4 W’s of ESG management & reporting leadership: “Why”, “What”, “Who”, “When”.
Why: Set Goals, Define Success
The very first question you need to ask yourself as you consider an ESG strategy is “Why”. The answers you discover for this question will sculpt the path your strategy will take. “Why” will define what success in your endeavors looks like, from tangible outcomes like reduced environmental impact and decreased spend on utilities to those that are more difficult to measure, like improved well-being of employees and tenants.
Input for the answers to “Why” should come from those who will be affected by the successes and shortfalls of your strategies, such as stakeholders and others that are invested in the outcomes. These voices will play a large role in shaping how success is measured, what the end goals are, and the paths that will be taken to achieve them.
What: Map Your Route
Now that you’ve defined “Why” you’ll be implementing your new ESG strategy, you need to figure out “What” you’ll actually be doing. An important first step is to identify where you stand now; this will provide a foundation and benchmark for you to build off, and can help narrow down the path your strategy will take. Comparing your current standing with your idyllic, future situation will also quantify and visualize the distance you have to travel to reach your goals, and allows you to realistically plan.
For example, if one of your goals is to increase your portfolio’s average ENERGY STAR rating by 20 points, you’ll need to know the current rating and then calculate the time it would take to realize your goal. It seems unlikely that you could make that large of an improvement in a single year, but setting a longer-term, realistic plan (e.g. “gain 5 points per year for the next four years”) will allow you to eventually accomplish your goal.
Sustainability reporting and benchmarking frameworks, such as GRESB, can provide a strong foundation that can help guide your strategy through its nascence and early stages. If you’ve submitted to one of them before, you can use those submissions to improve year-over-year. The results from your submissions allow you to identify the strongest parts of your submissions and pinpoint weaker areas; uncovering areas that have historically performed poorly allows you to focus more heavily on them, which provides opportunities to improve your scores.
Who: Build Your Team
After defining “Why” you’re doing this and “What” you want to accomplish, the next question to answer is “Who”. This is where you identify key team members, stakeholders, and anyone whose participation would be a benefit to your ESG strategy implementation. These can be people throughout your organization, from high-level executives with the power to make decisions and enable others, to individual employees who can take the lead on implementing property-level initiatives and strategies to positively affect results.
For more focused strategies, such as property-level initiatives, that you plan to implement, there are benefits to considering how building occupants, such as tenants and employees, will be affected any changes. Providing open channels of communication with building occupants will give them a voice in the decision-making, strategizing, and implementation. These alternate points of view may uncover new avenues to success for your strategies that hadn’t been considered before. Also, including these groups will increase the feeling of community and well-being within the buildings themselves.
This is also the right time to consider whether you want to keep the effort in-house or outsource the strategy creation process to a consultant. Creating and implementing an ESG strategy is a hands-on effort and requires a large time, resource, and labor commitment. Utilization of consulting companies can remove the necessary burden from you and your employees, freeing up that time for more pressing and urgent tasks.
The When: Start Early & Outperform Your Peers
Now that you’ve got your purpose (“Why”), your plan (“What”), and your team (“Who”), you’re left with only one question: “When” do you begin? The answer to this question is fairly simple: right now!
ESG is a marathon, not a sprint; now that you’re ready to start, you’re in it for the long haul. Because of that, it’s never too early to start implementing your new ESG strategy. The sooner you begin, the sooner you’ll see the results, such as decreased utility usage, increased sustainability scores, and improvements for your employees, tenants, and organization as a whole.