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Nareit Dashboard Details REITs’ ESG Compliance
When it comes to efforts based on environment, social and governance (ESG), metrics can help the story. To that end, the National Association of Real Estate Investment Trusts (Nareit) recently revealed its sixth annual REIT ESG Dashboard, which tracks data supporting issues and KPIs on issues including environmental stewardship and social responsibility. The dashboard focused on the 100 largest U.S. equity REITs, as ranked by equity market cap.
When it comes to the “Environmental” component, the dashboard indicated that REITs are increasingly reporting sustainability targets, along with environmental performance and policies. Also being increasingly reported are carbon targets, along with energy usage and water consumption and waste. Additionally, 89% of REITs by equity market ap report their policies concerning risk and opportunity oversight involved with climate change impacts and low-carbon economy transitions.
On the “Social” side, REITs are upping their social engagement reporting. These social initiatives include improvements among employees, communities and tenants. To that end, 97 REITs reported data on community development programs, 84 reported their charitable giving efforts and 68 reported on employee volunteerism. Additionally, most of the 100 REITS analyzed reported on health and wellness and workforce development programs.
Meanwhile, the category of DEI, which spans both “Social” and “Governance” is also being reported by the REITs analyzed. Nearly all the 100 REITs publicly disclose their diversity, equity and inclusion initiatives. Additionally, supplier screening disclosure as part of REIT social policies increased from 22% in 2018 to 96% in 2022.
Finally, alignment of ESG disclosures with financial reporting frameworks is also on the rise as “investor interest in financially relevant ESG issues, such as climate risk, increases,” Nareit said. The Task Force on Climate-Related Financial Disclosures (TCFD) was revealed as the most popular framework among the top 100 REITs, with 66 reporting in 2021. Meanwhile, the Global Reporting Initiative (GRI) and SASB Sustainability Accounting Standards Board (SASB) developed reporting standards that help communicate sustainability performance. This, in turn, provide investors with useful information on the financial impacts of sustainability.
- ◦People
- ◦Policy/Gov't
