The Missing Link: Rewarding Tenant Engagement In Sustainability Benchmarking
by Ayumi Shimizu, Energy & Sustainability Consultant, CBRE GWS
A common theme amongst various sustainability benchmarking frameworks, such as the Global Real Estate Sustainability Benchmark (GRESB), and the Global Reporting Initiative (GRI), is the weight placed on working with tenants. More specifically, landlords are now expected to capture and report on tenant energy use if they wish to achieve top scores.
Landlords often have little operational control over how much energy a building consumes. But long gone are the days where a landlord’s responsibilities lay only in areas under their control. To be seen as a responsible landlord and a leader in sustainable performance, you are now expected to know the energy use across your whole portfolio.
“To be seen as a responsible landlord and a leader in sustainable performance, you are now expected to know the energy use across your whole portfolio.”
This unsurprisingly makes life for landlords more difficult. The heavy administrative burden and the task to convince apprehensive tenants to share their data may appear daunting; however there are greater benefits for both parties besides a good score. Landlords will be able to accurately benchmark energy use for whole buildings with the full building data set, and use this information to engage with tenants to improve the efficiency of their space. Tenants lacking insight into their own energy consumption can use this to better understand their energy costs and increase efficiency. Landlord-tenant relationships will also improve as both parties align their interests. This ultimately translates to a better-performing, more sustainable building; enhancing asset value, and contributing to increased tenant satisfaction and retention.
Tools such as green lease clauses that include sharing of environmental data between landlord and tenant, or installation of sub-meters can help this process. Such clauses are already on the rise in standard contracts and will lead to a new industry norm.
GRESB – a leading global provider of environmental, social and governance (ESG) benchmarking for real estate funds – has designed its survey to clearly distinguish between managed- and indirectly managed- assets. This methodology helps to understand and accurately assess the limitations in the landlord’s ability to manage an asset. However, this appears to not yet align with their scoring system. To date, GRESB have not assigned a greater score weighting to tenant data. If more resources are spent in retrieving tenant information, participants should be rewarded for this.
“As sustainability benchmarks continue to develop, it is encouraged that greater credit is awarded to those landlords who engage with tenants.”
As sustainability benchmarks, such as GRESB, continue to develop, it is encouraged that scoring criteria evolve to a system whereby greater credit is awarded to those landlords who demonstrate efforts to engage with tenants. This would not only enable landlords to gain a more complete understanding of the sustainability impacts of their portfolio, but would incentivise those landlords who are not currently doing so to follow suit.
