By Joyce S. Lee
September 9, 2017
“Both nationally and internationally, GRESB has not only changed the conversation about investment reporting but also helped start many conversations by giving visibility to a relevant set of data not previously assembled for investors,” says Andrew McAllan, Head of Real Estate Management of Oxford Properties Group based in Toronto, Canada.
Image 1: MNP Tower entrance, credit: Oxford Properties Group
The global property and infrastructure sectors are at the heart of many major investment decisions, including urbanization, demographic change, resource constraints, environmental impacts, political climate and emerging technologies. According to the World Bank, the urban population has reached 54.3% of world population in 2016. The design, construction and operation of current and future assets reflects, drives and potentially mitigates the impact of all of these issues on individuals, communities and society at large.
GRESB assessment started in 2009 with a healthy uptake of large pension funds and their fiduciaries. This portfolio level assessment has become a global benchmark for sustainability performance used by leading private equity firms and listed property companies. GRESB has grown to define Environmental Social and Corporate Governance (ESG) concepts for the real asset sector. The assessment systematizes information for analysis and furthers the understanding across investment portfolios. The GRESB assessment collects information from funds and assets, including data on performance indicators, such as energy, greenhouse gas emissions, water and waste.
The latest year of reporting (2017) reflected 850 funding entities (up from 759 last year) in 63 countries and a total of US$3.5 trillion in assets (up from $2.8 trillion last year). In 2016, even a small single digit percentage reduction of an immense portfolio in each of the reporting areas is significant: carbon reduction is equivalent to 90,197 cars off the road, water reduction is equivalent to 1,200 olympic pools, and waste reduction is equivalent to 14,963 truckloads. This transparency of the real asset portfolio could factor into the investors’ risk assessment and overall financial performance projection.
In 2016, GRESB initiated the Health and Well-being Module in response to rising healthcare costs and increased interest in productivity. The ten survey questions were developed among a global working group of experts: It focuses on needs, strategies and access. One snapshot of the 2016 result is already giving new insights to companies: greater impact could be achieved when the leaders in sustainability, real estate and corporate wellness are in good communication internally. The current year results will be discussed in an upcoming article.
While top level changes or grassroot initiatives are critical, actual implementation are often realized by facility managers who intimately understand the pulse of their physical assets like a living organism. An organization that fully engages this group of professionals is the Building Owners and Managers Association (BOMA). Several BOMA members echo that survey frameworks like GRESB are essential to moving the industry forward as each evaluation garners new motivation and opportunities for reflection and improvement. Many forward looking managers have day-to-day oversight of waste generation, energy and water consumption,. The opportunity to collaborate effectively with human resources to promote health offers yet another upside.
In a recent luncheon with Building Owners Managers Association (BOMA) Philadelphia’s leaders, including its co-chairs of the Sustainability Committee, the conversation circled around education and engagement. As Benjamin Franklin had said, “Tell me and I forget; Teach me and I remember; Involve me and I learn.” Before the formation of this Committee, green cleaning was a leading edge concept. Today, one has to alter a standard template to purchase “non-green” cleaning products. Benefits of green cleaning are accrued to all levels of staff, especially to those who perform cleaning tasks coming in regular contact with these products.
While every sustainability task force has checklists of energy and air quality, BOMA Philadelphia also notices the growing popularity of yoga classes and walking clubs that are initiated by building occupants. Building managers that are forward looking even host stair climb charity events to not only increase physical activity of their employees, but also further engage the local public safety departments, such as fire and police, to enhance public relations and build community trust. Incidentally, these are all pathways towards achieving WELL certifications which place a major focus on health and well-being.
Is health and wellness pervasive enough among building owners and managers? “We see that after providing hand sanitizers and high efficiency filters, building managers are actively seeking all good ideas that are both implementable and have a positive impact on tenants and occupants,” says Kristine Kiphorn, Executive Director of BOMA Philadelphia.
Image 2: CBRE Vancouver Office, credit: CBRE
At CBRE, a global real estate services firm, in Vancouver, a stunning view of the water and a biophilic design feature in its lobby together make an inspiring arrival. In order to raise the indoor quality level, CBRE chose only furniture reaching Green Guard Certification gold level. The risers in the company’s internal stairs, a physical activity feature, read “There is no elevator to Success. You have to take the Stairs”. Inside the base building, the MNP Tower in downtown Vancouver, the fire stairs are equally animated with paint colors to make stair climbing a pleasurable experience. On a sunny day, building tenants could be seen on the property premise competing in intramural games of hockey with many happy onlookers from the sidewalk. This Oxford Properties Group building is managed by active BOMA members.
It is not hard to see a larger trend unfold. As trillions in assets move from the current generation to younger, more sustainably oriented investors, an increased attention to environmental social responsibility and governance reporting measures has incentivized companies to revisit strategies and to boost performance in areas deemed important by this generation. This trend is particularly relevant for business school graduates who plan to work in private equity, real estate investment trusts (REITs) or public companies with physical assets.
Business school students and graduates are investors in their own future. In an ESG report of a potential employer, the performance metrics can speak loud and clear of the companies’ priorities and missions. Other policies towards transparency, travel, sleep, exercise, and nourishment could affect stress level on the job. If the quality of the workplace matters, look for those telltale signs of green and healthy real estate, such as LEED and WELL certifications.
The concept of creating a sense of place in companies and offices becomes a new paradigm to attract the best talents. In the age of connectivity, business school graduates can truly work anywhere. The workplace of choice is entering a brave new world.
Joyce Lee, FAIA, LEED Fellow, is president of IndigoJLD providing green health, planning and design services on exemplary projects. She is among a group of 300 LEED Fellows worldwide. In addition to being on the Penn faculty, Joyce has affiliations with Penn Center for Public Health Initiatives and the Penn Urban Health Lab. Joyce served under Mayors Giuliani and Bloomberg, as Chief Architect at the New York City OMB. The Active Design Guidelines, a publication she co-authored, had won recognition from the Robert Wood Johnson Foundation as well as the Sustainable Building Industry Council., She has been a subject matter expert in the development of a GRESB module.. Her practice continues to assist cities to establish 2030 Districts and assist companies to reach sustainability and wellness goals.