At Oxford, we’re on a journey to become a leader in providing investment grade ESG data to make the most accurate investment decisions. Current and upcoming regulatory requirements demand accurate ESG data, capital markets increasingly need it to properly assess risk, and customers want to see the evidence of a buildings ESG performance. We believe investment grade ESG data is able to unlock value. Sustainability performance can drive operational efficiency, inspire retrofits, richer customer experiences, and attract investors.
That’s why we talked to Measurabl’s Co-founder and CEO, Matt Ellis, who joined our team to discuss ESG data as part of Oxford’s monthly ESG sessions where we learn, collaborate and share best practices with global thought leaders in the ESG space.
Here are our three major takeaways:
1. Goodbye Green, Hello ESG
The ESG era is upon us. In the preceding ‘green’ era, commercial real estate firms could voluntarily track their own self-reported or incomplete data as a faculty of their marketing stack and be met with praise. Those days are long gone. ESG is now integrated into the operation and investment chain, not to be used simply as window dressing, but something that is trackable through reliable data. For firms to attract the best customers, create the best experiences, and have a real impact on their community, they must provide assured and audited data. Platitudes and inaccurate declarations now have consequences. In recent years headlines have been made as companies have faced serious regulatory discipline for inaccuracies.
We are entering into a climate where sustainability metrics will be scrutinized as heavily as financial statements. We have reached the inflection point where customers, operators, and regulators are demanding transparency. The most measurable way of meeting those demands is through data, but what makes for quality data?
2. What gets measured gets improved
So, what gets measured? Just because you are tracking data does not necessarily mean you are making an impact. To track the right data, you must focus and prioritize three major buckets of data:
● Quantitative: These are the tangibles such as utilities, carbon, chilled water, steam and climate risk exposure
● Qualitative: How you bring ESG across everything you do in your processes and procedures. This includes policies, procedures, executive compensation, governance, tenant engagement, green leasing among other operational and strategic aspects.
● Relative: Benchmarks to find environmental comparables across assets, portfolios, capital markets, and geographies)
If you have all three, you have data competency across your ESG efforts.
Now to develop investment grade data you must apply the same concepts from finance to ESG.
Those being:
● Timeliness: All leveraged information needs to be recent and relevant.
● Completeness: Accessing all aspects of the data to give us a complete and thorough understanding of portfolios.
● Accuracy: Less estimates and more actual data.
● Lineage: You need to know where the data comes from and what was the chain of custody when gathering that data.
3. Meter to market
Real estate is a business of brick and mortar, but equally important is debt and equity. Without it you wouldn’t be able to buy/sell, retrofit buildings, and improve customer experiences. That is why it is critical we consider sustainability throughout each value proposition across the business from appraisal, leasing, operation, and investment. Reliable, rapid, and repeatable data must be able to be pulled across the entire business.
Debt and Equity has spoken – risk cannot be properly assessed without precise sustainability performance data. This has signaled a paradigm shift to capital markets. Capital markets, particularly lenders, will be taking a much more assertive role in the shift to sustainability. There is a rise in green lending programs that incent sustainability performance for individual assets. For us at Oxford we launched our Green Financing Framework in 2022 and our inaugural $600M issuance of green bond proceeds are being put to work to fund ESG strategies including our decarbonization programs.
As regulators, customers, and investors begin to demand more measurable data we’re getting ahead of the rapid change required from the real estate industry to maintain a competitive advantage.