ESG 360: The Green Cities Company’s Holistic Lens on Impact
A Q&A with Lauren Winkler, Senior Director, ESG
Many firms are talking about environmental, social, and governance (ESG) considerations today. As a vertically integrated real estate investment management firm, can you describe how Green Cities defines responsible investment?
At The Green Cities Company, our values and practices are rooted in environmental stewardship, social impact, and fiduciary responsibility across all disciplinary departments of the Firm. We demonstrate our long-standing commitment to positive environmental and social outcomes across our portfolio of assets and within our organization. To us, responsible investment is the confluence of environmental, social, and investment value.
Our differentiated approach to investment management is holistic, encompassing the environmental footprint of an asset, the diversity and inclusivity of its community, and the wellbeing and fulfillment of its occupants and neighbors. We believe a focus on ESG factors enhances the value of our investments, promotes occupant health and wellbeing, and improves economic and social outcomes for local communities and therefore must play a central role in our investment management approach.
What exactly does a “holistic approach” to ESG look like?
To measure our ESG strategies, report results to our investors, and continue to drive innovation and industry-leading practice in ESG, we designed a proprietary framework, The Green Cities Index (GCI). This unique index is a robust metric fully integrating ESG and diversity, equity, inclusion, and access considerations throughout investments’ lifecycle as well as in the Firm. This pioneering approach promotes our deep focus on five key pillars:
ENVIRONMENTAL IMPACT – Focus on optimizing the energy, emissions, water, waste, and materials and furnishings used by our properties.
By measuring each property’s energy usage, water usage, Greenhouse Gas (GHG) emissions, and waste, we are able to drive set targets and utilize our in-house project management and design to implement a variety of value-driving and environmentally sound upgrades. By the 2021 reporting year, these initiatives had led to a 35% reduction in energy use over the EPA baseline and 26% reduction in water use over the EPA baseline in our active portfolio of properties.
CLIMATE CHANGE MITIGATION – Action-oriented look to the future, taking bold steps to reduce fossil fuel usage and reduce emissions of greenhouse gases.
Green Cities conducts climate risk planning for all of its properties. By implementing building optimization strategies such as retro commissioning and GHG reduction strategies such as the use of EV charging stations, we are taking an action-oriented look to the future, with a variety of opportunities to reduce fossil fuel usage and reduce GHG emissions.
Further, Green Cities has made a public commitment to be Net Zero across our portfolio by 2050 and is actively developing tangible, non-offset strategies as part of our Climate Action Plan to achieve at least 50% decarbonization in our portfolio by 2030.
RESILIENCE – Enhancing the preparedness of our properties and tenants to withstand and recover from challenges like climate risks, social unrest, and large-scale health threats.
We seek to create more resilient properties by considering opportunities for onsite energy production; protecting the local ecology and biodiversity of our investment areas through features like urban agriculture, apiaries, and Salmon Safe certification; management of stormwater; and establishing emergency and pandemic preparedness throughout the portfolio.
HEALTH & WELLBEING – Commitment to safety, comfort, and physical and emotional wellness to improve the quality of life for our tenants.
Green Cities has a commitment to providing safety, comfort, and physical and emotional wellness to improve the quality of life for our tenants. In addition to achieving Fitwel certification at certain of our properties, we also conduct indoor air quality testing at every asset, consider opportunities for mobility and physical fitness, and strive to provide access to nourishment either through nearby grocers or tenant CSA programs. Green Cities also extends our definition of health and wellbeing to the psychological space, leveraging our in-house design and asset management expertise to bring in principles of biophilic design, thermal comfort, and emotional wellbeing.
EQUITABLE COMMNUITIES – Engagement to create a positive, inclusive impact within our properties and on the neighborhoods where they reside, driving opportunity, justice, and anti-discrimination.
In the 2021 reporting year, a total of 47 local vendor partnerships in four different markets were established – in fact 56% of all contracted vendors and service providers were locally owned businesses. 40% of all artists hired were women. An additional 38% of all artists hired were BIPOC, as defined by the Institutional Limited Partners Association (ILPA).
