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.
Last year, Ventas became the first healthcare REIT to commit to net-zero operational carbon emissions (scopes 1 and 2)—a goal the company has set out to achieve by 2040. This step furthers Ventas’ position as a leader in energy and emissions reductions, adding to a track record that includes long-standing investments in energy efficiency and a science- based emissions reduction target. Importantly, these actions are expected to drive long-term shareholder value in myriad ways including lower energy and maintenance costs, more resilient assets, improved air quality and occupant comfort, and enhanced tenant and resident attraction and retention.
Ventas’ net-zero decarbonization approach is comprised of three primary components: energy efficiency, electrification, and renewable energy procurement. With smart capital investment as a hallmark of the company’s 25 year track-record of success, Ventas is integrating energy efficiency and electrification into its annual capex planning and budgeting process.
Transformational Capital Planning: Integrating Decarbonization through Energy Efficiency and Electrification
Ventas has developed property-specific decarbonization roadmaps for each of its approximately 800 senior housing communities, outpatient medical buildings, and research centers within its operational control. These long- term roadmaps are specific to each building’s unique conditions and drive energy efficiency and electrification based on existing technologies.
The roadmaps are optimally sequenced to maximize the net present value of the building improvements and realize net energy cost savings, while enhancing the tenant and resident experience. The net present value of these carbon and energy reduction efforts could increase over time as technology advances and becomes more cost effective. The roadmaps include actions such as increased insulation at the time of roof replacements, implementation of robust building energy management systems, transitioning heating and cooling to electric heat pump technology (including for hot water), assessing opportunities for on-site solar, implementing refrigerant management and tracking (including the use of refrigerants with low global warming potentials), and LED lighting. The plans have been rolled out to Ventas property management teams and third-party operators to be integrated into capital planning and equipment replacements in 2024 and beyond. By 2040, these actions are expected to eliminate more than 95% of current natural gas consumption, minimize emissions from refrigerants, and improve energy efficiency across the Ventas portfolio.
Renewable Energy Procurement
While the decarbonization roadmaps will result in energy efficient and electrified buildings, to achieve net zero carbon, the electricity must come from renewable or other zero-carbon sources.
Ventas has committed to sourcing 60% of the electricity consumed by its operational portfolio from renewable or zero-carbon sources by 2030, and 100% by 2035. Ventas is evaluating a range of opportunities to achieve this goal including virtual power purchase agreements (VPPAs), utility green tariff programs, and on-site solar.
Strategic renewable energy procurement, combined with a transformational approach to capital planning that integrates decarbonization through energy efficiency and electrification, is expected to enable Ventas to achieve net zero operational carbon by 2040. Through a smart, integrated, long-term approach to decarbonization, Ventas is paving the way for the commercial real estate industry to achieve significant emissions reductions in a manner that drives long-term shareholder value— attracting and retaining tenants with more resilient, safe, and comfortable buildings with lower operating costs.
Ventas, Inc. is an S&P 500 company and one of the world’s preeminent REITs. Its diversified portfolio of senior housing communities, outpatient medical buildings, research centers, hospitals and other healthcare facilities are unified in serving the needs of a large and growing aging demographic.