It’s hard to keep up with ESG in CRE — but, we’re making that easier for you by sending the most important news in decarbonization.
Each month we will take the top industry news and summarize it here so you don’t have to, saving you time by giving you a bite-sized deep-dive into the highlights of what you actually need to know.
As we wrap up the last quarter of 2022, finalize our budgets, and look forward to the new year, discussions are buzzing around the decarbonization trends the CRE industry has seen over the last year, and speculation over what the next year will bring has begun.
Monthly Decarbonization Debrief
Your overview of everything ESG in CRE you need to know from the last month
1. Empire Building Challenge Expands, Pushing Forward Sustainability as a Priority in New York State
💡 What You Need to Know
On October 3rd, New York Governor Kathy Hochul announced that an additional six real estate leaders will join the Empire Building Challenge — including Boston Properties, Brookfield Properties, and Tishman-Speyer. The Challenge, originally proposed in 2020, now includes 16 real estate leaders who, together, have committed 57 million square feet to decarbonization.
🌎 Why You Should Care
Whether your properties are based out of New York or you’re located along the West Coast, programs like EBC and the companies participating in them represent the future of decarbonization projects and incentives that are spreading across North America.
2. Building Management Must Engage Tenants in Sustainability Goals
A discussion led by Urban Land Institute sheds light on the growing necessity to engage building tenants in ESG initiatives. Panelists from Clarion Partners, TA Realty, and Boston Properties explore their best practices and strategies on aligning tenants with portfolio Net Zero goals.
💡 What You Need to Know
There is no longer just the demand to communicate ESG goals and progress to tenants. Now, portfolio-level leaders and sustainability heads are noticing the need to further engage and align tenants within those goals. Even ESG scores, such as GRESB, include tenant and stakeholder engagement within their scoring system.
Ben Meyes, VP of Sustainability at Boston Properties, even shares that their ESG goals and the “intentionality behind those goals come from our property management engineering teams.”
🌎 Why You Should Care
With tenant space accounting for about half a building’s energy usage, incorporating tenant engagement is proving to be an essential piece in any commercial real estate ESG strategy if buildings are aiming to reach Net Zero goals.
By including green lease language into contracts, including property management within ESG conversations, and finding creative ways to communicate progress to tenants, the trends are pointing toward tenant engagement becoming a more highly prioritized strategy if portfolios hope to hit their Net Zero and ESG goals.
3. Increase in Sustainability Trends Can Transform Office Bottomline
JLL’s Senior VP of Sustainability Cara Kennedy breaks down current office building market trends, exploring how sustainably designed office spaces are at the forefront of driving tenants back into their spaces.
💡 What You Need to Know
While cities (and therefore, their buildings) are pushing for decarbonization due to regulations on local, state, and federal levels, Kennedy emphasizes that pressure for office buildings in particular to prioritize sustainable initiatives can serve also as a solution to making office spaces “commute worthy.”
Kennedy also discusses in this interview the importance of CRE leaders to shift their mindset away from viewing sustainability in office spaces as a building-level consideration, and rather, prioritize ESG efforts as a strategy that must be adopted at the portfolio level. She says that this is essential, not only to meet the fast-approaching milestones for carbon neutrality, but also because investors are “ahead of the curve” in expecting comprehensive strides in ESG practices on a portfolio level before investing.
🌎 Why You Should Care
Tenants are looking to work in spaces they know are sustainable, making decarbonization an important factor if you are looking to increase your tenant retention and continue attracting those high-value tenants.
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