New Influence

No longer are companies simply judged on their business performance—they are also evaluated based on their role in environmental stewardship and societal involvement, as well as how they govern themselves. It’s impacting who will do business with you, and it’s taking leadership to a new level.

 

Editorial Director Suzann D. Silverman
Editorial Director Suzann D. Silverman

It’s heartening to see that the measure of success is broadening in today’s business world. No longer are companies simply judged on their business performance; they are also evaluated for their environmental stewardship and contributions to society, as well as how they govern themselves. This expanded participation—known as ESG, for environmental, social and corporate governance—is even influencing how institutions select their business partners and clients.

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This new awareness is creating a different form of leadership: companies that set an example by giving back and driving forward not only business and industry but the planet as a whole. After all, commercial real estate represents almost 20 percent of U.S. greenhouse gas emissions, according to Energy Star data, and property owners and operators have a significant presence in every major U.S. city.

Of course, participation brings its own rewards in the form of expanded business opportunities. That’s on top of the increased apartment and office occupancies and sometimes higher rental rates from implementation of energy and wellness measures, not to mention the buildings’ own greater efficiencies and cost savings. In many municipalities, maximizing energy efficiency is becoming less a choice than a requirement. Chicago may be the poster child of this trend, with its new energy benchmarking system that mandates a high level of transparency. Meanwhile, many companies with a significant presence in a city or neighborhood have long found a variety of ways to contribute to their communities. But the new expectations for business represent a heightened awareness and create a more well-rounded approach that is inspiring greater, more meaningful efforts, as Sibley Fleming details in her article “Seismic Shift.”

Add a spirit of innovation, and the possibilities for impact reach even further. Take Prologis, for example. A year ago, the industrial REIT installed an ESG officer to direct an initiative that includes achieving 200 megawatts of rooftop solar energy in the firm’s portfolio by 2020. Also on the agenda are local measures like installing renewable-energy storage batteries to boost efficiency and sponsoring training programs to ease labor shortages in markets where it operates properties. All this while achieving the first WELL-certified logistics facility and other innovations, such as the multi-story warehouse concept Prologis brought back from Japan and is applying to meet e-commerce’s need for close-in fulfillment centers.

Innovations that benefit the environment, society and the commercial real estate industry, while also advancing the company: That takes leadership to a new level. I’d love to hear about other efforts!