Proptech is growing as a tool for CRE to fight climate change: Forum – Trade Observer
Commercial real estate sustainable development efforts remained in the hot seat.
At Commercial Observer’s recent forum – “Spotlight Sustainability: Proptech at the Core of Positive Climate Outcomes” – industry experts provided insight into real estate’s environmental responsibility from both a climate and business perspective. Held virtually on June 23, the event was the second installment in Commercial Observer’s Tech Insider Live series.
Tom Acitelli, one of Commercial Observer’s associate editors, kicked off the first panel, “Inside the Playbook to Achieving the Climate Mobilization Act Goals.” He moderated the conversation between Dana Schneidersenior vice president and director of energy, sustainability and ESG at Empire State Realty Trust (ESRT); Michael ReedTeam Leader of Advanced Efficiency Solutions at JNew York State Energy Research and Development Authority (NYSERDA); and Danielle DonnellyHead of Sustainable Development Programs at Nonprofit Development Finance The Community Preservation Society (CCP).
Panelists cited New York City legislation, primarily Local Law 97, as a framework for sustainability efforts. Whatever a company’s interests or plans, such legislation puts buildings at the forefront of decarbonization and climate neutrality efforts. New York City must therefore be creative in using a variety of solutions, from assessing fossil fuel use to retrofitting buildings. After all, about 70 percent of the city’s emissions come from construction operations, Reed said.
Yet even if legally mandated, sustainability improvements are not negative but positive, Schneider said. She highlighted the opportunities – namely collaboration and relationships – that environmental changes invite.
Schneider has experienced the results of the partnership firsthand. She was work alongside Reed to help ESRTs Empire State Building achieve its goal of carbon neutrality by 2030. Meanwhile, ESRT’s entire portfolio hopes to achieve carbon neutrality by 2035. Goal setting contextualizes near-term efforts, placing day-to-day metrics in an overview.
“A long-term incremental approach to decarbonization that invests in decarbonization alongside the building’s natural investment cycle is the optimal way to achieve meaningful energy and carbon reductions at commercially acceptable returns,” Reed said. .
The emphasis here is on the long term; Schneider noted that carbon neutrality goals should not be taken lightly or rushed. Goals should not only be productive, but also realistic and well-informed. For example, committing the Empire State Building to carbon neutrality by 2030 required intensive planning through analysis, technical considerations, and economic justification.
In working towards these long-term environmental goals, Schneider also noted that partnership is not limited to direct business relationships. On the contrary, real estate leaders have a responsibility to stimulate other businesses and buildings in their climate efforts. To show other businesses how the Empire State Building is working to carbon neutralityEmpire State Realty and NYSERDA have created a manual of actionable steps.
Such a playbook proves that being proactive starts, like stillwith information. Collecting data, analyzing it and using it later is a daunting multi-step process, but one that all three panelists felt was necessary.
“You can’t manage what you don’t measure,” Donnelly said, summarizing CPC’s mentality when it comes to making informed decisions.
The second panel echoed this need for a data-centric approach. In “The Transition to Net Zero: The Critical Role of Data, Energy Efficiency, and Crusaders for Climate Action”, Sonu PandaCEO of a software company Prescriptive datahosted a conversation with Ben Myersvice president of sustainable development at developer Boston Propertiesand Becca RushESG director for investment and management company Jamestown.
Data has become an essential tool for achieving carbon neutrality first and net zero second, Panda said. He noted that data can – and should – be harnessed to propel decision-making and increase efficiency.
As data becomes increasingly accessible, sustainability has continued to rise to the forefront of the real estate industry.
“Years ago I was begging people to get involved in the conversation, and there were a lot fewer cheerleaders and people with specific expertise,” Rushin said. “While now my phone is ringing.”
Indeed, the roles related to ESG have changed. Rushin’s work no longer requires him to mobilize support for sustainability or raise awareness of environmental concerns. Instead, it must effectively leverage the information and interest that already exists.
“I absolutely think that dynamic went from headwind to tailwind,” Myers said. He noted that Boston Properties has increasingly reached out to stakeholders to understand energy consumption and sources, as well as what properties are doing to reduce their carbon footprint.
With such widespread interest, Myers and Rushin believe that decisions should be made in accordance with intentional sustainability frameworks rather than random upgrades. While proactiveness marks an improvement over past years, it also comes with its own challenges and pressures.
“We have to go faster,” Myers said.
Knowing how to allocate time, energy and resources is therefore a balancing act that requires intentional planning and perspective. To design such a strategy, business interests and environmental practices must be considered in tandem.
The third panel – “Sustainability Means Good Business: Understanding the Broader Benefits of Carbon Neutrality and Sustainable Best Practices” – looked at the ways in which sustainability and business overlap for the better.
Acitelli moderated the conversation between Sarah Kingsenior vice president of sustainability at Kilroy Realty; Kyle Goehringresponsible for sustainable development at Turner and Townsend; Kelly Wordenvice-president ESG and investment for health at WELL International Building Institute; and Violet Whitneysenior product manager at Dig by Sidewalk Labs, a Googleowner-owned AI product for neighborhood planning.
Like previous panelists, these speakers noted the positive consensus surrounding real estate sustainability efforts.
“When I started working in this area, I thought it was ‘How can sustainability programs help a company do less harm?’ King said. “We were really focused on reducing the negative. … We’re now thinking, ‘How can sustainability programs accelerate more good?’ ”
Proactively creating good requires, again, prioritizing informed decisions. These processes start with the interests of the clients; companies need to define and set goals on a customer-by-customer basis, Worden said. Communication is therefore better for the environment — and economic partnerships.
In addition to accounting for tenant needs, companies must account for changing Needs.
“In this age of uncertainty, I think flexibility is the word of the moment,” King said.
Even when well-informed, a building’s design may not be future-proof – and, in a changing world, may not be able to anticipate is anticipated. Allowing a building room to grow and change is therefore a crucial step that will save time, money and brain power years later.
Building on this sense of flexibility, the event concluded with a roundtable summarizing the overlap of sustainability with good business.
For Goehring, sustainability is simple. It’s all about “efficiency,” he said, summing up the corporate sustainability momentum in a nutshell.
Yet efficiency is only the tip of the climate change iceberg. Longevity is another key benefit of adopting pro-environmental measures. Both Whitney and Worden noted that green practices reduce a building’s risk early on and can yield long-term success, although the result is not immediately noticeable. Such practices set a building apart from its competitors and appeal to forward-looking tenants and investors.
Clearly, real estate can – and should – do it all. Industry does not have to choose between sustainability and business; on the contrary, any company wishing to remain competitive must manage both, as soon as possible. Otherwise, a business risks harming the environment, not to mention its own finances.
Anna Staropoli can be contacted at [email protected].