In healthcare real estate, “green” is no longer enough. A new model of governance – collaborative, transparent, and deeply human – is emerging to meet the sector’s evolving ESG challenges. Will real estate investors rise to the occasion? Stéphane Hedont-Hartmann, Director of CSR-ESG Strategy at MoZaïC Asset Management, explores.

Real Estate’s ESG Reckoning: Why new governance is the next big shift by Stéphane Hedont-Hartmann.

If real estate has long been considered a safe bet, healthcare real estate has been viewed as its most resilient corner – steady returns, long leases, and social impact. But as ESG becomes more than a marketing slogan, cracks appear in this once-comfortable narrative.

More profound questions are being asked behind the façades of eco-certified buildings: Who governs these spaces? What is the quality of life inside them? Who ensures accountability – not just to shareholders but also to patients, caregivers, and communities?

In a world where regulators, investors, and civil society demand more, healthcare real estate is undergoing a quiet but urgent revolution. And at its centre is one idea: governance matters more than ever.

From Labels to Lives: The ESG evolution

Environmental benchmarks such as BREEAM, LEED, and France’s HQE have long dominated discussions on real estate sustainability. They assess carbon footprints, energy performance, and resource efficiency. However, they do not evaluate whether a nurse can find a break room, whether dementia patients feel safe, or whether staff leave the sector in exhaustion.

Healthcare real estate isn’t just about walls and roofs – it’s about people.

A recent white paper by MoZaïC Asset Management, “Beyond Carbon: Addressing Social and Governance Issues in Healthcare Real Estate,” highlights this: while environmental metrics are essential, they are insufficient. In healthcare, the social and governance dimensions must especially take centre stage.

Regulations Are Catching Up – Fast

The EU’s Sustainable Finance Disclosure Regulation (SFDR) and Corporate Sustainability Reporting Directive (CSRD) now require real estate investors to assess how ESG risks affect their bottom line and how their investments impact society and the planet.

This is the era of double materiality. And the message is clear: a building that’s energy efficient but socially negligent is no longer defensible.

Under the SFDR, Principal Adverse Impacts (PAIs) include energy inefficiency and fossil fuel exposure indicators. However, in sectors like healthcare, more is needed: data on patient satisfaction, staff well-being, and operational ethics must become standard practice.

From Landlord to Partner: A new governance model

So, what does a new governance model look like?

Firstly, this indicates that investors can no longer remain passive owners. According to the white paper, investors, operators, and public authorities must establish tripartite governance alliances, based on shared objectives and transparent decision-making.

“Even without legal liability for what occurs inside the facility, investors can no longer disregard reputational risk,” the report warns.

The model redefines roles:

• Investors bring capital and long-term vision.
• Operators offer frontline insight into patient care, staffing, and facility use.
• Public institutions ensure that infrastructure serves public health needs.

This isn’t about micromanagement – it’s about shared stewardship.

Boots on the Ground: Five shifts in action

The white paper outlines five strategic moves investors must make to adapt:

Lead the ESG Agenda
Investors must move beyond compliance. They must anticipate regulatory change, manage reputational risk, and balance financial return with social value. ESG performance should be treated as an asset class in itself.

• Embed ESG in the Relationship
  ESG must be written into every stage of the investor-operator relationship, from lease terms to tenant engagement. This includes co-created transition plans, contract ESG clauses, and clear KPIs.
• Make Social and Governance Criteria Investment Filters
  It’s no longer enough to ask “What’s the yield?” Investors must also ask, “What are working conditions like for staff? Are patients safe? Are we aligned with local healthcare strategies?”
• Design for Adaptability
  Facilities must evolve with changing care models, demographics, and technologies. The future of healthcare real estate lies in modular, flexible spaces, not cookie-cutter clinics.
• Rethink ESG Indicators
  Standard metrics fall short. Real impact requires tailored indicators: staff retention, patient satisfaction, workplace well-being. And these must be tracked, published, and improved over time—in partnership with operators and stakeholders.

A Culture Shift: ESG as dialogue, not diktat

Change won’t come from checklists alone. As Philippe Denormandie, a white paper contributor and surgeon turned ESG advocate, puts it:

“It’s time to rethink investment not only in terms of property but in terms of use – projects must be collaborative, eco-responsible, and truly adapted to their purpose.”

Indeed, this governance rethinking is as much cultural as it is technical. Investors must engage more deeply with the realities on the ground. This entails regularly conversing with facility managers, healthcare staff, and families. It involves listening – not just reporting.

What This Means for Managers and ESG Leaders

For those in the broader business sustainability community, the lessons are clear:

• Governance is the backbone of ESG. Without shared governance, environmental and social goals fall apart in execution.
• Real estate must become relational. Stakeholder engagement isn’t just ethical – it’s strategic.
• Buildings must become adaptable. Fixed-use, inflexible facilities will become stranded assets in a world of evolving social needs.

Whether in healthcare, senior living, or education, the new frontier of real estate ESG isn’t just smart sensors or solar panels. It’s about who has a seat at the table – and who benefits from what’s being built.

Tomorrow’s Leaders Are Shaping Governance Today

Investors who embrace these changes will future-proof their portfolios and improve the real estate landscape.

The ESG debate in real estate is maturing. Labels and checklists, while helpful, are not enough. As investors seek to align capital with purpose, the true differentiator will be how governance is designed and practised.

The path forward is clear: embrace governance not as a compliance hurdle, but as a source of resilience, innovation, and shared value. In doing so, we move from buildings that are sustainable in theory to spaces that are truly sustainable in use.

Because in the end, real estate is not just about walls – it’s about people.

Useful links:

• Link up with Stéphane Hedont-Hartmann on LinkedIn
• Download the White paper “Beyond carbon: Addressing social and governance. Issues in healthcare real estate”
• Read a previous article by Stéphane Hedont-Hartmann: Achieving a net-zero world on carbon credit
• Read a related article: People, profit, and planet: Do sustainability reporting standards measure up?
• Discover ESSEC Business School and apply for a master’s degree.

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