by Ann Withanee — September 12, 2011—Leading real estate companies lowered their annual energy consumption by nearly three percent in 2010 and are taking steps to integrate environmental management into their daily operations, according to a report issued by the Global Real Estate Sustainability Benchmark (GRESB) Foundation polling leaders in the commercial real estate industry.
Environmental concerns and achievements are not limited to the real estate industry. Corporate America and the global corporate world are increasingly focusing on sustainability plans to protect the environment. Some work with a consultant firm specializing in environmental issues; others develop in-house facilities personnel charged to find means to curb energy usage. Not only do such programs benefit the environment, they also contribute to fiscal bottom lines.
In the real estate sector, the GRESB Foundation analyzes the environmental performance of 340 of the world’s largest real estate companies and funds. Companies ranked in the recently issued GRESBE Research Report 2011 manage real estate assets worth nearly U.S. $1 trillion and represent approximately 35 percent of the global real estate market. The companies responded to the survey issued by the GRESB Foundation and backed by institutional investors worth $1.7 trillion that sought disclosure on environmental management practices and data on energy and water consumption.
“The commercial property sector is beginning to embrace energy efficiency because it’s good for the bottom line. It lowers operating costs and provides higher value for investors,” said Mindy Lubber, president of Ceres, a member of the GRESB Foundation. “But energy efficiency also creates jobs, reduces emissions, and enhances U.S. energy security. If commercial property managers can maintain a three percent reduction in energy use per year, they will make a significant contribution towards these broader goals.” Ceres leads a coalition of investors and public interest groups working with companies to address sustainability challenges such as climate change.
Participating companies were ranked and sorted into four groups, or quadrants, according to their scores on more than 50 metrics of environmental and social performance. Sixty-five companies achieved the highest rank of “Green Star,” indicating they have both robust corporate environmental policies and have taken concrete steps to implement those policies. Green Star companies decreased their average energy consumption by nearly 3 percent and their water consumption by 3.8 percent in 2010.
North American Green Stars include Liberty Property and funds managed by Principal Real Estate, USAA and Tishman Speyer. Additionally, Los Angeles-based real estate investment trust (REIT) Thomas Properties Group received the highest Green Star Rank of all U.S. companies, and Toronto-based Bentall Kennedy Group scored in the top ten of all 340 funds and companies.
Studies show that office buildings with certification from the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program or the U.S. Environmental Protection Agency’s (EPA) Energy Star label generate cash flows that are 7 percent higher than conventional buildings and transaction prices that are more than 13 percent higher.
“The commercial real estate sector is poised to move towards full integration of environmental management in daily operations with great opportunities lying ahead,” says Dr. Nils Kok, executive director of the GRESB Foundation. “Our benchmark puts the environmental performance of fund managers in perspective and provides investors with a tool for engaging with the property sector.”
