{"id":1004647948,"date":"2023-02-27T06:20:53","date_gmt":"2023-02-27T14:20:53","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004647948"},"modified":"2023-03-22T22:47:57","modified_gmt":"2023-03-23T06:47:57","slug":"how-cre-is-doing-on-esg-focus-of-nyu-conference","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/how-cre-is-doing-on-esg-focus-of-nyu-conference\/","title":{"rendered":"How CRE Is Doing on ESG Focus of NYU Conference"},"content":{"rendered":"
\"\"<\/a>

Savills Board Member Dana Roffman<\/p><\/div>\n

When it comes to the environment and ESG overall, commercial real estate\u2019s glass is half full, but it is also half empty.<\/p>\n

That was a persistent theme of the InnovateESG conference sponsored last week by the New York University Stern School of Business. Executives from investment, finance, government, and tech gathered to discuss commercial real estate’s ESG progress\u2014and the need for more of it\u2014before an audience of grad students from 10 different business schools, including Yale, Columbia, Cornell and, of course, NY.<\/p>\n

\u201cReal estate needs to not be so down on itself,\u201d said AFIRE<\/strong> President Gunnar Branson. \u201cOver the last 20 years, we\u2019ve done an incredible amount.\u201d<\/p>\n

Obviously, commercial real estate needs to do more to reduce carbon emissions. But it should not be just for the sake of the planet, Branson said. It should also be for the sake of the bottom line. With tenants and clients demanding sustainability, environmentally responsible and healthy buildings are winning while others are lagging. \u201cThis is how we make money,\u201d he said.<\/p>\n

Global Divides<\/strong><\/h2>\n

ESG is becoming essential in the U.S., but we are still lagging behind other nations. Europe is way more advanced on sustainability due, in part, to national mandates and consequences. While U.S. cities and states are turning up the dial on regulation, national mandates are not likely here. Another reason that Europe, and Canada, are ahead of the U.S. is their investment horizons are longer, making property owners more likely to invest in the technologies needed to reduce energy consumption and carbon emissions.<\/p>\n

\u201cHow do (U.S.) firms see the payout since our holds are so short?\u201d posed Savills plc<\/strong> Board Member Dana Roffman. London-based Savills, Roffman noted, is working on being net zero for Scope 1 and 2 emissions by 2030 and net zero for Scope 3 emissions by 2040.<\/p>\n

Opportunities and Headwinds<\/strong><\/h2>\n
\"\"<\/a>

CREFC Managing Director Sairah Burki<\/p><\/div>\n

While the U.S. does not have national mandates, the recently enacted Inflation Reduction Act, with its $370 billion of incentives and credits is seen as a tremendous step forward in providing national leadership on the issue, and it will create a lot of impetus for private-sector innovation, according to Sairah Burki, CREFC<\/strong> Managing Director & head of Regulatory Affairs and Sustainability.<\/p>\n

Despite the act\u2019s passage, however, Burki reported, there is a faction in Congress\u2014and at various state levels\u2014that want to limit ESG funds and the consideration of ESG factors as criteria for investing. The bills will probably not pass, though, since Democrats control the Senate and the White House. Meanwhile, she said, considering climate risk has been inherent in credit analysis for some time. \u201cThe anti-woke crowd is now targeting ESG, but ESG will ultimately move forward,\u201d she said.<\/p>\n

Trickle-Down ESG<\/h2>\n

Tenants\u2019 desire to infuse ESG into their business strategy seems to be trickling down to property owners and pushing them to invest in sustainability. Institutions, meanwhile, are showing a preference for assets that were built (or retrofitted) sustainably.<\/p>\n

\u201cIf (developers) don\u2019t build energy-efficient, they will have already built an outdated project,\u201d said Empire<\/strong> State Realty Trust<\/strong> CEO Tony Malkin, the conference keynoter.<\/p>\n

