There are two sides to ESG: the good-intents side where everything possible will be done to make a difference, and the reality side where what can actually be done has limitations. The real estate industry has reached the point where the intents side has been wonderful and hopeful, but it’s time for results. People want to know if things are changing or if it’s all just greenwashing, when companies make deceptive or unsubstantiated claims about how what they’re doing is making a difference.
The only way to truly find results is through data. The real estate industry has been gradually increasing the data it uses to operate. This can be seen in economic and market data for real estate acquisition via brokers, or understanding how workers use an office’s space to make it appealing to return to, or monitoring access control and visitor management to optimize residential buildings, or integrating occupancy sensors with HVAC and lighting to minimize wasted energy. There are so many sources of data in real estate.
Getting ESG data is one challenge, but managing it and making it useful are yet two others. The type of data collected matters in relation to ESG, too. The E in ESG, environmental, is much more quantitative and possible to collect than the S (social) and G (governance) pieces of the initiative. We’ll focus on the E.
First, data collection
These days there is no lack of data aggregating solutions. The IoT has been around for over a decade and is quite built out from hardware like sensors to software like that which automates relationships and actions like IFTTT. If there’s something that can be measured, there’s a technology out there that can do it.
To get the ESG metrics that real estate needs, data needs to be accurate, precise and available down to the necessary level of granularity. For example, does an office building need to understand the entire building’s usage of energy or does it need to break it down by tenant space? For portfolio managers, these metrics need to be consistent between properties so comparisons can be accurately made.
The source of data also needs to be taken into account. Some sources might reveal personal data and regulations may not allow their integration with outside parties. Determining formulas for unit measurement, and what units to use, may not match between countries or the default language of a software. There will always be complications, but getting the data is important.
Then, data management
Getting data and knowing what you have is the first step, then it’s time to figure out how to make it work together. Deloitte said it well in a recent report, “With different calculation methodologies, metrics and indicators used across jurisdictions, there must be a system in place to align the raw data collected from different assets and from different countries into a single data model to derive the ESG KPIs.”
Once data is speaking the same language, it’s probably time to normalize and integrate it. Information silos are nothing new to the real estate world, and taking the perspective of facilities maintenance, it’s expected that any new equipment will operate on its own software backend. The result? Continued silos of rich and wanted data. Using software that utilizes an open API can extract and integrate data from various silos. Envio System’s software simplifies and consolidates dashboards so users can go to one place to monitor and manage what’s happening within a building or around a property.
Also, it’s important to be able to drill down into metrics. For example, knowing that a property is using five times as much energy as another comparable in size and in a similar geography, is important to know but without detailed data, it begins an investigation about why instead of providing answers.
Finally, data utilization
Many concerns related to ESG require knowing standards that must be met and having a baseline of building measurements to use for comparison and tracking improvements. It is impossible for real estate to become better at ESG initiatives without knowing where they are currently operating. By knowing the current status, buildings can be alerted to any areas that are operating erratically or suboptimally and create a plan of action based on real priorities from data instead of good intentions and hopeful results.
As requirements and hopes to meet ESG targets become more important, cloud-based software solutions are the only way to realistically meet them. Based on experience and templates, the right solution can fast-track it for the real estate industry. ESG data capture, management, and usage can be used to improve performance at the asset, building, property, or portfolio level.
The ESG reporting landscape has evolved quickly over the past decade but don’t expect it to slow down. As requirements change, the software industry will strive to provide solutions for the real estate industry to meet new targets. We know the world is moving fast, but we’re nimble and we’ve been doing this for a while. Get to know more about what we can offer you by watching a demo and let’s make the world a better place together.