Managing ESG

Real estate investors, stakeholders, and employees are more focused than ever on the impact of climate change on real estate assets and their surrounding communities. In turn, the implementation of environmental, social, and governance (ESG) initiatives has earned a higher priority in asset management and commercial real estate.

Engaging property teams in specific applications of ESG can take the shape of policies, procedures, and program administration, as well as team training sessions. Implementing sustainability best practices into property-level operations allows management teams to maximize their cumulative impact on day-to-day operations. Managing ESG at the property level aids in mitigating the effects of climate change on our planet and reflects a commitment to greater climate goals.

Ambition alignment

The real estate sector is a major contributor to global greenhouse gas emissions, with physical buildings accounting for 39% of energy-related carbon dioxide (CO2) emissions.1 Of those emissions, 28% stem from operational emissions—the collective CO2 emissions produced as byproducts in order for a building to run.

Alignment between a company’s leadership and ESG initiatives makes it easier to integrate sustainability into property management responsibilities and expectations. Publicly announced corporate commitments to sustainability and climate change objectives, in addition to disclosures of metrics and progress, necessitate greater property management team engagement so that those teams can contribute to year-over-year performance reductions in energy and water consumption, emissions, and waste. Comparing performance metrics over time requires consistent data tracking and adherence to set timelines, which property teams can learn to track using resource and data management tools.

Data management platforms

Resource and data management tools, such as the EPA’s ENERGY STAR® Portfolio Manager®, allow property teams to benchmark data on energy and water consumption, emissions, and waste. They can also submit data for local and state benchmarking and performance ordinances. Management teams can even measure an individual building’s performance compared to similar properties across the U.S.

Training property teams to use the Portfolio Manager platform enables them to track building resource consumption and optimize their understanding of performance metrics based on the building’s physical use breakdowns, operations, and occupant behavior. Portfolio Manager or any other similar data management platform also allows property management teams to quantify their progress toward reaching emissions reduction targets over time, capture trends in consumption, and identify outliers in utility usage and costs. Without such measures, long-term sustainability performance would be difficult to track, more susceptible to incomplete data captures, and much more challenging to manage.

Evaluating project feasibility

At the property level, the ability to identify potential sources of emissions reductions and efficiency improvements begins with taking a proper inventory of any measures already implemented. For example, the presence or absence of previous lighting and energy audits conducted at the property, the feasibility of cool roof implementation, and the use of high-efficiency appliances can indicate varying levels of sustainability measures already in place.

Creating and updating sustainability checklists for property management teams to use provides a practical tool and grounds for common consensus. Reviewing and updating these checklists every one to three years can help property teams maximize opportunities for efficiency upgrades and emissions mitigation.

Resource availability

Improving performance at the property level depends on day-to-day best practices and programs embedded in management responsibilities and procedures. For example, providing property management teams with resources—like tenant retrofit guides, LED upgrade guides, and general sustainability resource guides—gives them a reference point for what types of projects they could implement at a particular site.

Proper resource guides should outline processes for effective follow-through to get projects started and completed. LORD Green Strategies, an ESG consulting company specializing in commercial real estate, creates and delivers various sustainability tools for property management teams, including resources for office, multifamily, industrial, and retail properties. Projects for implementation at the property level may include those related to renewable energy, sustainable purchasing policies, integrated pest management, resident and tenant ESG surveys, sustainable vendor programs, and energy audits.

Integration into operations

Individual actions and small-scale shifts can have large impacts on the environment as they accrue over time. Even quick payback projects, such as setting dual-sided printing as the default, only using FSC-certified paper, or establishing recycling services, can all contribute to a property’s overall sustainability efforts. As a good management practice, engaging tenants in sustainability events and consistently discussing ESG makes it more natural for management teams to recognize and prioritize sustainability in their daily operations.

Green building certification and IREM Certified Sustainable Property (CSP)

IREM’s CSP program provides sustainability best practices and evaluation for multifamily, retail, office, medical office, industrial, and senior housing properties. Every year, LORD Green Strategies works with all property types to help them achieve the CSP certification, and LORD Green Strategies has already helped more than 350 properties reach CSP status.

Working with property management teams to help them achieve green building certifications like IREM’s CSP can be a valuable educational opportunity. Understanding certification requirements helps lay out what sustainability measures are being implemented, which measures are feasible, and how specific projects can be applied to each property.

“IREM CSP certification has been a great tool to further engage with property management teams and emphasize the importance of sustainability practices at the property level,” says Aaron Jones, consultant at LORD Green Strategies.

Achieving certification gives property management teams the benefit of enhanced ESG reporting, and it is appealing to tenants. It also signals support for environmental health and sustainability for both the management team and the property owner.

Sustainability at the property level doesn’t need to be overly complicated to be effective. Saving energy, reducing building-level emissions, and implementing resilience strategies against future climate risks create mutual benefits for both the planet and property management companies.

As the urgency and visibility of climate change continue to grow, property and asset management organizations with well-recognized sustainability programs in place will be better positioned against climate risks in the future. Integrating ESG into the day-to-day operations of properties is a crucial yet approachable step in realizing wide-scale emissions reductions from real estate assets.

1 Nesler, Clay. Lam, Khee. Lasternas, Bertrand. “How to build zero carbon buildings – and why it matters”. World Economic Forum [website], 8 Sep. 2021.