Sustainability Reports for CRE Owners
As a commercial real estate owner, it's up to you to grow your property's value. Investing in sustainability initiatives can help you accomplish that goal. When you improve a building's energy and water efficiency, indoor air quality, and HVAC systems, the result is lower operational costs and a smaller carbon footprint.
While upgrades boost property value, investors want to see concrete benefits. Sustainability reports use hard data to track metrics on a building's efficiency and conservation efforts. By implementing them into your reporting processes, you can impress investors and enhance the marketability of your property.
What Are Sustainability Reports?
A sustainability report is a disclosure shared with investors, regulators, and other stakeholders. It documents an organization's performance in environmental and social areas. The reports share an organization's commitment to sustainability initiatives and how they integrate with its business model.
Sustainability reports may sound similar to environmental, social, and governance (ESG) reports, but they're a bit different. ESG reports use specific criteria designated by an ESG sustainability reporting framework. Sustainability reports take a less defined approach. They look at a company's long-term impact on the environment and society. The framework used to create a sustainability report can be created internally. Companies can also use defined standards such as the Global Reporting Initiative (GRI).
Commercial real estate owners use sustainability reports to showcase a building's operational efficiency. They may be included as a disclosure within the property's financial reports and shared with relevant stakeholders.
Key Components of Sustainability Reports and Benefits
Sustainability reports are very versatile. Companies are free to determine the information and metrics that appear in the document if they don't use a standardized reporting framework. When establishing the criteria to include, organizations may consider the seven principles of sustainability reporting:
Materiality: Whether a sustainability metric relates to the organization's business model
Stakeholder Inclusiveness: Whether sustainability information supports a stakeholder's information requirements
Accuracy: Whether the report is backed up by trustworthy sources and reliable data
Clarity: If the report conveys data in a simple and easily understood format
Comparability: Whether data shared in the report can be benchmarked internally and across similar organizations
Timeliness: Whether the report contains recent data that's shared on a regular basis, such as annually
Reliability: The trustworthiness of the report
Many commercial real estate owners focus on efficiency metrics in sustainability reports. Some examples include:
Energy Use: Electricity demand and consumption, including from any renewable energy resources
Waste Management: Details on waste reduction and recycling efforts
Water Use: Water consumption and conservation initiatives
Indoor Air Quality: Measurement of indoor pollutants that can adversely impact tenant health
Compliance: Adherence to applicable environmental regulations
There are significant benefits to making sustainability a part of your reporting process. Investors want to see operational benefits, such as lower utility costs and regulatory compliance. And tenants want to know they're occupying a safe building owned by a business that cares about their health.
As a property owner, you may aim to reach certain ESG goals. For example, green building developers may aim for a living building certification. It considers a building's architectural and design elements and how they impact the environment and community. The Building Research Establishment Environmental Assessment Method (BREEAM) is another coveted certification. It looks at energy consumption, indoor air quality, and materials and assigns a star rating.
Sustainability reporting contributes to a property's value. Would-be investors look positively on building efficiency. A property that contains energy-efficient fixtures and engages in other sustainability initiatives can command higher values on the market.
Best Practices for Creating Effective Reports
If you're new to sustainability reporting, you may wonder where to start. Consider who will view the report and what their concerns might be. For example, a bank would want to know how sustainability initiatives contribute to the building's profitability and regulatory compliance. A tenant's interest may be health and security.
From there, determine whether you'll follow a defined sustainability reporting framework. If you're aiming for a sustainability certification, include its relevant metrics in your report. That makes it easier for reviewers to track building performance and assess whether it qualifies for a green building standard.
Most sustainability reports include quantitative and qualitative data. Numerical metrics can include indoor air quality levels, energy consumption levels, and water usage. Qualitative data can include a discussion about your sustainability efforts. Other sources are tenant and community feedback. For example, you could share the results of a sustainability survey that occupants complete.
A big part of sustainability reporting is transparency. Be clear about where you are in the sustainability process and use reliable data to back up your reports. Stakeholders who view the report should understand your short and long-term vision for sustainability.
How To Overcome the Challenges of Sustainability Reports
One area that commercial real estate owners struggle with in sustainability reporting is data. Obtaining accurate data isn't easy, especially without measurement tools. Technology makes it possible to track building efficiency using Internet of Things (IoT) sensors. They are among the top tools and trends in environmental monitoring.
Sensors monitor water consumption, energy usage, indoor air quality, and more. When placed on a building's critical infrastructure, they track the data you need for sustainability reporting. All data is transferred from the sensors to a dedicated platform, so you can view historical and real-time information.
Attune offers a full suite of water and energy sensors that collect relevant data for sustainability reporting. Our products give you full visibility into building utility usage, detecting leaks and monitoring infrastructure for potential issues. Each sensor connects to our dedicated platform, enabling you to monitor building conditions from one spot. To learn more about how Attune supports commercial real estate owners, schedule a demo with our team.
FAQs About Sustainability Reports
How Often Should CRE Owners Update Their Sustainability Reports?
Plan to update your sustainability reports at least once a year. This cadence helps you track year-over-year progress and monitor your ongoing sustainability efforts.
Can Sustainability Reports Improve Tenant Retention?
They can! Environmentally conscious tenants look favorably on buildings that align with their priorities. Sustainability reports can highlight features like clean indoor air and natural design elements that health-minded individuals appreciate.
