Sustainability Reporting for Commercial Real Estate
This “Sustainability Reporting for Asset-Level Commercial Real Estate” blog post is part of a series on sustainability reporting. Be sure to sign up for EnergyWatch’s newsletter to be notified of future postings in this series.
There are many factors that drive companies to implement sustainability reporting. For some, the sole purpose may be to abide by new legislation and avoid fines. For commercial real estate companies, however, the purpose of sustainability reporting has largely been driven by the value it offers. Aside from sustainability reporting being sought after by investors and stakeholders, certified green buildings have shown to add property value. In EnergyWatch’s sustainability reporting blog series, we’ve reviewed some mainstream and investor-focused sustainability reporting frameworks, but now we are going to focus on sustainability reports/certifications specifically built for the commercial real estate industry. From LEED Arc to Fitwel to the WELL Building Standard, the sustainability reporting frameworks and certifications available to the commercial real estate industry vary largely in purpose and requirements. Read on for more information about each sustainability reporting framework, how they can add value to commercial properties, and best practices for standardizing your sustainability reporting processes.
What is LEED Arc?
As the most widely used green building rating system in the world, Leadership in Energy and Environmental Design (LEED) provides a framework for healthy, highly efficient, and cost-saving green buildings. Obtaining a LEED certification shows a globally recognized symbol of sustainability achievement and leadership. In comparison to WELL Building Standard and Fitwel, LEED currently is the most popular, with over 80,000 projects certified to date. There are numerous economic, health, and environmental benefits that come with a LEED certification. To name a few:
- Gain an edge against competitors through market differentiation
- Attract quality tenants that bring premiums/higher rent
on operational costs – From 2015-2018, LEED certified buildings saved:
- $1.2 billion in energy costs
- $149.5 million in water costs
- $715.3 million in maintenance costs
- $54.2 million in waste costs
- Increased employee productivity, higher recruitment, and retention rates
To help participants achieve a green building certification with LEED, they developed Arc; a tool to help manage buildings’ performance data and allow scoring based on this performance. Arc analyzes data from many sources, including energy, emissions, water, waste, transportation, and human experience to provide scores and insights. Arc has various partnerships with technology providers, including EnergyWatch’s platform watchwire, that help to scale their platform, automate, and streamline data collection to discover potential LEED certifications and meet LEED requirements.
How about the WELL Building Standard?
Created and managed by the International WELL Building Institute, the WELL Building Standard is a performance-based system for measuring, certifying, and monitoring features of a building’s environment that may impact human health and wellbeing. WELL’s rating and certification system is modeled after LEED, but with a stronger focus on human wellbeing in relation to buildings they work in, rather than environmental sustainability. Their performance-based system was originally constructed around seven core concepts to measure, certify, and monitor the working environments of the participating buildings. In 2018, WELL released their second version (v2), expanding the core concepts to ten. The ten core concepts in WELL v2 are Air, Water, Nourishment, Light, Movement, Thermal Comfort, Sound, Materials, Mind, and Community. Each of these concepts contain additional certification requirements in a list totaling over 100 total metrics. Benefits that are received through a WELL rating expand from companies to their employees:
- Increased business prosperity through employee satisfaction and productivity
- Attract investors
- Potential betterment to employee health: lower blood pressure, cleaner breathing air, and lowered risk of illness
- Appeal to better talent for hiring
With over 4,000 projects registered through the WELL Building Standard, it continues to grow in popularity and investor attraction.
Lastly, what about Fitwel?
Fitwel is another building certification system created in partnership between the Center for Disease Control and New York’s Center for Active Design (CfAD), Fitwel is committed to “building health for all” by focusing their certification around the health and wellness of buildings, similar to the WELL Building Standard. The CfAD, as the officially licensed operator of Fitwel, has since expanded to 180 countries worldwide. Unlike WELL, Fitwel’s certification scorecard is based on a 3-star scale, taking into consideration over 50 different design and operational strategies that enhance buildings by addressing a broad range of health behaviors and risks. Some of the factors considered in scoring are location/distance from public transit, outdoor spaces available, indoor air quality, the water supply, and vending machines/snack bars. A few benefits that obtaining a Fitwel certification offer are:
- Signals to tenants’ employees and investors that you prioritize wellness within the design, development, and operations of buildings
- Ensures others your company is on the next frontier of sustainability practices
- Improve the health and wellbeing of employees and tenants, thus increasing productivity
While the popularity of Fitwel continues to expand, it currently has the least number of projects of the three frameworks, with just over 1,000 to date.
Sustainability Reporting Best Practices
It is evident that commercial properties can benefit from each of the various sustainability reporting frameworks and certifications through increased savings, property value, and tenant satisfaction. However, juggling the competing frameworks and lack of a standard makes the reporting process challenging. To most efficiently assess and complete your organization’s sustainability reporting needs, it is important to:
- Determine your reporting audience – who will be reading the reports? Investors? Potential tenants? Employees?
- Streamline your sustainability data collection required for all reports
- Automate your reporting process as much as possible, while remaining adaptable to the changing landscape of reporting
Of course, the last two are easier said than done. EnergyWatch can help streamline, automate, and standardize your sustainability reporting process through our cloud-based energy management software, watchwire. The platform stores and analyzes all your energy, water, waste, and emissions data, providing a single source of truth for your organization. With multiple integrations to LEED Arc, GRESB, and more, standardizing your sustainability reporting process is made possible.