10/18/2023 | by

This case study was published in the 2023 REIT Industry ESG Report, which details the REIT and publicly traded real estate industry's environmental, social, and governance (ESG) performance and features 20 case studies showcasing REIT leadership and ESG innovation from a variety of sectors. The report serves as a practical tool for shareholders and stakeholders to assess the scale and impact of the REIT industry's ESG commitments and initiatives. Applicable footnotes and/or citations for this case study are available in the full report.

Avalon Teaneck, Teaneck, NJ. Photograph by Alan Schindler Photography. Photo courtesy of AvalonBay Communities, Inc.

While climate risk has a well-established place in the sustainability lexicon, biodiversity loss is gaining momentum as a major area of focus. These interconnected issues both have a place in a holistic sustainability strategy for the real estate industry. As an active developer, AvalonBay Communities recognizes the importance of understanding its biodiversity impact and charting a replicable path forward to create a better way to live, both for people and the natural environment by protecting natural capital.

In the wake of increasing investor requests, an emerging focus on the economic value of natural capital, and adoption of initiatives like the Task Force on Nature-Related Disclosures (TNFD), AvalonBay is finalizing its approach to biodiversity management, which outlines concrete steps to support the ecosystems that may be impacted by its development business. In 2022, AvalonBay completed the development of 5 communities, with another 17 under development at the end of the year.

To begin this process, AvalonBay benchmarked site-specific biodiversity impacts and opportunities for its operating portfolio using the Integrated Biodiversity Assessment Tool (IBAT). IBAT provides a desktop analysis platform to measure biodiversity impact risk, removing barriers for organizations for which conducting on-site assessments may not be feasible. The IBAT was created so that organizations making decisions affecting critical biodiversity have access to the best and most up-to-date scientific information possible. The IBAT includes data from IUCN Red List of Threatened Species, World Database on Protected Areas (WDPA), and World Database of Key Biodiversity Areas. AvalonBay was the first U.S. REIT to use IBAT to assess its entire U.S. operating real estate portfolio.

AvalonBay is finalizing its approach to integrating this tool’s biodiversity impact reports into its site due diligence process. The REIT is considering the potential for negative impact on biodiversity or ecosystem collapse as a physical climate risk, a reputational risk, and a future regulatory risk, while also recognizing that some sites present opportunities to make an outsized positive impact to the biodiversity of a particular location. IBAT reports provide a multitude of data points including a list of species that may be at risk and the prevailing form of negative impact. This arms developers with the information needed to make informed landscaping or site design decisions that support or minimize risk to a particular species.

Empowered by this data, AvalonBay is extending its “Spirit of Caring” framework to the natural world to protect biodiversity through remediating brownfield sites and limiting the pursuit of new greenfield development while emphasizing community revitalization with its new developments.

Biodiversity loss poses a risk to economic value generation, prosperity of people, and the planet. While the protection of biodiversity remains a largely conceptual goal for many businesses, AvalonBay is excited for the potential to show what a way-forward can look like and promote a better way to live in harmony with the natural habitat.

AvalonBay Communities, Inc. is a REIT with a long-term track record of developing, redeveloping, acquiring, and managing distinctive apartment homes in some of the best U.S. markets, and delivering outsized, risk-adjusted returns to shareholders. With equal parts experience and vision, AvalonBay has established a leadership position rooted in building value for the long term

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