The third annual report demonstrates that REITs continue to enhance practices and proactively integrate ESG efforts across all areas of business.
WASHINGTON, D.C. (June 22, 2021) – Nareit has released its third annual REIT Industry ESG Report demonstrating the progress REITs and the publicly traded real estate industry have made in adopting, implementing, executing, and reporting on environmental stewardship, social responsibility, and good governance practices and outcomes.
In 2020, REITs’ ESG journey advanced further and with more urgency, and this year’s report outlines that:
- ESG goals are integrated into corporate strategies;
- There is an increasing focus on assessing climate risk and addressing climate change;
- There are deliberate efforts to drive for diversity, equity and inclusion in workplaces; board rooms, businesses and communities, and;
- The experience of the global pandemic reaffirmed the centrality of health, safety and wellness to the REIT industry’s ESG efforts.
"The advancement of sustainability in all of its facets, including environmental stewardship, social responsibility, and good governance is a core component of the REIT approach to real estate investment," said Nareit President and CEO Steven A. Wechsler. “The remarkable events of the past year and more—a period marked by the most devastating global pandemic in a century, the worst recession in the U.S. since the Great Depression, and growing demands for social justice—dramatically heightened consciousness of ESG and the increasingly clear imperative for leaders in society, including in the REIT community, to take more affirmative and concrete steps with respect to the complete constellation of ESG-related matters.”
Key takeaways from the report include:
REITs continue to embed ESG into corporate strategy and business operations.
- 77% of REITs surveyed integrate ESG risks and opportunities into strategic and financial planning.
- 79% of REIT participants have a cross-functional sustainability committee or team.
- REITs with an equity market cap under $5 billion that are reporting on ESG jumped from 43% in 2018, to 71% in 2019, to 97% in 2020.
REITs are a driving force behind the movement to tackle climate change and make the global building portfolio healthier and cleaner.
- More than 2,100 REIT-owned buildings now have a green certification – and this number continues to grow.
- REITs improved disclosure across all key environmental performance areas, demonstrating recognition of the environmental impact of their businesses on the long-term sustainability of their communities.
- 89% of REITs surveyed have an Environmental Management System (EMS), enabling them to reduce environmental impacts and increase operating efficiency.
- Nareit members that participate with GRESB decreased greenhouse gas emissions by 429,324 metric tons of CO₂, resulting in a 5% decline from 2019 emission levels. Similarly, the industry also reduced water usage, energy consumption, and operational waste.
Amidst the global pandemic, REITs continued to put people and communities first.
- 100% of REITs reporting to GRESB have ongoing community engagement programs, and 98% indicated that they monitor inclusion and diversity metrics at board and workforce levels.
- 68% of REITs that Nareit surveyed indicated they have policies in place for recruiting and hiring a more diverse workforce, and 64% of REITs expect to conduct or renew unconscious bias training for staff and management by the end of 2021.
- In response to COVID-19, 77% of REITs surveyed implemented new employee engagement practices, and over half of REITs executed community relief programs.
Nareit offers a comprehensive ESG program, providing thought leadership, educational series, resources, research, and a platform for REITs to share best practices for sustainability and ESG implementation among their peers. The organization’s Dividends Through Diversity, Equity & Inclusion (DDEI) Initiative , launched in 2017, promotes the recruitment, inclusion, and advancement of diverse groups in REITs and the broader commercial real estate industry. Since its launch, the Initiative has established an annual awards program, convened several educational events, and, last year, established the DDEI CEO Council.
Throughout 2021 and beyond, Nareit will continue to convene, support, and inform the REIT community as the industry’s ESG journey evolves.