REITs of all types collectively own more than $3.5 trillion in gross assets across the U.S. U.S. listed REITs have an equity market capitalization of nearly $1.6 trillion, and own and operate between 10% and 20% of U.S. commercial real estate.
Nareit’s REIT ESG Dashboard reflects data from 2016 through 2020 as publicly reported from 2017 through 2021 for the 100 largest U.S. equity REITs by equity market cap within each of these years.
In 2021, these 100 REITs represented approximately 90% of the listed equity REIT equity market cap as of Dec. 31, 2020. These REITs owned 480,390 assets, including 41,906 buildings totaling approximately 5.2 billion square feet of real estate in the U.S. as of year-end 2020.
Charts within the Dashboard either reflect REITs by number or the percentage of the REIT industry by equity market cap.
How are REITs Reporting on ESG Efforts?
Public reporting of ESG has become the new normal in the REIT industry. All of the largest 100 REITs by equity market cap are now reporting their ESG efforts publicly, including on their company websites, and in annual reports, proxy statements, and/or stand-alone sustainability reports.
Nareit’s Practical Reference for ESG Implementation and Reporting (PDF), was published in 2021 and offers step-by-step guidance for addressing some of the most widely used key performance indicators (KPIs).
REITs are increasingly issuing stand-alone sustainability reports, with 80 of the largest 100 REITs by equity market cap issuing these reports in 2021. More than half of these 100 REITs align their sustainability report to the Global Reporting Initiative (GRI) standards.
Prevalence of ESG reporting for REITs with an equity market cap under $5 billion has accelerated at a rapid pace, with percent by equity market cap growing from just over 40% in 2017 to nearly 100% in 2021. Nareit supports member companies of all sizes looking to advance their ESG initiatives through its JumpStart Program, guidance documents and ESG-related resources, committees, and councils.
GRESB, CDP and GRI remain the most commonly used frameworks through which REITs are reporting their ESG data. GRI was the most used framework for reporting in 2021 with 56 REITs utilizing the guidance framework, representing 67% of the total equity market cap of the REITs analyzed.
Reporting in alignment with financial ESG reporting disclosures has risen significantly in the past year, as investor interest in financially relevant ESG issues, such as climate risk, increases. The number of REITs reporting in alignment with SASB and TCFD went from 16 and 15, respectively, in 2020 to 52 and 45, respectively, in 2021.
83% of REITs had requests from institutional investors regarding climate-related risks in their portfolios.
The 2019 Nareit Guide to ESG Reporting Frameworks (PDF) provides an overview of the most reported ESG reporting frameworks in the marketplace and their most commonly used metrics in a single, user-friendly document.
REITs are Publicly Disclosing ESG Targets, Goals
In addition to reporting sustainability performance, an increasing number of REITs are publicly disclosing carbon targets and sustainability goals. Half of the REITs analyzed reported public carbon targets in 2021.
Of the largest REITs by equity market cap, 56 REITs publicly disclosed other types of environmental sustainability goals, such as renewable energy procurement, waste and water consumption, green development, and other KPIs. Most disclosed goals targeted 2030 or earlier for completion. According to Nareit’s 2021 ESG member survey, 52% of respondents align their ESG strategy to the U.N.’s Sustainable Development Goals (UNSDGs), and 30% of respondents utilize the Science-Based Targets initiative (SBTi).
REITs are reporting reduced carbon emissions, increased energy savings, and reduced water consumption and waste. Public disclosure of carbon emission and energy usage have shown great momentum since 2017, and disclosure of carbon emissions outpaced disclosure of energy usage for the first time in 2021.
Along with an increase in carbon emissions disclosures, more REITs are publicly disclosing their climate change policy.
REITs Are Expanding ESG Teams, Leading the Way in Sustainable Buildings
As REITs expand their ESG initiatives, more companies are hiring staff dedicated to ESG. Between 2017 and 2021, the number of companies with a full-time dedicated ESG staff position increased by nearly 30. The 50 REITs with dedicated ESG staff account for 68% of the equity market cap of the top 100 REITs. Many of those REITs without dedicated ESG staff implement ESG initiatives through sustainability committees as well as guidance from outside consultants.
Green building certifications continue to be a useful tool for companies to demonstrate their commitment to operating sustainably. More than 80 of the top 100 REITs owned certified green buildings in 2021, compared to 78 in both 2020 and 2019. Nearly 2,700 REIT-owned buildings have a green certification, which covers approximately 712 million square feet. In fact, REIT-owned properties are often at the forefront of sustainable building innovations.
