Real estate organizations recognize the strong business case for incorporating environmental, social, and governance (ESG) factors into their day-to-day business operations with new policies affecting building energy performance, strong returns from cost savings on utilities savings, rising tenant demand, and pressure from investors. However, developing a real estate sustainability program from the ground up is no simple task; it takes thoughtful and thorough work across technical, financial, and market-facing elements to achieve success.

Building on the leading sustainability work that ULI Greenprint member organizations have been implementing since 2009, the recently published ULI Blueprint for Green Real Estate report (the Blueprint) helps real estate owners and investors create or accelerate a sustainability program, and developers looking for ways to integrate sustainability into their overall development strategy. The resource is focused on real estate addressing environmental areas—energy, water, waste, and greenhouse gas (GHG) emissions—while acknowledging that the role of a real estate sustainability program is much broader than it once was, now encompassing topics like resilience, health and wellness, and social equity.

Real estate’s potential for creating positive value for the owners’ own bottom lines, as well as for the environment, is immense and the time to start is now. The Blueprint is laid out to support a firm’s new sustainability lead in building a holistic program from the ground up, starting with data collection and building a team, to addressing topics like climate adaptation and resilience, health and wellness, and social impacts.

Ben Myers (left), vice president of sustainability at Boston Properties; and Sara Neff, senior vice president of sustainability at Kilroy Realty Corporation, speaking at the 2020 ULI Virtual Fall Meeting.

Building the Foundation

In an on-demand session at the 2020 ULI Virtual Fall Meeting, two sustainability directors at Greenprint member companies interviewed one another about creating their own blueprint for green real estate at their respective organizations.

“When you start a program, it’s all about quick wins while laying the foundation,” said Sara Neff, senior vice president of sustainability at Kilroy Realty Corporation (Kilroy), who has been leading the sustainability program for the past 10 years at the real estate investment trust (REIT) that develops, owns, and manages properties on the West Coast. “As you measure success, you get the ability to do more projects and it builds from there.”

Similarly, Boston Properties (NYSE: BXP) started with energy management and built more upon successes. “We started on energy management through the Energy Star program, starting in Boston and New York, then San Francisco, then D.C. That got property managers and engineers thinking about energy performance, which is the gateway,” said Ben Myers, vice president of sustainability at BXP, a REIT that develops, owns, and managers class A office properties across the United States. “From there, we proceeded to LEED, delivering some of the first green buildings in New England.”

Executive Support

At both organizations, ensuring that the executive team was on board was key. For Myers, “What I think solidified the engagement and buy-in from our C-suite was our first materiality assessment. It was actually reaching out and engaging investors, customers, our own employees, and community members about what sustainability issues matter to them and then thinking critically about how those issues impact our business and beginning to develop a strong value proposition for sustainability at BXP. From there, stakeholder interest has just grown. With increasing interest comes increasing buy-in.”

Neff said that at Kilroy, the CEO was clear in wanting leadership in sustainability, but that early on, achieving buy-in was all about showing the business case. The company is now expanding into topics that don’t have a traditional business case like health and wellness or the supply chain.

However, “you can’t ever lose sight of the fundamentals: you still have to do all your energy projects, and water projects, and reporting, as you build,” said Neff. “And I think what we’ve both found is you know when things are going well is when other people in your organization are just doing sustainability stuff without us saying, ‘Make sure you’re doing your sustainability.’”

Sustainability Metrics

Measuring successes was also a key part of the discussion, as both BXP and Kilroy have recently set public sustainability goals. “When you can make a public statement as a publicly traded company, with a real target, that gets people rowing in the same direction,” said Myers about BXP. “I do believe that we need to demonstrate that we have aligned values with our communities. Our communities in Boston, New York, San Francisco, and Washington, D.C.—they are all bullish on achieving carbon neutrality. As a leading developer, we have to speak that same language and be on the same page when we go forward and seek permitting, entitlement, and engage with our community.”

It was also important to Kilroy that real estate play a leading role in the climate conversation, driving the company to set a goal of carbon-neutral operations by 2020. “There is this idea for existing buildings that you can’t go for renewables or offsets until you are done with energy efficiency, which isn’t how it works. You need to do it all at once,” said Neff. “For people who are starting programs—get in there, don’t be shy, you’ll figure out how to get there, there are a lot of tools.”

Neff and Myers also discussed the shift to carbon as a key metric instead of energy use. “Energy, which has a real operating cost, makes sense,” said Myers. “We’ve marked a 27 percent EUI reduction; we can quantify what that means in dollars per square foot in operating costs.” While carbon can be hard to measure or abstract, many stakeholders and partners are interested specifically in climate change and carbon. For both, policy regulations that set carbon standards in major U.S. markets are also driving them to make improvements and helping executives understand the costs of ignoring this issue.

Looking Forward

As for future plans, both Kilroy and BXP are looking to define and address scope-3, or the indirect emissions that occur in the value chain of the reporting company, such as the supply chain or employee travel. While often difficult to measure, both Neff and Myers look forward to collaborating on this topic and many others in the future as they continue to develop their program of work over the course of time.

According to Marta Schantz, senior vice president of the ULI Greenprint Center for Building Performance, “These two Greenprint member sustainability programs showcase what is possible for the real estate industry when we collaborate around shared goals, shared best practices, and shared successes. Distilling expertise from peers in the Greenprint community of practice into the Blueprint is another way to broaden industry knowledge and accelerate industry movement on reducing carbon and building value across a real estate portfolio.”

Learn More

To promote key lessons learned from the Blueprint, ULI Greenprint is hosting a series of webinars. The first webinar, “Blueprint: Building the Foundation of a Sustainability Program,” starts on January 22, 2021, and features Jonathan Flaherty, senior director of sustainability and utilities at Tishman Speyer, and Elena Daniel, vice president of ESG and corporate affairs at CenterPoint Properties, discussing how to develop an initial vision for a sustainability program, obtain buy-in, and define successes at a specific organization.

Register here for the first Blueprint webinar. Register here for the full series of webinars. Read the Blueprint at uli.org/greenprintblueprint.