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.
As part of its strategy to decarbonize, Vornado Realty Trust has invested in and expanded various environmental initiatives. One method is proving to be particularly successful –engaging with tenants in meaningful ways and providing transparent data has led to a significant reduction in carbon emissions.
Vornado employs several tactics to meet its goal to reduce its environmental footprint, including purchasing Renewable Energy Certificates (RECs), electrifying buildings, and implementing portfolio- wide approaches to sustainable tenant fit-outs and building operations. The REIT also established a board-level ESG steering committee and ties executive compensation to ESG metrics. Its Vision 2030 commitment to carbon neutrality includes targeted goals for both owner and tenant energy reductions, with a key focus on transparency.
Landlord access to data and the ability to share data with tenants is a common challenge across the industry. Vornado is addressing this issue by submetering approximately 95% of its tenant spaces, which allows tenants to see their energy usage and benchmark how it compares to other spaces in the building. Additionally, the REIT has invested in upgrading its properties’ building management system (BMS) controls, which allows it to make actionable decisions related to building performance and energy reductions. As part of one BMS improvement project, Vornado piloted the installation of a communication interface to allow its tenants to securely connect their own space controls systems into the base building control system. This enabled mutual sharing of data points so tenants can confirm that Vornado is meeting the lease requirements.
With the increased visibility into tenant space data points, the building engineers can better deliver optimal comfort conditions, quickly and remotely diagnose hot or cold issues, and avoid wasted energy on excessive heating or cooling, reducing energy expenses and lowering carbon emissions. A software layer was added to continuously monitor efficacy of the new BMS, identify deficiencies and opportunities for improvement, and measure savings. The entire system is anticipated to reduce 1,600 MWh of electricity use and 4,600 Mlbs of steam use and will result in the avoidance of 264 tons of CO2 emissions.
The company utilizes other strategies for engaging with tenants to increase transparency. For one, it hosts tenant roundtables twice a year to discuss the company’s sustainability initiatives where it invites feedback from attendees. The Vornado LIVE. WORK.DO app was created to boost engagement and provide tenants with quick access to building information and Vornado’s ESG report. Vornado is seeing stronger relationships with both tenants and property managers because of the focus on transparency. The REIT believes that the solutions for effective decarbonization already exist and should be continuously rolled out over time to capture as much reduction as possible.
Vornado Realty Trust is an owner, manager, and developer of office and retail assets. Vornado's portfolio is concentrated in New York City, along with premier assets in both Chicago and San Francisco. Vornado is also a real estate industry leader in sustainability. The company owns and manages over 26 million square feet of LEED certified buildings.