A majority of the top 100 largest REITs by equity market cap certify their buildings according to the U.S. Green Building Council’s LEED system, with the office sector leading the way. Of the office REITs in the 100 analyzed companies, 92% by equity market cap have achieved LEED certifications.
The share of the largest 100 REITs by equity market cap reporting onsite renewables has more than doubled in five years. In addition, in 2021, 11 REITs publicly disclosed utilization of power purchase agreements, a way for companies to invest in third-party development of renewable energy infrastructure.
REITs have a history of incorporating social initiatives into their business models, resulting in positive impact on their employees, communities, tenants, and other stakeholders. Social initiatives may include providing employee development opportunities, revitalizing neighborhoods within their communities, and supporting tenant needs.
REITs are Publicly Disclosing on Social Policies, Programs and Governance Issues
In 2021, REITs continued to demonstrate their commitment to their community. Of the largest 100 REITs by equity market cap:
- 94 publicly disclosed data on their community development programs.
- 79 publicly reported on their disclosed charitable giving, together reporting over $68.5 million in total monetary and in-kind donations.
- 51 publicly reported on employee volunteerism.
In the wake of COVID-19, reporting of both health and wellness and workforce development programs continue to increase, with nearly all of the largest 100 REITs publicly disclosing on these KPIs.
Social policies related to supplier/vendor screening, diversity, inclusion, and equal opportunity initiatives, and health and safety practices are being increasingly disclosed by REITs. Diversity, equity, and inclusion (DEI) continues to be a priority for REITs and Nareit. Nearly all of the top 100 REITs by equity market cap (representing 98% by equity market cap) publicly disclosed their diversity, equity and inclusion initiatives.
Nareit’s Dividends Through Diversity, Equity, and Inclusion Initiative, which is guided by Nareit’s DDEI CEO Council, has developed and supported a number of programs to help the industry increase visibility and appeal to diverse individuals and businesses.
REITs are showing progress in gender diversity on their boards of directors. In 2021, all 100 of the largest equity REITs by equity market cap had at least one female board member, and 91 REITs had two or more female board members. Of the 100 companies analyzed, 21 companies also publicly reported on pay equity.
Governance policies reflect an organization’s processes, policies, practices, and impact regarding its formalized governing infrastructure, transparency, roles and responsibilities, and accountability.
Public disclosure of governance-related items is a strength for REITs. Of the 100 largest REITs by equity market cap:
- 95 publicly disclosed their general governance and risk assessment policies.
- 95 publicly disclosed their compensation policy.
- 91 publicly disclosed their anti-corruption policy.
These disclosures are primarily reported in proxy statements, rather than stand-alone reports.
To Learn More
REITs and Publicly Traded Real Estate Companies
If you’re looking to start a sustainability ESG program or advance an existing one, check out Nareit’s ESG JumpStart Workshop and annual REITworks® Conference. Contact Fulya Kocak, Nareit Senior Vice President, ESG Issues to learn more about these programs.
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This data collection and analysis for the ESG Dashboard was performed by GeoPhy, a tech company in the real estate domain, building a global platform for independent real estate data and information, using publicly available information from listed U.S. equity REITs including websites, annual reports, sustainability reports, 10-Ks, direct feeds, and certification schemes. This public information is subject to continuous change and therefore is not warranted as to its merchantability, completeness, accuracy or fitness for a particular purpose. The data and analysis are provided “as is” and reflect GeoPhy’s opinion at the date of publication only. Any reference to third party names, or third- party data, is for appropriate acknowledgement of its ownership and does not constitute a sponsorship, or endorsement, by such owner. When the ESG Dashboard refers to 2018, 2019, 2020, or 2021 results, it reflects data reported by REITs in 2018, 2019, 2020, or 2021 reflecting the prior fiscal year operations.
Nareit is not acting as an investment adviser, investment fiduciary, broker, dealer or other market participant, and no offer or solicitation to buy or sell any security or real estate investment is being made by the ESG Dashboard. The information in the ESG Dashboard is for informational purposes only and it is not intended to be a solicitation related to any particular company, nor does Nareit intend to provide investment, financial, legal or tax advice, and no information, services, or materials offered by or through the Dashboard shall be construed as such. This information is not intended by Nareit to serve as the basis for any investment decision.