path forward.

References

UNSW Business School. (2024, June 3).

Teaching future leaders how to merge profit and sustainability.