In the debt market, however, the trickle is slower and less direct. A lot of financial institutions want borrowers to make their buildings greener, but the lenders are still waiting for \u201cgranularity\u201d on the subject, said Leah Fisher, senior vice president, Special Projects, Governance & Risk, Arbor Realty Trust<\/strong>. Therefore, without specific directives, borrowers may look for a loophole.<\/p>\n

\"\"<\/a>

ESRT Chairman, President & CEO Tony Malkin and Sam Chandin, head of real estate programs at NYU Stern<\/p><\/div>\n

As a REIT, Arbor must also respond to concerns of ESG-minded shareholder groups. Many of the company\u2019s borrowers, however, own B and C buildings where the viability of green investment is questionable despite incentives.<\/p>\n

\u201cYou still have a divide between what they are paying for and the incentives behind it,\u201d said Fisher. \u201cAt the end of the day, is it worth it?\u201d<\/p>\n

As for the bond market, CREFC is seeing an increase in sustainable financing, but those bonds do not command a premium from investors. \u201cFolks are not paying up for green deals yet,\u201d said Burki.<\/p>\n

When the SEC finalizes its climate disclosures for public companies, including banks, there will be more clarity for lending institutions and borrowers, Burki noted. Meanwhile, the nation\u2019s six largest banks are in the midst of the Federal Reserve\u2019s \u201cclimate test\u201d to measure how the banks would respond to climate-related events. The results will be instructive for all lenders.<\/p>\n

S is for Social<\/h2>\n

ESG is not just about the environment. The industry’s progress on diversity, equity and inclusion\u2014the S in ESG\u2014was also on the table at the conference. In that realm, commercial real estate is becoming more inclusive, but “invisible” biases still exist, commented David Nabwangu, founder & CEO of Ai Spark<\/strong>.<\/p>\n

\"\"<\/a>

Project Destined CEO Cedric Bobo and Ai Spark Founder & CEO David Nabwangu<\/p><\/div>\n

The results of NAREIM<\/strong>‘s “Global Real Estate DEI Survey 2022,” conducted with Ferguson Partners, showed for North America, that respondent companies comprise 57.5 percent men and 42.5 percent women, a 3.7 percent increase from 2021,  but just 25.4 percent of those women war at the board level and 23 percent are at the executive management level. For ethnicity in North America, 64.6 percent of the respondent workforce is white and 31.3 percent are people of color (4.1 percent did not disclose), an almost 8 percent increase from 2021. People of color, however, hold only 9.3 percent of board seats at those companies and 15.6 percent of executive management positions.<\/p>\n

“DEI is seen as separate from business strategy,” said NAREIM Zoe Hughes. “It is not. It needs to be embedded in the business.”<\/p>\n","protected":false},"excerpt":{"rendered":"

InnovateESG featured speakers from from finance, investment, government and tech. <\/p>\n","protected":false},"author":756,"featured_media":1004648188,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21783,21742,21786],"tags":[48602,51896,34345,34107],"class_list":["post-1004647948","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment","category-latest","category-sustainability","tag-arbor-realty-trust","tag-crefc","tag-empire-state-realty-trust","tag-savills"],"acf":[],"yoast_head":"\nHow CRE Is Doing on ESG Focus of NYU Conference - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/how-cre-is-doing-on-esg-focus-of-nyu-conference\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How CRE Is Doing on ESG Focus of NYU Conference\" \/>\n<meta property=\"og:description\" content=\"InnovateESG featured speakers from from finance, investment, government and tech.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/how-cre-is-doing-on-esg-focus-of-nyu-conference\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-27T14:20:53+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-23T06:47:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/02\/Cedric-Bobo-and-david-Nabwangu.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"625\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Therese Fitzgerald\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/how-cre-is-doing-on-esg-focus-of-nyu-conference\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/how-cre-is-doing-on-esg-focus-of-nyu-conference\/\",\"name\":\"How CRE Is Doing on ESG Focus of NYU Conference - 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