ESG Strategies Move to CRE’s Center Stage
The acronym ESG (environmental, social and governance) increasingly is becoming a watchword in the investment community generally, and among real estate investors in particular. A new report from the Urban Land Institute’s (ULI) Greenprint Center for Building Performance, Sustainability Outlook 2021, shows that the real estate industry will take an increasingly focused view of ESG strategies this year.
“While the health crisis and social unrest dominated much of our attention in 2020, sustainability has remained at the forefront,” said Owen D. Thomas, ULI global chairman and chairman, Boston Properties. “In fact, as this sustainability outlook shows, the events of the past year have led to health and wellness as well as a social equity cementing themselves as key components of sustainability. While this poses new challenges for how we in the industry will measure portfolio risk, value, and performance, it also reinforces just how intertwined our work is with so many aspects of people’s lives.”
In an introductory note, Thomas identifies four main stakeholders that prioritize sustainability and drive his own company’s emphasis on the topic. “First are our tenants, who make sustainability part of the value proposition they offer employees,” he writes. “Second are the financial markets—we are seeing an increasing number of both equity and fixed-income investors focused on ESG.”
The third constituency consists of “communities that are increasingly focused on climate change, and which benefit from our leadership on the issue. Fourth are our employees—they are increasingly younger and are increasingly going to feel the impacts of climate change, so it is an important topic to them.”
Based on input from ULI members, Greenprint compiled a “top-ten” list of sustainability issues that the industry will be facing over the next year:
1. Real estate’s increasing role in advancing sustainability throughout the market.
2. Increased appetite for ESG investing.
3. Heightened emphasis on health and social equity.
4. A baseline expectation for energy efficiency in real estate.
5. Tenants driving sustainability innovation.
6. Emissions reductions through embodied carbon of building construction materials.
7. Increasingly grid-interactive buildings.
8. Resilience and climate risk as a priority for investments.
9. Water as a resource to be conserved and leveraged.
10. Waste reduction over a building’s life cycle.
For comments, questions or concerns, please contact Paul Bubny
- ◦Economy
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