{"id":35814,"date":"2023-06-14T00:37:00","date_gmt":"2023-06-14T07:37:00","guid":{"rendered":"https:\/\/www.yardi.com\/blog\/?p=35814"},"modified":"2023-04-28T12:40:48","modified_gmt":"2023-04-28T19:40:48","slug":"keys-to-esg","status":"publish","type":"post","link":"https:\/\/www.yardi.com\/blog\/keys-to-esg\/","title":{"rendered":"Keys to ESG"},"content":{"rendered":"\n

Note:<\/u> This article is adapted from an interview with Joe Consolo, Yardi\u2019s industry principal for energy, that was published in <\/em>PERE magazine.<\/em><\/p>\n\n\n\n

\u201cESG [environmental, social and governance] performance is becoming a key concern and differentiator for many real estate players,\u201d PwC and the Urban Land Institute declared in their joint Emerging Trends in Real Estate<\/em> survey report in 2022. Establishing ESG priorities to meet changing compliance and investor expectations complicates the already complex business of property management \u2013 but in today\u2019s environment, property owners need to avoid the consequences of ESG obsolescence that can alienate investors and tenants and invite regulatory penalties. That\u2019s why enhancing ESG performance with improved operations, technology and tenant behavior is critical to sustaining asset value.<\/p>\n\n\n

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Obsolescence risks investor hesitancy<\/strong><\/p>\n\n\n\n

Back when ESG factors weighed less heavily on property management, buildings become obsolescent because their design or amenities become outdated, causing the properties to lose market value. External factors such as the location or local job loss often also came into play.<\/p>\n\n\n\n

But in this era, failure to comply with energy efficiency standards and other ESG standards rank among the key drivers of property obsolescence \u2013 and real estate investment decisions. With laws governing environmental and construction standards \u201conly becoming more stringent, there is a significant risk for the future if you barely meet those standards today,\u201d Consolo says.<\/p>\n\n\n\n

Tech bolsters compliance<\/strong><\/p>\n\n\n\n

Fortunately, property managers can undertake a number of initiatives to prevent ESG obsolescence and maintain attractiveness to investors and tenants. They include such relatively simple sustainable processes as encouraging tenants to recycle and switch off their lights at day\u2019s end. Preventative equipment maintenance, such as changing filters, upgraded air handlers and other equipment and dealing promptly with equipment failure, also helps maintain peak ESG performance.<\/p>\n\n\n\n

Other actions that shore up ESG performance, such as monitoring building energy performance, require advanced software solutions capable of amassing and aggregating whole-building data. This functionality delivers visibility into energy consumption and helps create a roadmap for instituting ongoing operational improvements.<\/p>\n\n\n\n

Such software \u201ccan help you operate more effectively or alert you when it is not operating efficiently. It could be as simple as detecting faults or smart devices that can control equipment centrally,\u201d Consolo observes, presenting a positive portrayal of ESG performance to investors and tenants who have \u201ca deeper understanding of the impact of the building on the environment\u201d than in previous eras.<\/p>\n\n\n\n

Open Standards Consortium for Real Estate (OSCRE), which standardizes data formats to facilitate electronic information exchange in the real estate industry, offers some recommendations for assessing an organization\u2019s ESG readiness and compliance with local, state and federal requirements. They include:<\/p>\n\n\n\n