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Do You Have the Right Tools to Manage ESG?

For real estate owners, the benefits of establishing a strong sustainability program are clear—not just from a “heal the world” perspective, but from a financial perspective as well. Investors are becoming more discerning about where they choose to invest. Meanwhile, sustainable finance is on the rise, as capital markets rely on ESG (environmental, social, governance) data to make investment decisions proven to have higher risks and lower returns. Even tenants—many of whom have their own sustainability goals to consider—are expecting more from the spaces they choose to occupy. 

Though CRE has taken a while to catch on to this trend, there are a few innovators in the industry that have sophisticated, data-driven sustainability programs, and they’re no strangers to disclosing ESG information to benchmarks like GRESB and CDP. Many other firms are just learning about what these terms mean—truly mean—for their business, as they face mounting pressure from stakeholders to focus on sustainability and start reporting accurate ESG data. 

If you fall under that second category, you are far from alone. It’s true that the ESG Era is already here, but as many of our customers will attest, it’s not too late to catch up—and technology that can automate data collection will get you there even faster. 

But where to begin? When faced with a seemingly arduous task like collecting and analyzing ESG data, it can be tempting to hire someone to do the grunt work on your behalf. But is this the best approach for you and your company? The answer may not be so simple. 

Data is King

The very beginning of an ESG program will look different depending on the real estate company. However, whether you’re running a multinational company or a local firm with room to grow, there are three main objectives to consider: 

  1.  Understand what information is relevant to your organization and its goals. This will depend on the sustainability milestones you set as well as the way you choose to report that information externally. Many companies choose to start by focusing on the “E”—namely, environmental data that is quantifiable, such as energy, water, and waste—before moving on to collect data about diversity and inclusion efforts, employee health and wellness benefits, and other factors that fall under the “Social” and “Governance” categories.
  1. Next, it’s time to start collecting data on these material factors and figure out how to keep tabs on your portfolio’s performance over time. Remember, it’s not just about the annual report: You’ll want to consistently check your project to make sure you’re on track to meet your goals. 
  1. Make sure the data you collect and disclose is investment grade. Essentially, it needs to be accurate and complete. Reporting information that has serious gaps, errors, or inconsistencies will result in a lower benchmark score, as well as potential frustration among your stakeholders.

The way in which you collect this data will heavily impact the success of your overall ESG program. Capturing all of this data manually across your entire portfolio, or relying upon someone who does this manually, is not only a headache—it wastes valuable time and money and leaves a lot of room for human error.

Repeatable, Scalable, and Accessible

Effective sustainability programs dictate that companies can’t just report data once and then rest on their laurels for the next five years. Measurabl’s customers work year round on various phases of the ESG process, whether that’s collecting and verifying data or getting it ready for the annual reporting deadline. Then it’s time to take a step back, analyze the results and compare performance with peers—just before starting all over again to meet next year’s milestones. And throughout this process, companies are using this valuable data to make and track improvements to their sustainability performance, such as reducing energy consumption. 

It’s an ongoing process that requires continuous number crunching. As your portfolio expands, the multiplier effect comes into play, resulting in more and more data to be collected. Whether you’re paying a consultant or a full-time employee to crunch the numbers, expensing countless hours on manual data collection simply will not benefit ESG reporters in the short or long run. 

And let’s not lose sight of the ultimate goal of any sustainability program: To minimize your company’s impact on the environment while improving financial outcomes. Having the ability to view data surrounding ESG performance at all times is crucial to extract valuable insights and ensure your firm is on track to meet or exceed its carbon reduction goals. With ESG data, you can make well-informed decisions on the most impactful ways to create change. 

While it may seem intimidating in the beginning, remember that your competitors are also likely shifting their focus toward ESG in order to satisfy stakeholders and gain better access to capital. Having nimble, scalable technology in place from the start gives real estate firms a leg up on the competition. Deploying a SaaS platform can automate the difficult job of data collection—and ensure that data is accurate, secure, and accessible—while paying humans to focus on higher level tasks like implementing strategies that reduce environmental impact, can help firms strike just the right balance.