Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
Having a sustainability or environmental, social and governance (ESG) strategy is increasingly becoming a requirement within the real estate industry, with rising pressure from the investors themselves, as well as the organization’s stakeholders, and as a matter of overall legal compliance. Such strategies often encompass short-and long-term goals, which can be challenging and even daunting for organizations as they attempt to navigate this novel and shifting landscape. A sustainability roadmap is a key tool that organizations may use to gain a clear understanding of their sustainability journey -from their current position, to where they aim to be in the future, whether that is 5 years, a decade, or even further out -, and provides the actionable steps that will allow them to reach their objectives and fulfill their vision. Additionally, the roadmap provides the opportunity to measure the organization’s progress toward its sustainability and ESG-related goals over time and adjust as new requirements and insights emerge. A robust roadmap not only guides the organization but ensures its commitment to overcoming sustainability-related challenges to its stakeholders.
The first step to creating a sustainability roadmap is for the organization to understand its current ESG performance, as well as its overall impact and its vision for where they want to be in the future. Since sustainability and ESG may be new territory for many organizations, some struggle to develop a clear vision and objectives as there is a range of aspects that must be considered, and not all goals can be achieved simultaneously. In this case, an organization will often look at the practices of their peers through a peer review to benchmark themselves and identify opportunities to narrow their focus for an achievable roadmap and strategy that is aligned with or exceeds the overall market, depending on the level of ambition.
While benchmarking is a necessary step, strategies should be personalized to the organization. Consequently, organizations need to engage with their own stakeholders to discover the most material ESG topics to center their efforts. The importance and level of control over the full range of relevant ESG topics vary from organization to organization, and even department to department, so involving stakeholders at every level of the organization is best practice, as a means to uncover which topics are most material. This helps tailor the objectives set out in the sustainability roadmap so each organization can approach implementation in a way that prioritizes the values of their respective stakeholders.
Furthermore, it is critical to review legislation to understand regulatory requirements and changes that relate to the organization’s operations. In the United States, real estate organizations may be subject to federal, state, and municipal regulations; if a real estate organization has assets in different cities and states, they face multi-layered and heterogeneous regulatory risks that must be managed. By identifying and analyzing the regulatory environment, the organization can determine its overall risk severity. In determining these risks, organizations can further target the most impactful areas to focus their sustainability roadmap to either keep compliant with or surpass legal requirements, which often become more stringent over time.
It is important to note that a sustainability roadmap will also often change over time to accommodate new regulations and/or evolving stakeholder and investor interests, so the organization should be prepared to reassess its roadmap on a regular basis. Having a clear communication channel within the organization, such as an internal sustainability or ESG committee, or an ESG representative that reports to senior management, will help the organization to stay on top of its ESG journey as they continue to progress its goals and material issues.
After an organization has taken the time to understand the topics most significant to it, the next step is to create measurable and actionable goals or targets that support or advance these topics. Finally, the organization can assign a timeline to each goal or target; these can either have specific dates for completion or be ongoing and should contain timeframes that are both short and long-term. After all, the purpose of the roadmap is to recognize what an organization is driving towards, as well as their commitment to the fact that ESG requires a long-term view, not one that is tied to quarterly earnings reports and short-term gains. Goals do not have to be lofty and grand, but can (and often do) begin as granular, smaller achievements. As the organization tackles goals at the micro level, those at the macro level come within greater reach as their cumulative environmental and social contributions expand.
If your real estate organization is interested in beginning or refining its sustainability journey, please visit our website at https://longevity-partners.com/.
This article was written by Wes Fitch, Sustainability and Energy Consultant; Ivy Harrison, Senior Analyst; and Katie Schenk, Sustainability and Energy Analyst, at Longevity Partners.