09/25/2023 | by

Nareit’s Fifth REIT Industry ESG Report Offers Overview of
REITs’ Environmental, Social, and Governance Practices

WASHINGTON, D.C. (Sept. 25, 2023) – Publicly traded REITs are focused on transparency and operating responsibly by continuing to adopt, implement, and report on environmental, social, and governance practices, as illustrated in Nareit’s REIT Industry ESG Report 2023.

This fifth edition of the report, which features 20 case studies from individual REITs, demonstrates how REITs continue to adapt their sustainability and corporate responsibility practices as well as advance their governance and reporting approaches to keep pace with today’s changing physical and social environments.

“REITs have implemented new and innovative programs, and adjusted them as needed, to be even more effective as responsible real estate owners, partners with their tenants, and members of the communities where they invest and operate,” said Jessica Long, Nareit senior vice president of environmental stewardship and sustainability. “REITs are also applying the lessons they learn from their programs and practices to provide leadership and effectively address shareholder and stakeholder interests.”

The report includes Nareit research sources, including the 2022 Nareit ESG Dashboard, which surveys the top 100 REITs by market capitalization; the 2022 Nareit Workforce Development & DEI Survey; the 2022 Nareit Member ESG Survey; and outside sources such as the 2022 GRESB U.S. Portfolio Analysis Report and S&P Global Intelligence Green Bond Issuance data.

Below are some key takeaways from the report:

REITs are adapting to and managing the impact of climate change by focusing on risk assessment, preparedness, mitigation, and strategies to reduce carbon emissions in alignment with leading global frameworks.

For example, of the 100 largest REITs by market capitalization:

  • 89% publicly report having a climate policy—up from 20% in 2018 (Nareit ESG Dashboard).
  • 83% align their ESG financial frameworks with the Task Force on Climate-Related Financial Disclosures (TCFD)—up from 23% in 2020 (Nareit ESG Dashboard).
  • 73% publicly report carbon targets—up from 30% in 2018 (Nareit ESG Dashboard).

REITs continue to focus on developing people within their businesses, the occupants of their buildings, and the communities in which they invest and operate.

For example, of the 100 largest REITs by market capitalization:

  • 99% report on community development programs (Nareit ESG Dashboard).
  • 98% have at least two board members on their boards of directors (Nareit ESG Dashboard).
  • 96% publicly disclose supplier screening (Nareit ESG Dashboard).

REITs provide leadership through transparency, target setting, and effective governance practices that help plan for uncertainty and increase business resiliency. For example:

  • 78% of REITs have board oversight of ESG specified in a charter (Nareit Member ESG Survey).
  • 76% of REITs report ESG performance to their boards of directors quarterly or more frequently (Nareit Member ESG Survey).
  • 67% of REITs link executive compensation to ESG performance (Nareit Member ESG Survey).

To learn more about REITs’ ongoing work to advance their environmental, social, and governance efforts, download the complete REIT Industry ESG Report 2023.

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