ESG Is Also a Good Idea for Saving Money

In a previous conversation with GlobeSt.com, Sudhi Sinha UL’s vice president for Ecosystems and Service Development, and Lauren Alexander, an ESG program manager with UL’s ESG Advisory and Assurance Team discussed how building systems fall down on tracking ESG data. And that ESG data is critical for CRE.

“ESG is largely driven by investors or your business partners,” according to Alexander. “It’s driven by regulation and legislation as well as society as a whole. So, when we’re working with our clients in real estate, they’re largely concerned with what investors want to know. And investors want to know how your real estate portfolio is performing in comparison to your competitors in comparison to their other portfolios they’re invested in.”

But there’s another aspect of ESG. Not as something to be done to make investors and regulators comfortable, but to cut costs and make buildings more profitable. “From the real estate standpoint, you’re looking at your bottom line, your operational costs,” Alexander says. “That’s a reason to use these smart technologies like building automation systems. Building automation systems … really help all of the equipment talk to each other. Building engineers are looking at these systems, trying to make those minute adjustments to make the building as efficient as possible.”

To make operations more efficient, the data is critical. Technology can be an issue. It’s not enough to take periodic readings from spaces. Building engineers real-time data monitoring of equipment.

“That’s where you can see minute by minute interval data so that building engineers instead of looking at trends over a longer period of time, can make adjustments based on looking at it by that interval,” Alexander says. And some technology intended for ESG monitoring can miss information, either because of the way it’s designed or used. “If you’re looking at data from a very manual standpoint, you’re keying invoices into something like Energy Star portfolio Manager, which is an EPA tool, you don’t always get to see the trends,” Alexaner says. “You have to wait to see what’s happening with your building over a period of time where smart technology allows you to track those systems more granularly so that you can make adjustments more proactively to build efficiency of the building.”

And there are other considerations that can hinder the data collection. For example, leases a real estate firm decides to use with their properties. “If you had a triple net tenant, the tenant would be responsible for the operations of the building. You can’t always get that data unless the tenant is cooperative.” (This is the second of a two-part conversation.)