E-S-G Spells Opportunities

Environmental, Social, and Governance (ESG) initiatives have become a top priority for the industry, and provide a unique opportunity for collaboration between investors, owners, and occupiers. While what they do with the data may vary, all parties share a common need for what’s collected at the real estate asset level that’s accessible, consistent, and can be exchanged across multiple platforms, providing a catalyst to attract more investment.

The time is now to dramatically improve the flow of ESG data between these stakeholders and across the industry. To link asset-level data with portfolios, and to attract new investment in funds based on improved ESG capabilities and performance. OSCRE—a corporate member organization focused on the development and implementation of real estate data standards—has a focus is on the ESG data standards needed to go beyond real estate reporting for ESG and to help integrate data coming from diverse systems and platforms many of which are managed by others. (Click here to lear more about the Data Standards Project.)

I am very pleased with our industry's response to AutomatedBuildings.com’s July theme "ESG R Us" with these great articles –

Decarbonization at Scale by Brad White, President at SES Consulting:

A quick skim of the ESG plan of any of the top commercial property owners will reveal aggressive decarbonization targets for their portfolios. Numbers like: 20% reduction by 2025, 50% by 2030, 80% by 2040, 100% by 2050. These targets represent a significant step towards decarbonizing the built environment, but are they achievable? The track record to date of most organizations is not great when it comes to meeting carbon reduction goals. Why is this, and what can be done to change this story?

Barriers to Decarbonization

Even where organizations have made climate change a strategic priority, there are often significant barriers to decarbonization. And no wonder, it represents a big departure from previous ways of doing business. My experience is that these barriers tend to stem from organizational and financial issues, rather than technical hurdles.

One of the biggest barriers is a tale as old as time, organizational silos. In this case, a disconnect between the sustainability departments, which are setting ESG targets, and the asset managers planning their annual budgets for new equipment.

Other barriers may be financial. For example, companies that only fund projects with a positive ROI are based on traditional approaches to financial analysis. This is how energy efficiency projects have long been evaluated and the approach has been carried over to decarbonization projects. However, decarbonization is not the same as efficiency. There are certainly some cases where you can achieve a positive ROI and achieve deep reductions in GHGs, but this simply isn’t the case a lot of the time.

How to Be Successful

The organizations that are successfully tackling decarbonization are doing the hard work of changing how they make decisions as a business. First, you must bring together the sustainability folks, asset planners, and operations teams so that everyone is working from the same playbook. This ultimately means understanding where every investment into your buildings fits in terms of its impact on carbon emissions. Viewing projects through a sustainability lens, in addition to a financial one, is the first step to making change.

Enabling Facility Owners to Easily Address the “E” in ESG  by John Petze, Partner and Co-Founder at SkyFoundry:

If you have meter data, you now have GhG data.

Corporate and government interest and support for sustainability and “ESG” related policies (Environmental Social and Governance) is growing across all segments of the CRE industry. ESG issues are increasingly seen by shareholders as an indicator of a company’s future success and are now a core component of most annual reports by public companies. Key elements of the “E” portion include energy efficiency initiatives, and Greenhouse Gas Emission tracking and reporting.

Our approach to helping facility owners and operators address the need to track, report, and improve GhG/Carbon performance is the addition of a simple, easy-to-use, App that converts energy meter data to GhG equivalents with a few mouse clicks.

DATA ANALYTIC SOFTWARE: The ideal tool for ESG analysis  by Cory Pedue, CEO Datakwip:

Effectively leveraging data from BAS systems and using it to reduce energy consumption and carbon emissions can have an immediate impact on the environmental part of a company’s ESG rating.

ESG Meets Smart Building Data Analytics

Today’s smart building data analytics platforms can tag large amounts of facility data with a common labeling format, then enrich that data with weather and utility information, equipment performance specifications, and more. These analytics engines can then identify specific energy conservation measures (ECMs) to correct or improve performance that would otherwise be lost. Whether it’s a corrected anomaly or a recommended improvement, the result is a more energy-efficient operation that will show immediate improvement for any company tracking the key performance indicators of the “E” in ESG. Using these approaches, it is not uncommon to achieve energy reductions from 10 to 30% while requiring little or no capital investment. Offering this capability under a Software as a Service (SaaS) model can make this a cash flow positive investment for the end-user.

When considering this type of system, building managers should review the features and capabilities offered.

Baseline requirements must include energy and carbon profiling, equipment fault detection, ECM identification, and management reporting.  From a technology perspective, the platform itself should include:

·       Analytics engine with a track record of success

·       Capability to ingest, standardize and label data from any building control system

·       Scalable, enterprise-grade data management platform that does not require new site-level hardware

·       Integration with all BAS systems, IoT devices, meters, web data, and other databases

·       Integration with existing business intelligence, CMMS, dashboarding, and reporting solutions

·       Ability to create custom visualizations, reports, and alerts.

Other ESG Opportunities

Less established criteria such as compliance with the recent spate of local environmental laws such as Local Law 97 in New York City also can be tracked using smart building data analytic platforms. These laws call for significant reductions in greenhouse gas emissions (GHG) and carbon footprint from buildings. Building analytics can identify, track, and confirm measures that will reduce GHG, providing another opportunity to reach the company’s ESG goals.

Urgent IMPACT needed  by Nicolas Waern, Digital Twin Specialist:

What do we need to do to steer this planet in the right direction? What are the challenges and why are existing efforts not providing tangible results? And most of all, what can be done to change this?

A lot of existing Net-zero ambitions, discussions and energy-related strategies are like that of a ship, with holes in the bottom. Where everyone is focused on steering the ship in the right direction.

Except that it’s not just one ship, but an armada of ships, leaking, and not necessarily pointing in the right directions. A lot of innovation theatre going on in a lot of industries. The need for sustainable impact acceleration in all industries is evident. But why, and how can we get there? How do we get the behaviour change necessary to do a course correction that will lead to sustainable impact?

Our June online Zoom meetings at Monday Live! are a catalyst to identify, discuss and clarify relative topics that help drive buildings to be smarter. We have been focused on ESG and how they impact the industry for the month of June this provides a bit of a summary of some of those thoughts. The latest discussion represents a clear call to action—we all need to do better.

Here are a few links to “big picture” articles that help define our July theme—

ESG+R – What is it and Why are We Talking About it Now?

By Hyon Rah & Mandi Wedin writing for www.groundbreaker.co

One of the market forces shaping the future of commercial real estate (CRE) investing and the built environment is the demand for a holistic approach to sustainable investing that applies an ESG+R (Environment, Social, Governance, and Resilience) framework to achieve strong risk-adjusted returns alongside positive societal impact. In this article, we will discuss the current state and trajectory of ESG+R frameworks in CRE and the incentives and regulations involved.

The ranting critics of sustainability may have a point

By Joel Makower, Chairman & Co-founder, GreenBiz Group writing for www.greenbiz.com

Remember when the profession of sustainability was largely a backwater activity inside companies, seemingly unrelated to the business of productivity and profits? Remember when sustainability flew under the radar—when hardly anyone understood or even cared about what sustainability folks were doing?

Those are the good old days. Sustainability—and its finance-oriented cousin, ESG—are now mainstream, which means they are more widely seen and understood—and misunderstood. As they gain altitude and influence, they are roiling the status quo, spurring transformations in companies, supply chains, and markets, which may be sorely needed but which aren’t universally appreciated. Far from it.

Join the industry in capturing this Opportunity.