Get Credit Where Credit Is Due: ESG Reporting and Why It's Important
Sustainability is not just a marketing buzzword, and it's not just Environmental Social and Governance committees considering these "non-financial" performance indicators anymore. As more companies reckon with the real, long-term financial risks of climate change, the ability to quantify, adjust, and report data like building emissions, water use, and food waste is more in demand than ever. Why is it so important for companies to put hard numbers behind their sustainability stories? And how can Property Works help you tell your sustainability story?
With buildings making up 40% of greenhouse gas emissions, there are not only huge opportunities but increasingly required responsibilities that building owners as well as tenants can and should undertake to reduce and report on their environmental impact. These are just some of the interested parties you should consider while assessing your own sustainability data strategy:
At both the state and federal level, the number of laws relating to sustainability standards are only growing. In states like California, license and permitting processes can be complicated and confusing if you're not already tracking relevant data. For global franchise brands, there are international regulations to comply with, and for publicly traded companies, stock exchange disclosure requirements.
Capital Providers and Investors
With the now-quantifiable financial risks posed by climate change, investors are taking a much closer look at how companies plan to mitigate those risks, such as physical loss, regulatory costs, and market risk. A sustainability strategy is no longer a nice-to-have, or completed with a solidarity statement on a website. The cost of changing nothing but marketing verbiage is literally too high, and can have repercussions for how much investment a venture can attract.
As noted at the top of this post, it's not just ESG committees looking at companies' sustainability strategies anymore. CFOs and others in the C-suite have realized the long-term impact environmental change will have on the balance sheet, and the numbers are moving many to action like never before. In the world of finance, those who have done the math agree: it's past time for playing games with sustainability.
Remember that list of risks including market risk? Customers are more invested than ever in the sustainability practices of the brands they patronize. Failing to have a sustainability strategy—or failing to communicate that strategy effectively to an educated market—can mean lost revenue and bad press.
Insurance companies are a bit of an unknown at this point, but they have a substantial amount of muscle to flex if and when they choose to do so. With the physical and financial risks associated with climate change, it will become very expensive for them to insure buildings and businesses that are in the line of the next natural catastrophe. How they will seek to mitigate those risks remains to be seen, but having numbers to support sustainability efforts as the insured will likely become a crucial component of acquiring coverage.
Landlords and Tenants
Just as there are huge potential financial costs associated with not addressing climate change, there are also huge potential savings for those who plan ahead. Certain investments in sustainable options today can pay for themselves and beyond in the long-term, from making a simple in-store lighting switch and taking advantage of a utility company discount, to undergoing more extensive retrofits and pursuing certifications like LEED. Tenants should be on the lookout for lease language related to sustainability practices, as more landlords are reserving the right to make environmentally conscious building improvements or requiring tenant compliance with waste reduction policies.
With so many parties invested (not to mention the global population at large) it's clear that sustainability deserves a top spot among your highest business priorities.
How can Property Works help you tell your sustainability story?
About Property Works
Property Works has been an industry leader in real estate and lease portfolio management for over 20 years, providing support to companies with multi-unit locations across a range of sectors including restaurant and retail. Since 1996, we’ve handled the portfolios of numerous Fortune 500 companies, as well as small businesses.
Contact Property Works’ Transaction Support Services Team today for more information on the benefits of partnering with us. https://www.propertyworks.com