Stakeholder Engagement is essential to a real estate portfolio – from communication with investors to everyday relationships with tenants and property management teams – and is integral to an organization’s sustainability success. This fact is further emphasized with the GRESB Assessment as 34 points, weighted 24.5% of the total GRESB score, are focused specifically upon Stakeholder Engagement. In this post, we will explore the “Why, Who, What, & How?” to stakeholder engagement as we walk through the elements of an effective stakeholder engagement program.
Engaging to What End, the “Why?”
One of the biggest questions about stakeholder engagement, is the “why”, in other words – what are you hoping to achieve through your engagement efforts?
The purpose for engagement should not be solely for earning “points” in sustainability activities, but rather as a tool to generate meaning, increase relationships with stakeholder groups to let them know we care about the issues important to them, and driving investment performance as a result of these strengthened relationships.
Engaging with the investor stakeholder group through opportunities such as GRESB provides a transparent report on progress, a comparison versus historical performance and against peers, and identifies areas for improvement. This also leads to an open platform to discuss ESG issues and creates a device for aligning investment priorities and strategies moving forward. Similarly, by proactively engaging with employees and tenants, we can further strengthen relationships, instill a shared sense of ownership, and facilitate improved organization outcomes such as improved employee and tenant recruitment and retention.
Fundamentally, engagement is about dialogue, and recognizing that our success is dependent on multiple constituencies. Its about partnerships, and creating open communications and aligned interests where possible.
Identification of the “Who?”
Who are stakeholders? It’s a surprisingly fluid term. One definition – AA1000SES, AccountAbility’s Stakeholder Engagement Standard – defines stakeholders as individuals, groups, or organizations that affect or could be affected by an organization’s activities, products, services, or associated performance. For real estate organizations, typical stakeholders often include investors, employees, tenants, property management teams, supply chain vendors, and the surrounding community.
For any organization, real estate or not, investors are a vital stakeholder group. Recent studies have identified heightened consideration among the investment community of environmental, social, and governance (ESG) issues within the investment decision-making process as demand for responsible investing increases.
But what does this mean to a real estate organization? While investor interest spans a broad range of topics across the ESG spectrum (energy, GHG, water, waste, resilience, etc.), several factors such as sustainability transparency, data coverage, and performance often carry the most meaning. This is demonstrated within the GRESB Performance Indicator scoring breakdown, where data coverage (transparency and coverage) accounts for 8 points and like-for-like performance change 3 points for energy.
Employees, tenants, and property management teams are also key stakeholder groups. Employees are essential to an organization’s performance, and effective engagement can be used to boost employee recruitment, talent retention, and work-life balance. This internal focus first approach is further exemplified by the 2016 GRESB Health & Well-Being Module, which demonstrated that entities are more likely to have internal health & well-being policies for their employees than policies pertaining to tenants, customers, or surrounding communities. Similar to employees, tenant stakeholder engagement efforts seek to monitor and improve the satisfaction of current tenants, improve retention rates, and also attract prospective tenants. Engaging property management teams, whether internal or third-party, is also smart strategy, as they drive the relationship between real estate owners and tenants and oversee the implementation of sustainability best practices.
Clarifying the “What” to Engage Upon
Once the “who” has been determined, the “what” subject matter are you engaging upon needs to be defined. For investors, this boils down to comparable and reliable ESG data spanning all asset types, as transparency and disclosure are valued to give insights into performance. For employees and tenants, the scope of their engagement centers around the occupant experience. “Health”, “wellness,” and “indoor environmental quality” are buzz words that stress the recent attention given to understanding the connection between worker/tenant health and productivity thus improving recruitment and retention. Comparatively, engagement with property management teams tends to focus upon specific needs such as ensuring tenant/occupant satisfaction and collecting sustainability performance data.
Ultimately, “what” engagement means depends on the “why” and the objectives of your efforts. Topic areas can vary by fund investment strategy, property type, geography, or the life-cycle stage of an asset. Designing and implementing an effective engagement strategy will depend on these factors and more, and care should be taken to deliberately think through the objectives of your engagement, the needs of your partners and stakeholders, and then define “what” subject matter takes precedent.
“How” to Engage
The “how” of engagement is where real estate organizations can get creative. There is no one right way to conduct stakeholder engagement, and different stakeholder groups respond best to different engagement methods. Examples of successful engagement include Kilroy Realty Corporation’s Engineer All-Star twitter campaign which featured baseball cards for each building’s chief engineer and various stats including percent energy reduced, years ENERGY STAR certified, and energy efficiency projects implemented. This engagement was extremely successful as recognition is one of the quickest ways to build a relationship between sustainability and engineering teams and generated a bit of an internal competition amongst the chief engineers to see who had the best stats. Another example is Principal Real Estate Investors’ Stakeholder Engagement Toolkit. Part of the sustainability Handbook provided to all property management teams, the toolkit is designed to help property management teams develop their own tenant and community engagement plans by providing requirements and recommendations that can be tailored into a plan that best suits each individual building.
We encourage people to strategically think through the who, what, why and how and deliberately design their engagement efforts.