When asked to rate sustainability priorities, improving building energy efficiency ranked as the top priority. On a scale of one to five, 65 percent of survey respondents rating improving energy efficiency as a four or a five. Incorporating sustainable materials in new development and/or retrofits rated as a priority for 41 percent, followed by reducing building carbon emissions at 30 percent.
Setting priorities is especially important for property owners and managers who are continuing to advance ESG strategies and net zero carbon goals.
“Energy efficiency is the first thing you can tackle when you start to come up with a net zero target. So, that is absolutely on my list,” says Anne Peck, vice president and head of ESG+R at TA Realty, a leading provider of real estate investment management services with about $12.3 billion in AUM. Peck was recently hired to lead development of the firm’s measurable annual ESG+R goals and drive implementation of their corresponding roadmap at the corporate level to ensure integration of ESG+R throughout the company and across the assets it manages.
“Carbon offsets and carbon bonds are very important to the overall industry. The problem is there is less of an ROI with those. So, you don’t actually see the impact that you are doing on the rest of the world,” notes Peck. “That’s why it is less favorable, although it is definitely still a piece of it, and everyone has to whittle away with as many pieces as possible.” Sustainable materials also are important, but the cost of those materials is a factor, because projects still have to pencil out, she says.
Investing in carbon capture and utilizing green bonds rated as a low priority for nearly half of respondents. Only a minority 15 percent and 13 percent, respectively, rated carbon capture and green bonds as a four or five. Those results are not surprising as carbon offsets are often used by owners that are looking to bridge the gap to achieve net zero carbon, which is still a fraction of the overall market. Carbon offsets also tend to generate mixed views. Although there is real value to offsets in supporting green projects, a lot of people think of them as an “easy button”, says Richards. In theory, a property could make no reductions to energy, emissions and water consumption, but they can announce that they have reduced consumption by 30 percent YOY simply by buying offsets.