How ESG transparency improves office tenant wellbeing
ESG has been a focal point for us over the last year or so. This coincides with our introduction of FLOW, the property visualization and monitoring tool that allows property owners and managers to gain a much deeper understanding of important building metrics like energy use and carbon generation. As we discussed on a recent LinkedIn Live event featuring Steffen Walvius, Head of Sustainability and ESG Services for JLL, not making sure your properties are up to ESG snuff will lead to diminished asset value and reduced sellability in a competitive market.
Like those two risks, across the entire ESG world, some of the most frequently mentioned reasons to consider these metrics are attractiveness to investors, satisfaction of governmental requirements, and cutting of operating expenses. But how does ESG measurement, and the transparency of ESG data, help improve occupier outcomes at your properties?
High demand for healthy buildings
First of all, it’s important to keep in mind that occupiers want healthier buildings, and are expected to increasingly want these spaces in the future. In a 2021 survey of real estate investors owning $5.75 million of property, the United Nations Environmental Programme Finance Initiative Property Working Group, BentallGreenOak, and the Center for Active Design, sponsor of the Fitwel property wellness certification, found that 87 percent of surveyed investors saw increased demand for healthy buildings over the previous 12 to 24 months, and further expected this percentage to grow to 92 percent over the coming three years.
Occupiers are not only increasingly demanding healthy spaces, they are also getting more sophisticated in their ask in terms of data transparency. It’s one thing to tell a tenant that you prioritize their wellness, and it’s another to show them your attainment scores on property certifications like LEED or WELL. But it’s something else entirely to be able to actually share ESG data with them. According to Eric Duchon, Global Head of Real Estate ESG for Blackstone, “Tenants are now asking more than before about indoor air quality and a host of health and safety issues. How the landlord responds by prioritizing the tenant’s health and safety is critical to creating that link between landlord and tenant which will help stabilize leased and physical occupancy as we emerge from the pandemic.”
Positive occupier outcomes
Having this data allows occupier firms to create their own reports, internal and external, on what they are doing to ensure their teams are safe and healthy. This is important for investors, marketing, and of course also for hiring. According to Liz York, Chief Sustainability Officer for the U.S. Centers for Disease Control and Prevention, “There’s definitely a war for talent. How are you going to get the smartest, hardest-working people to choose your company? Space matters. We used to try to attract them with our great buildings, but it’s not enough. They have to be healthy, too."
In the job market of 2022, where many desirable prospective employees have multiple job options to consider, being able to show a clear dedication to health and wellness, down to the types of air filters used and attention to good lighting and acoustic attenuation that make a big difference for occupiers, is very valuable.
Beyond hiring, there are bigger picture elements here as well. According to the Governance & Accountability Institute, a consulting firm, 90 percent of S&P 500 companies published sustainability report by the year 2019. Making your data on the sustainability and emissions of their spaces available to them will position you, the landlord, as a partner who adds real value beyond just providing space.
These are just a few reasons why actually sharing your ESG data with your tenants helps them attain their business goals, and consequently helps you demonstrate your own value as their landlord. For more on ESG from Spaceflow, check out our article on the new age of property energy management.