Environmental, social and corporate governance (ESG) factors in commercial real estate are playing an increasingly important role. A panel of experts at this year’s International Council of Shopping Centers (ICSC) retail convention discussed new approaches to starting and prioritizing ESG initiatives.
Lesley Campbell, general counsel and senior vice president of talent engagement & office relations at ICSC, moderated the panel titled “ESG Developer, Investor and Retailer Perspectives.” Speakers included Sharon Bair, managing director of Americas retail at Nuveen, and Glenn Rufrano, ICSC chairman and former CEO of VEREIT.
Campbell kicked off the panel with a question she often gets from people unfamiliar with ESG: Why should their company care about ESG?
“I think probably first and foremost, we talk about doing the right thing in Nuveen,” Bair said. “When you cut down the financial aspects of it, there are two key drivers here for us. On the capital-raising front, investors are mandating where they put their capital. They want to see that the companies have a strong ESG program. So it’s extremely important to us as we go out and try to raise capital for our existing investors, who have their own obligations to their investors, that we take the appropriate steps to move forward with ESG initiatives.”
“The Securities and Exchange Commission has just come out with a paper, which will require public companies to review ESG,” Rufrano said. “And there’s scope one, two and three. Scope three is the environmental part, and we are going to have to conform to that. So it’s practical from my standpoint, but there’s another level where if you don’t conform you will lose capital. And so we all have to be thinking about how we’re going to practically work with ESG.”
When asked about which part of the ESG has been most challenging to adopt and implement within an organization, Rufrano shared how VEREIT executes its ESG initiative. The firm formed a committee that reports to the board, the general counsel oversees the governance factor, the head of asset management is the person that’s responsible for the environmental element, and the head of human resources is in charge of the social element.
“So we had someone who was specifically assigned to be the head of each factor as part of the job in addition to their normal job,” he said.
In terms of obtaining value through implementing ESG initiatives, Bair shared a recent successful case with the audience.
“We have an asset here in Las Vegas in which we have executed over the past couple of years a healthy water savings initiative in different areas that improve irrigation, and drought-resistant landscaping,” Bair said. “We have reduced our water usage by 20 million gallons a year. And bottom-line impact is $100,000 on an annual basis.”
Emily Fu can be reached at firstname.lastname@example.org.