Tenant Experience, Operations & Maintenance
Behind the Curtain Challenges and Opportunities with Increased Tenant Transparency By: Scott Baker, Baker Engineering While energy performance has been the focus for most building owners, property managers, and building engineers for many years, there is now more of a push to see this reported. In recent years, Environmental, Social, and Governance (ESG) reporting has had a swift uptick. For commercial real estate, this means reporting on our energy, emissions, water, and waste data as well as certifications earned at our buildings. Most of the requests for this data appear to be driven by building owners for either ESG reporting or internal reporting, but we are also seeing more tenants are requesting this data. These requests tend to be from tenants that are from national and international companies who are likely now reporting their ESG data. According to a November 2020 MarketWatch article, ESG investment “now represents 33% of the $51.4 trillion in total U.S. assets under professional management.” This has increased 42% from 2018.1
CREATING THE BENCHMARK One of the most popular ESG reporting assessments, GRESB2, was launched in 2009 with a focus on the real estate sector. For the environmental portion of the assessment, the topics include energy, emissions, water, waste, and health/wellness. It covers performance using energy, water, and waste data while also tracking leading indicators that include audits and certifications for energy, water, waste, and health/wellness. While the commercial office sector is a little more streamlined for reporting this data, as main utility meters are typically invoiced to the building owner or property manager, industrial and retail buildings are more difficult to report. In many of these buildings, utilities may have triple-net leases which limit access to energy and water data for building owners. In these buildings, property teams typically ask the
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Tenant Experience Guide | October 2021
tenants for their energy and water data for reporting. Considering data confidentiality and availability at the local store/branch level as well as a lack of understanding as to why this is needed, this can be a difficult proposition. Given such, many property managers will pitch the data request directly to the tenant by encouraging a partnership to reduce both energy consumption and cost. They may also provide assistance in reviewing energy and water efficiency projects that can help the tenant’s bottom line while also improving the environmental performance for the building owner. In most major cities in the United States, mandatory energy and emissions benchmarking programs have been introduced through local laws or ordinances. A map and list of these cities can be found through the Environmental Protection Agency’s website3. In addition, in June of this year, the House of Representatives passed legislation that would require public companies to disclose ESG metrics. If passed into law, this would require publicly traded companies to report on energy and emissions. All such laws and ordinances require more transparency around this environmental data, whether at the building or portfolio level. When it comes to public disclosure and reporting, the market and legislation are currently in sync. Most of the local laws and ordinances require use of the Environmental Protection Agency’s ENERGY STAR® Portfolio Manager4 - a free online tool - to benchmark and submit energy, water, and emissions data. This tool takes in inputs of energy data and building characteristics including building size, hours, and occupancy data and then for eligible property types will produce a 1-100 score. This score shows a comparison of the input property against the large data set of properties used to create the scoring calculation.
