Putting Your Best Foot Forward with Investors: Reporting CRE ESG Data in Four Steps
We’ve entered a new era of sustainability reporting, one characterized by the need for high quality, context-based, decision-useful information. Having clear and concise data helps improve decision making, accelerates the accomplishment of goals and enables transparency across organizations and stakeholders, including investors.
The importance of investors’ scrutiny of a company’s ESG profile continues
to increase. For example, the S&P Global recently announced its approach to assessing ESG in its credit
ratings, and environmental risks & opportunities play a large role in
creditworthiness within the financial market. Therefore, engaging with
investors to determine the desirable quality of data is imperative to success.
Data isn’t just numbers though – it can be any type of information that is
useful for driving a decision for investors.
Let’s explore four ways in which commercial real estate professionals can approach ESG data collection to ensure quality and that they’re putting their best foot forward with investors:
Determine if the information is material to your company. Does it reflect an authentic sustainability program? Is it relevant to investors? Remember, quantity of information is not as important as quality.
2. Consistency & Availability
Provide an appropriate level of granularity of data in a reliable format that is easily accessible (i.e. where investors are already looking, like a company’s 10k report or sustainability report like GRESB or CDP) and ensure it’s consistent across all frameworks. Report information in a frequency that’s appropriate for monitoring and shows progress toward an objective. For example, if a CRE is going to disclose tenant engagement data, then it should collect the same material data and ask the same questions with the same frequency to ensure data gathered is consistent year-over-year to track progress.
Qualitative information is just as important as quantitative information. Numbers by themselves aren’t incredibly useful, especially to external groups that don’t have domain knowledge to understand why a data point is impressive or alarming. Additional context into how a sustainability metric connects to your business performance and values provides your investors with a more accessible way to leverage your ESG data in their decision-making process. Context can also mean being honest about where a company is at in its overall journey. Your sustainability program may just be getting started with basic data collection or you might be expanding an aggressive climate resiliency program to critical infrastructure. No matter where you are in your organization’s journey, own it and tell the story authentically. Emphasize the business case to why it’s important to start this program by showing how it links to risk management, resilience and business growth. The Global Reporting Initiative (GRI) is a great framework for helping to craft your unique narrative.
Eliminate future risks down the road. Share your sustainability story on your own terms, rather than allowing investors to craft their own narrative. Get to know what shareholders look for and don’t assume that all investors care about the same things. Share your sustainability story in a few ways either by joining your investor relations counterpart on an ESG themed roadshow to promote the company/brand, hosting an ESG day, or providing investor relations with more consistent internal updates and training on what you are sharing.
To get started, a few frameworks to align with could be the Sustainability
Accounting Standards Board (SASB), the Investor Network on Climate Risk (INCR),
or Global Reporting Initiative (GRI). Also, there is pressure on federal
governments to better define what a consistent framework to disclosing this
information is – familiarize yourself with SEC standardization or the EU taxonomy language that provide a common language for ESG
The importance of quality data cannot be understated. Data collection ultimately mitigates risks and drives business value. The days of simply reporting are long gone and has transitioned into a state of further action on what company’s report. Collecting and reporting are not enough. The resilience module in GRESB now exists which requires companies to convert the data collected into meaningful actions. Translating quantitative data into purposeful relative metrics increase value for the business and investor community. ESG metrics are increasingly used for access to capital and often reduce risks. Watch our recent webinar with Ceres which unlocks a view into the minds of investors and what they’re looking for in companies with ESG data. Walk away with a roadmap to tackle challenges and crack the code on ESG ratings.
This article is written by Nathan Shuler, Sustainability Solutions Architect, Schneider Electric
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