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Commercial Real Estate’s ESG Push Has Industry Fighting Over Talent

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Corporate America Push ESG investment Given the need to protect valuable resources and reduce carbon emissions, but for commercial real estate companies looking to expand their workforce in anticipation of more regulatory and reporting requirements, One might be someone with the right analytical experience and skills. .

Marta Schantz, co-executive director of the Urban Land Institute at the Randall Lewis Center for Sustainability in Real Estate, said: “Everybody wants to do more on climate change, but we don’t have enough staff to do it, so she has to cover all the different aspects of ESG. You can’t be an expert.”

As real estate companies increasingly rely on emissions reporting, ESG professionals will be in high demand.

Increasing local carbon emission reduction regulations New York City Local Law 97 and Boston’s Building Emission Reductions and Disclosures Act are increasing the need for skilled sustainability professionals at all levels.

Companies and property owners deploying proptech to measure emissions in their portfolios and more personalized answers to challenges such as electrifying older buildings and meeting the Securities and Exchange Commission’s upcoming climate risk disclosure requirements. I am looking for

As these rules and regulations are enforced and standardized and their technical expertise becomes more complex, ESG and sustainability professionals will participate in transactional due diligence, block-level and even building-level You have to understand the risks. Abnormal weather.

As government regulations become more comprehensive and sophisticated, companies will be expected to report emissions and energy calculations with the same rigor as they report financials.

Currently, 80% of S&P Fortune 500 companies submit detailed annual emissions and sustainability reports to the Carbon Disclosure Project (CDP), an international non-profit organization that monitors environmental performance and compliance.

“We are still in the early days of good environmental data for commercial real estate. It’s becoming a necessity now.”

ESG analysts are benefiting from industry growth, Schantz said. Salary is higher than he was five years ago and demand has led to aggressive hiring at all levels, including Head of Sustainability, his ESG roles within the company, property managers with ESG skills, and professional consultants. is taking place.

Internal positions are often pulled from consulting firms, Schantz said, and many employees are recruited directly from schools if they have experience in real estate or sustainability. The most common role is that of a data analyst meeting growing reporting requirements.

Investment firms are also vying for management, as British firm ICG did in May. Elsa Paranza Leading ESG efforts from Barclays. 2021, KKR Seduced Blackstone’s Global Head Blackstone itself has been busy expanding its ESG staffing.

This mass hiring is in stark contrast to the ESG backlash felt by companies like Blackstone and the pressure on this type of investment approach from some conservative legislators.

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Simon Fischweicher, Head of Corporate and Supply Chain at CDP North America, said:

Simon Fischweicher, CPD Head of Business and Supply Chain, said despite the backlash, it was clear business and real estate were moving forward. Many companies are preparing “uphill” to prepare for the SEC’s reporting requirements.

“I think it’s clear that the corporate sector, investors and customers are moving forward,” he said.

“How does your asset affect climate change? It can certainly be a very political statement,” said Tony Liu, President of Partner Energy. “But another statement is how climate change will affect your assets. Many can argue about the former, but not the latter.”

In many ways, real estate has been at the center of the broader ESG movement, helping the industry develop more talent and experience than any other sector of the economy. For many companies, the first step in their ESG and sustainability strategy has focused on real estate. CPD’s Fischweicher said even the financial sector is really starting to look at emissions and sustainability through the lens of property and facility management.

But its expertise is evolving. Today’s analysts are not only reducing emissions, but also achieving net-zero buildings, including working with material suppliers, which are likely to have their own sustainability teams, and embodied The focus may be on finding ways to reduce carbon. According to Liou, demand for this information about upcoming transactions is growing, and buyers and sellers expect the scope of data collection to expand during due diligence.

Schantz has a history of hiring and recruiting ESG professionals, including Lendlease Americas, which has a large team that allows for more analysis and project management, and JBG Smith, a DC-area REIT with a relatively large team. We mentioned some companies that stand out for .

Consultants aren’t going away, according to experts, despite the growing number of in-house roles across CREs. Many believe that verification and certification of energy audits has a role. Demand will skyrocket as companies seek third-party verification of their sustainability data. And as companies strengthen their sustainability teams, they tend to hire consultants to supplement their work and develop internal strategies and workflows.

There is a growing suite of software for measuring performance and emissions, but they themselves require consultants to scrutinize the technology and help with installation and operation. Comly Wilson, his Enertiv marketing director at a company that provides technology solutions for measuring energy and emissions, said automating the data-reporting process was essential to increase the level of time and accuracy. said it would be.

“ESG consultants are hiring continuously,” says Schantz. “Not only because their staff is being poached by an in-house real estate company, but because their workbook continues to grow.”

Schantz does not expect the shortage to be resolved anytime soon. When SEC rule changes call for a full set of risks, the vast majority of companies will find themselves unprepared and “rushing” to find talent.

“We see this talent shortage across the board. It’s a reality,” Wilson said. “Whether it’s an ESG consultant or an architectural engineer, it’s a serious problem, and when portfolios are forced to do more, when less people do it. is.”

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