Matt Ellis (Measurabl CEO) identifies how tech plays a role in the future of corporate sustainability, specifically in the real estate industry.
For the first time ever businesses are being ranked on their social and environmental impacts by mainstream rating agencies like Dow Jones and Morningstar, making sustainability performance key criteria in how trillions in institutional capital are invested. Companies who want to continue to court investors, maintain stakeholder loyalty, or simply want to stay out of the regulatory line of fire, need to disclose on corporate sustainability. Disclosure of sustainability data is now the “new normal”.
Sound like a big step to take? It is. Fortunately, there are technology solutions available to help you easily track sustainability data and ease the burden and cost of reporting on corporate sustainability. Companies should be less intimidated by “what” reporting is and less concerned with the “how” to report. Instead, they should focus on the “why” – the fact that reporting helps them not only drive operational efficiencies but also establish stronger brands and position themselves as industry leaders.
The Importance of Environmental and Social Impacts
There is no denying the effect pollution and carbon emissions have on our planet. From sea levels rising to abnormal weather patterns that jump from floods to drought, you only have to check out the forecast to realize that our actions are having an indelible impact on our environment. As the years pass and the threat grows deeper, we’re seeing more consumers become aware of their contributions to climate change – and where the consumers go, so does their preference towards environmentally-conscious businesses.
That’s where the corporate sustainability movement comes in. There’s a fundamental need for transparency around the environmental and social impact of companies (especially in the real estate sector). As an article in the San Diego Union-Tribune explains, if businesses can better account for their energy consumption and carbon emissions, it will be easier for investors and consumers to make well-informed decisions with their dollars.
Though many companies are subscribing to the movement, their sustainability practices are often lacking, particularly when it comes to emissions, waste, and energy usage. And here’s where tech startups have a part to play – at the meeting point between tech and sustainability. Technology now enables companies to capture their utility, waste, and travel data; compile that data into accurate, easily-digestible reports; and analyze key performance indicators to make the right sustainability-improving adjustments for the future.
What This Means for the Real Estate Sector
Real estate is one of the biggest polluters with 40% of US energy use, 30% of water consumption, and 28% of carbon emissions – it’s clear that this industry ought to be on the forefront of change.
Previously, I was the director of Sustainability Solutions for CBRE, the world’s largest real estate services company. There I saw firsthand the start of the real estate industry demanding to know the sustainability performance of their assets – it is indicative of your overall financial health. In other words, companies that manage and disclose so-called “ESG” (environmental, social, governance) data simply tend to run better businesses. And, all things being equal, better businesses produce better financial results over the long run.
More than 10,000 companies report their ESG data to GRESB and CDP annually, which costs millions of dollars in compliance expenses – but by offering tools for free, tech leaders can remove the cost barrier for more companies to start tracking and analyzing their output.
It’s this sort of effort tech startups should strive to provide for corporations both large and small. If we can determine the pain point that’s keeping a company from adopting good sustainability practices, we can come up with an attractive solution for that business.
Real estate companies should adopt quick-to-deploy and simple-to-use system built by software experts, as opposed to building technologies that are large, complex, and costly.
Looking Towards the Future
The time may be closer than it appears for how companies report on sustainability. Instead of reporting on a vast array of dubious indicators to a multitude of non-governmental organizations, disclosure could simply take place within companies 10-K or 20-F. Whether or not companies are ready to take the plunge of reporting sustainability metrics in a fully auditable (and enforceable) fashion to the SEC. The jury remains out.