Real Estate Investment Trust Enhances Business Resilience With Improved ESG Reporting

This leading retail real estate company recognized the urgent need to address its environmental impact and align with global sustainability standards. The company’s leadership faced numerous challenges in managing greenhouse gas (GHG) emissions across their extensive portfolio of properties, implementing effective reduction plans, and benchmarking their sustainability performance against industry leaders. Their journey towards environmental stewardship needed expert guidance and innovative solutions.

Goal: Enhance business resilience and operational excellence

The client’s primary challenge was developing an accurate and comprehensive GHG emissions inventory. With properties spread across various regions, each with its own set of regulations and environmental conditions, tracking emissions consistently was not a light lift. Additionally, the company needed to establish a robust reduction plan that could be realistically implemented across all locations without disrupting operations or tenant relationships.

Another significant challenge was how to best understand the constantly evolving U.S. REIT market, including how its peers were performing. The real estate sector is increasingly scrutinized for its environmental impact, and this client wanted to improve its ability to measure the competitive landscape. However, the company lacked the tools and methodologies required to assess its performance accurately against peers and best practices within the industry.

The client’s specific objectives included:

• Benchmarking its existing GHG management program against peers
• Reviewing the organizational and operational boundary of its GHG emissions inventory
• Developing scope 1, 2, and 3 GHG emissions calculation processes
• Considering potential software and GHG accounting systems to automate the calculation processes
• Identifying GHG emissions reduction opportunities to meet existing Science Based Targets Initiatives (SBTi) targets
• Holding GHG emissions management strategy development sessions with key leaders

Resolving the challenges

Working closely with the company’s VP of Sustainability and the C-suite, Protiviti began a three-phased approach to accomplishing the goals outlined by the client.

• Developing a greenhouse gas emissions inventory management plan:
   
  • Benchmarking: Reviewed all publicly available information on GHG and ESG for five REIT peers to provide a status of how the client could adopt or improve upon the industry GHG management reporting standard.
  • Data collection and integration: Conducted an audit of existing data sources related to energy consumption and emissions across all of the client’s properties. This included integrating disparate data into a unified system for consistent tracking, while considering potential software and GHG accounting systems to automate the calculation processes.
  • Managing scope: Developed a 38-page standard operating procedure for managing scope 1, 2, and 3 emissions data and performing annual calculations for disclosure in the ESG report.
  • Standardization: Established standardized protocols for data collection, ensuring accuracy and comparability across different regions.
  • Training and capacity building: Conducted training sessions for managers to help with adoption and share the importance of accurate data reporting and how to use the new system effectively.
     
• Creating a greenhouse gas emissions reduction plan:
   
  • Baseline assessment: We performed a detailed baseline assessment of current emission levels to identify key areas where reductions could be made.
  • Strategic planning: Collaborating with the client’s leadership team, we developed strategic initiatives aimed at reducing emissions through energy efficiency upgrades, energy procurement and grid analysis, adoption of renewable energy sources, and sustainable building practices.
  • This resulted in a 7-year GHG emissions reduction plan covering electrification, energy efficiency, renewable energy sourcing, program development, policy development, corporate and executive engagement, employee engagement, and external engagement activities.
  • Implementation roadmap: A phased implementation roadmap was created that outlined specific actions at each stage, along with timelines for achieving targeted reductions.
     
• Global real estate sustainability benchmarking assessment:
   
  • Benchmarking framework: Developed a comprehensive benchmarking framework tailored specifically for the client which included metrics such as energy use intensity (EUI), water usage per square foot (WUF), waste diversion rates and more.
  • Peer comparison and analysis: Using this framework, we compared the client’s performance against industry peers and identified best practices adopted by leading companies globally.
  • Continuous improvement process: Regular reviews were scheduled to periodically evaluate continuous improvement over time.

Delivering results

Over the span of about a year, the client achieved a number of its immediate and longer-term goals. In particular, the company:

• Enhanced data accuracy and reporting efficiency:
  • The standardized GHG emissions inventory management has significantly improved the accuracy of emission data while reducing manual efforts involved in reporting processes (including, but not limited to annual ESG Report and GRESB), substantially saving both time and resources.
• Identified an emission reduction strategy:
  • The company now has a comprehensive, actionable reduction strategy in place that identifies priorities for Scope 1, 2 and 3 emissions reductions.
• Leadership position in sustainability:
  • Rigorous benchmarking practices based on globally recognized standards combined with proactive measures taken to enhance operational efficiencies positioned this client as an exemplary model demonstrating commitment toward sustainable development goals.
• Stakeholder confidence boosted:
  • These efforts strengthened both internal and external stakeholder confidence regarding the company’s dedication to creating long-term value through responsible business conduct.