Environmental Objectives in ESG real estate
The environmental ‘E’ within a real estate ESG plan focuses, as we might expect, on a company’s environmental responsibility, aiming to measure (using quality data) and ultimately reduce its impact on the natural world around us.
This is most broadly done through the reduction of energy use, water efficiency, waste efficiency and the conservation of natural resources, while still delivering a high performing and functioning service, product or building.
why is the environment so important in real estate esg?
Clearly the ‘E’ in real estate ESG is only one piece of the puzzle but as the real estate industry is responsible for around a third of the world’s global carbon emissions and 40% of its energy consumption there is simply no escaping the urgency of the task ahead for real estate funds, developers, landlords and construction companies.
The 17 UN Sustainable Development Goals (UN SDGs) are where we start, providing a macro-level context, as they contain the high-level environmental objectives we are all collectively no matter the industry, pointing towards.
Real estate ESG in particular might focus on the creation of resilient communities, sustainable consumption and production, protecting and restoring native habitats, and generally combatting climate change.
Tracking specific real estate performance indicators through the application of various activities and management policies can guide the environmental goals within the built environment.
Key Performance Indicators (KPIs) in Environmental Real Estate ESG
Key Performance Indicators are central to ESG management, providing us with tangible data points with which to track performance and the measure success (or indeed failure) of a company’s stated sustainability goals.
It is important to note that transparency is what matters most in real estate ESG, hiding mistakes under a rock and hoping nobody notices is for school kids, the planetary emergency requires a grown-up response, so we take a knock to the chin when necessary and stay on track for the long-term.
Core real estate ESG environmental strategies include:
carbon emission reductions / energy reduction
an increase in use of renewable / green energy
the responsible use of materials and natural resources
water efficiency
waste management
preserving biodiversity
For example, in the USA we might look at the % of installed water filters certified by the Environmental Protection Agency’s (EPA) WaterSense® mark as a KPI for improvements water management. By itself it may not provide a complete picture but when analysed alongside other such data points it quickly starts to build up to something meaningful.
On a larger scale, a real estate fund’s property portfolio could reference the number of buildings or projects certified by a green building standard such as USGBC LEED in the US or BREEAM in the UK can indicate a strong commitment to environmental stewardship that runs right through the portfolio, from design to construction and facilities management.
corporate Real estate ESG - Environmental Policy
In order to monitor and assess green initiatives, as corporate real estate ESG consultants we have to become fluent in the language of data collection. Once we have good quality data flowing into a real estate ESG management software from multiple sources each month, suddenly the whole ESG strategy starts to make more sense.
It can include measurements such as greenhouse gas emissions and energy, waste, and water use, Life Cycle Assessments, environmental impact assessments, LEED, BREEAM, the Living Building Challenge, and the World Green Building Council Net Zero Carbon Building Commitment.
This data collection should of course go hand in hand with the strategic sustainability initiatives designed to improve the data over time - everything from water cutbacks, to embodied carbon reductions, healthy materials selection and so on.
real estate ESG Management Software
To manage progress, the integration of ESG management software and resources is essential. One of the leading environmentally focused ESG software solutions is called Measurbl; aiding with goal setting, emission calculations, and certification support.
In addition, companies should report their progress to the Task Force on Climate Financial Disclosures (TCFD), GRESB, and Carbon Disclosure Project (CDP) to increase transparency and integrity.
There is inevitably a lot of reporting in real estate ESG, the larger the business the more reports are expected but… we always say - it’s about implementing meaningful actions that deliver improvements over time, get that part right first and the reporting is easy!