How multifamily firms are approaching sustainability is changing rapidly. For years, sustainability was more or less code for energy management. However, it’s broadening to encompass environmental impact, social responsibility and governance. And everyone-from investors to residents-are asking for it. During a panel discussion at the 2015 NMHC OPTECH Conference & Exposition, four multifamily executives offered up three important takeaways when it comes to sustainability.
Participants included Lou Schotsky, vice president of investments for Equity Residential; Mark Delisi, senior director of corporate responsibility for AvalonBay Communities; Hayley Schulist, sustainability coordinator for Balfour Beatty Investments; and Tom Spangler, president of Tomcin Ventures.
- The scope of sustainability is growing. It’s no longer just about being green and reducing environmental impact; it’s expanded to also include social responsibility and governance. All companies are being held accountable for their impact on their communities and environment. That pressure is coming not only from stakeholders like investors and residents but also local, state and federal governments who are ready and willing to legislate on the issue.
- Transparency is paramount. There’s a trend in the investment world to be sure companies are investing responsibly, so many multifamily firms are upping their reporting and responding to intensive and comprehensive surveys focused on identifying sustainability indicators. Many are already participating in the global reporting initiative (GRI), carbon disclosure project (CDP) and GRESB, as well as making strategic decisions to develop to standards such as LEED or Energy Star. These programs have high visibility and wide name recognition, which helps companies communicate their sustainability efforts while providing standardized measures of commitment and performance.
- New sustainability technologies are providing financial benefit. While sustainability is the right thing to do from a holistic perspective, investing in sustainable technology is also proving to be a powerful strategy for reducing costs and increasing asset performance-the proverbial double bottom line for investors. Recent technology winners include smart irrigation systems, which Balfour Beatty estimated cut water usage 60 percent (versus an estimated 40 percent). Similarly, a resident behavior program that texted or emailed residents when electrical usage reached a certain level proved successful in reducing consumption by 15 percent without any retrofits-a big win for the military housing provider given that federal housing allowance limits the company’s ability to recoup tech investment costs by passing on costs to residents.
However, Spangler said retrofits can be the way to go when introducing new sustainability technologies into properties. “If you are already going to do something like replace the car ports, replace them with solar. So you’re looking at just incremental costs that you need to finance,” he said. That’s a strategy a number of companies are following to roll out technologies like smart thermostats and LED lights across a portfolio.