Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position. Please refer to official GRESB documents for assessment related guidance.
Just as the COVID-19 pandemic has made us rethink health and wellness for our employees, tenants and buildings, so should the recent social unrest surrounding racism and police brutality help us to reflect on diversity and inclusion (D&I) efforts within our organizations as we make progress toward achieving our environmental, social and governance (ESG) goals. The growing consensus is that racial injustice makes sustainability impossible.
The interconnectedness between racism and environmental inequalities has been established for some time now, but capital markets are now paying more attention. Large institutional investors are already looking to integrate racial equity and justice into their investment decision-making. A McKinsey report showed that gender diversity in management positions leads to higher profits and companies with more culturally and ethnically diverse executive teams were 33% more likely to see better than average profits. In addition, the CRE industry outlook by Deloitte found that 86% of investors believe that more diversified company boards help generate better returns.
The real estate sector is uniquely positioned to help advance racial equity and better D&I practices, not just as an employer, but also as a landlord, a community steward, and a place maker. Despite a reputation as a legacy, family-first industry for predominantly white male leadership (more than 75% of senior executives), real estate companies are increasingly embracing the value of hiring teams and implementing practices that reflect the diversity of the tenants and communities in which they operate. There are notable organizations, such as the NAACP, working at the intersection of real estate, sustainability, and social equity. Their Centering Equity in the Sustainable Building Sector Initiative (CESBS) works to ensure a just transition for communities and promotes, “sustainable building policies and practices that produce equitable access, opportunities, treatment, impacts, and outcomes for all, regardless of identity or status.”
Client programs and commitments
Our clients, who are industry leaders, have been proactive in advancing D&I within their organizations, across their industries and in their communities.
For over 10 years, Clarion Partners has gained valuable insights and experience through sponsorship, mentorship, recruitment, and leadership with industry associations and initiatives that support women, minority and diverse employment and leadership in commercial real estate and finance. In addition to hosting its own internal Women’s Leadership Network, the firm supports many external organizations including the PREA Foundation’s Real Estate Track initiative with the Sponsors for Educational Opportunity (SEO) program, WX Women in Real Estate, Cristo Rey Foundation and the Robert Toigo Foundation.
In 2017, building upon over four years of success with their Women’s Leadership Network, PGIM Real Estate established an Inclusion and Leadership Network (ILN) to expand their focus to diversity across gender, race, ethnicity, sexual orientation, economic and geographic background. PGIM Real Estate believes that integrating the goals of the ILN into their employee engagement programs and business strategy makes them better investment managers and will help the company achieve its strategic objectives. PGIM Real Estate actively promotes equal opportunities for women, people of color, opportunity youth and LGBTQIA+, and is an influential voice, sponsor, mentor and recruiter in diversity and leadership organizations such as PREA, SEO, the Robert Toigo Foundation, Girls Who Invest, the Knowledge is Power Program (KIPP) and Youthbuild International.
Actionable ways to revamp your D&I efforts and culture
The silver lining of the national upheaval and interest in racial justice is the plethora of resources and best practices that are being shared between and within organizations to help advance more diverse and inclusive workplaces and communities. Here are some things to consider within a multi-faceted approach to improving your D&I performance.
- Recruitment: Building a talent pipeline and hiring culture that authentically values diversity, including at the senior leadership and board levels, is an essential way to start operationalizing a D&I culture. Analyzing hiring data, pay equity and turnover rates among different diverse groups at different levels will present a holistic view of your company’s performance. Beyond scholarship programs and summer internships, how will these diverse entry-level professionals advance in an organization with little-to-zero diversity at the top? Diversity is shown to lead to more diversity, starting at the top.
- Mentorship and support: Another way to address retention challenges and a lack of diversity at senior leadership levels is to consider mentorship programs to help diverse up-and-coming talent prepare for leadership roles. Employee Resource Groups (ERGs) have become a popular way to build internal communities of support, but it’s important to not overly rely on your employees to advance inclusion. Tracking and understanding the various reasons why female, black, LGBTQIA+ and other diverse colleagues leave in the first place will help you develop tailored support programs and initiatives that are needed to retain this key talent.
- Training: According to a recent BCG survey, half of all diverse employees stated that they see bias as part of their day-to-day experience at work, where they don’t believe that the right mechanisms are in place to ensure that key decision-making is free from bias. Unconscious bias training, when implemented thoughtfully and regularly, can help bring more awareness to this pervasive challenge.
- Policies and communications: Antidiscrimination, antiharassment, and D&I policies can be important vehicles to clearly communicate your company’s values and signal the seriousness of noncompliance within your organization. Needless to say, following the policies themselves and acting swiftly when problems arise are important to earning trust and confidence among diverse employees and stakeholders. Recent statements from CEOs across various industries about Black Lives Matter and improving organizations’ performance in D&I have been applauded, but it’s important to not consider this as a “one and done” effort. Corporate communications teams have a large, influential role in shaping and reaffirming your company’s narrative on these issues on an ongoing basis.
- Programming and events: Consider hiring more diverse speakers and experts to present at your trainings and workshops who can offer new perspectives on various topics. Recognition of and participation in external events such as Pride Month or Juneteenth help reaffirm your organization’s commitment to its diverse employees, communities, and underrepresented celebrations.
- Tenant engagement: Beyond your own employees, how are you promoting a built environment that values diversity and inclusion for your residents and tenants? Supporting women and minority-owned organizations as tenants might need different resources and mindsets. Property management teams can be trained and re-tooled to better serve diverse stakeholders.
Verdani is a Women/Minority Business Enterprise (WMBE) and we are very proud of the diverse team and inclusive work culture we’ve fostered over the years. It is important to emphasize that we took deliberate, conscious measures to build and grow this D&I mindset as part of our wider business strategy—it did not happen overnight or with just a simple policy. We sought out candidates from different professional backgrounds, who could speak other languages, and those who have experienced different places and cultures around the world to help us achieve our long-term goals and purpose. As a result, 55% of firm identify as people of color (POC), 85% of our firm is comprised of women and POC, and 78% of women and POC are in upper management. Leadership teams should be laying the groundwork for a robust D&I framework today while accepting that the fruit of this labor will take time, especially if done thoughtfully.
During this period of hyperawareness and calls for transparency, the importance aligning and implementing concrete action plans with the aspirational stories of your corporate communications and leadership teams cannot be understated. We must hope that our collective diversity and inclusion objectives and practices can help bring about a more just and equitable society.
About Verdani Partners
Verdani Partners is an award-winning full-service sustainability and ESG consulting firm with over 800 million SF across 4,300 properties in 11 national and international real estate portfolios with over $650 billion in assets under management. Our team members speak many languages including Portuguese, Hindi, Mandarin, Cantonese, Arabic, Japanese, Tagalog, French, Polish and Spanish. We believe our culture of diversity and inclusion makes our team more creative and resilient. Contact us about your ESG program management, green and healthy building certifications, and GRESB reporting needs. www.verdani.com