07/18/2022 | by

WASHINGTON, D.C. (July 18, 2022) – REITs and publicly traded real estate companies continue to take significant and tangible steps to address and advance their ESG strategies and practices, according to Nareit’s 2022 REIT Industry ESG Report.

Those steps include enhancing ESG data and disclosure, strengthening board oversight of ESG, implementing programs that prioritize the health and wellness of stakeholders, and putting in place climate mitigation and adaptation strategies to reduce carbon emissions while increasing resiliency.

“The REIT and publicly traded real estate industry is committed to implementing innovative and impactful ESG practices,” said Nareit President and CEO Steven A. Wechsler. “This report demonstrates the progress our industry has made in owning and operating real estate responsibly, planning and practicing for resilience, and placing a premium on the people who are key to the success of these efforts.”

REITs Are Embedding ESG into Their Corporate Strategies, Business Operations, and Talent Management Practices

Using robust industry data and 32 case studies from REITs across property sectors, Nareit’s report details how REITs are integrating ESG across their businesses and operations, finding through surveys* that:

  • 90% have oversight of ESG at the board level.
  • 82% integrated ESG risks and opportunities into their strategy and financial planning in 2021—up from 77% in 2020.
  • 87% offer mental health support as part of their health insurance.
  • 81% offer programs that improve work-life balance, such as childcare, flexible work arrangements, and parental leave.
  • More than half of Nareit corporate members report linking executive compensation packages to ESG performance in 2021—compared to approximately one-third in 2020.
  • In 2020, 50% of new REIT directors were women and 31% were people of color—up from 48% and 13% in 2019, respectively.

REITs Are Proactively Managing their Environmental Footprint and Addressing Climate Change Risks

Twelve of the case studies detail how REITs are deploying innovative approaches and new technologies to reduce their environmental impact and drive efficiencies across their portfolios.

The report also shows that:

  • 83 of the largest 100 REITs by equity market cap own green-certified buildings in their portfolio.
  • 673,444 cubic meters of water were reused, as reported by Nareit member Global Real Estate Sustainability Benchmark (GRESB) participants in 2021.
  • 654,775 metric tons of waste were diverted, as reported by Nareit member GRESB participants in 2021.
  • 59% had greenhouse gas emissions reduction goals in 2021—up from 43% in 2020.
  • 62% of REITs aligned their disclosures to the Task Force on Climate-Related Financial Disclosures (TCFD) framework in 2021, up from 35% in 2020.

This increase in REITs aligning their disclosures with the TCFD framework reflects REITs’ increasing recognition that TCFD bolsters investor and lender confidence that climate-related risks are being appropriately assessed and addressed.

Nareit’s Report and Other Resources Help the REIT Industry Advance ESG

As a complement to the report, Nareit offers a comprehensive ESG program encompassing events, research, thought leadership, and educational content. Some of this year’s offerings include the:

REITworks Conference (Sept. 12–13). This dynamic educational event offers commercial real estate (CRE) executives the chance to network and learn about ESG developments affecting the industry.

ESG Dashboard. The dashboard, updated annually by GeoPhy and Nareit, identifies and tracks ESG key performance indicators for the U.S. REIT industry, such as the share of REITs disclosing carbon targets and sustainability goals, which doubled between 2018 and 2021.

ESG Exchange Series. This webinar series helps industry participants and the media learn about everything from what the CRE industry is doing to reach net zero, to pathways for ESG-focused careers in real estate, to how REITs are advancing DEI in the industry.

Visit Nareit’s ESG Resources and Research page to learn more about Nareit’s ESG program.

*Editor’s note: Survey findings are based on Nareit and third-party data collected throughout 2021. Survey participants vary by source; percentages are not representative of all REITs. The full list of references is available in the report’s appendix, beginning on page 68 of the PDF.

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