By combining our firm values and GCI metrics, we further are able to thoughtfully support more inclusive environments through Heritage Month celebrations to develop awareness of and support for underrepresented populations; community engagement to add elements such as music, art, outdoor parks, and local markets; financial amenities that provide more equitable financial capabilities for our tenants, and landscaping and hardscaping that maintains and promotes community access to natural features and transportation.
You mentioned Diversity, Equity, & Inclusion. How do these factors integrate with the Green Cities Index and your holistic ESG approach?
As a Minority- and Women-Owned Business Enterprise (MWBE) – with 50% of our entire workforce being women – we are building on our longstanding values to advance the industry’s focus on its human impact.
Green Cities believes that we have a great responsibility to people: the tenants and property staff who live and work at our properties, the people who form the communities around our assets, and the team members who work diligently to make our business possible. This perspective is driven by our values and reflected in our work. We believe that the built environment – when conceived and operated with respect and inclusivity – can combat systemic marginalization by fostering dignity, providing equitable access, empowering individual voices, and inspiring collective purpose.
In recognition of these important considerations, Green Cities has a visionary commitment to Diversity, Equity, Inclusion & Access (DEI&A) – a unique positioning amongst our peers. By adding the concept of “access” to traditional considerations of diversity, equity, and inclusion, we believe we can advocate for and bring about social change. For Green Cities, the threads of “access” stretch to considerations of physical accessibility; expansion of opportunities for its residents and employees; facilitating connections to resources and information; and strengthening civic partnerships.
All pillars of the GCI also are supported by our unique approach to driving equity through our DEI&A framework.
There are a number of frameworks that exist in our industry – both for accountability on the part of the investment managers and for transparency to their investors. How is the Green Cities’ holistic ESG approach supported by reporting?
Annually, Green Cities reports on the GCI performance for every asset, each Fund, and the overall portfolio through our Environmental and Community Impact Report. These reports are distributed to our Limited Partners, as well as made available publicly on our website. We believe these detailed, transparent disclosures of ESG performance are unique amongst our peers and industry-leading.
In addition, we have supported transparency and certified, measurable results as a cornerstone of our ESG platform for nearly a decade. We hold ourselves accountable to achieving our stated ESG objectives at each asset and in our corporate operations through both voluntary and mandatory reporting. The Firm has been a signatory to the PRI since 2017, both to achieve this transparency and to continue to engage within our industry as stewards of sustainability. We also have been reporting under GRESB since 2015 as a further means to hold ourselves accountable for industry-leading ESG performance. We further participate in and contribute to internationally recognized standards of responsible investment relevant to the real estate investment industry including the Urban Land Institute Greenprint Center for Building Performance, LEED, and Fitwel. We are Fitwel Viral Response certified at the GP-level and through over 50% of our portfolio.
Proudly, we also are one of only a handful of real estate investment managers in the U.S. that is a certified B Corporation.
Can the value enhancement of these strategies be quantified?
Evidence of the value of an ESG-driven approach is prevalent in the market through enhanced results in tenant attraction, retention and promoter scores, rental unit value, and property valuations at disposition.
- Over four of five renters, or 82%, aged 22 to 35 years indicate energy-efficiency and environmentally
- 83% of renters believe living in a green community is beneficial to their health[2]
- 61% of renters will pay more for an eco-friendly apartment[3]
- Green commercial buildings achieved rental premiums between 2-17% and sale price premiums between 8-26%[4]
What final thoughts would you give to others in the industry who are looking to bring a more holistic lens to their ESG-related activities?
It is our belief that no single focus area alone will create investor and societal value. At Green Cities, our goal is to apply a cross-functional approach, utilizing our vertically integrated, in-house expertise to bring a broad perspective across the Green Cities Index to each of our properties. In our view, regardless of the specific resources brought to bear, we believe the consideration of each property’s unique attributes and the development of a holistic, property-specific ESG plan is an exciting and valuable approach to driving value and impact.
[1] Grubb Properties: “Today’s Young American Renter”, 2022.
[2] Multifamily Executive, ‘Most Renters Will Pay More for Green Features Survey Finds’. October 9, 2018.
[3] Apartmentdata.com
[4] IEA – Asset Values, Multiple Benefits of Energy Efficiency Analysis referencing Miller et al; Eichholtz et al (a); Eichholtz et al (b); Pivo and Fisher; Wiley et al; Miller et al, 2021.
