Rethinking risk: Why sustainability remains a business imperative
Abstract
Sustainability is now a core business imperative in commercial real estate, driven by evolving regulations, disclosure requirements, rising operating expenses and market demand. With 30 jurisdictions representing 57 per cent of global gross domestic product (GDP) implementing International Sustainability Standards Board (ISSB)-aligned climate disclosure rules, transparency is becoming the norm.1 Green building standards and energy regulations are accelerating the shift to low-carbon, high-performance assets, with 96 per cent of real estate investment trusts (REITs) now disclosing sustainability data, up from 75 per cent in 2020. Investors and tenants favour sustainable, efficient and healthy properties, leading to higher rental premiums, lower vacancy rates and stronger asset values, while rising insurance costs and weather-related events highlight the need for resilience-focused retrofits. Regardless of political shifts, sustainability remains a financial and strategic necessity, ensuring cost savings, regulatory compliance and long-term value preservation and creation for proactive real estate leaders. There is an urgency to act now to understand commercial real estate firms’ sustainability performance and to embed sustainability-related risk management into core decision-making practices. Failing to do so means firms could fall behind, further exposing them to financial, regulatory and market threats, which could include owning assets that face obsolescence. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.
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Author's Biography
Deborah Cloutier (Deb), Counselors of Real Estate (CRE), is the Chief Innovation Officer of Legence and Founder of RE Tech Advisors, who has dedicated her career to advancing sustainability within the built environment. For more than 30 years, she has crafted performance-driven solutions that mitigate risk and deliver operational improvements to building systems. Recognised for her legacy of influence, Deborah has been a key contributor to the formation of many of the industry’s most transformative initiatives and serves as a trusted adviser to institutional investors representing more than US$1.5tn in assets under management and over 5.5bn ft2 of commercial space. A nationally recognised speaker and an influential voice within the industry, Deborah serves on numerous boards and has authored publications that highlight the financial impacts of strategic energy management and sustainable business practices. In 2017, she earned the prestigious CRE designation, honouring her expertise, experience and ethical standards in advising the commercial real estate community. Deb is also a Blackstone Senior Adviser and has been named to Entrepreneur Magazine’s 100 Women of Influence as well as GlobeSt.com’s 2023 Women of Influence, recognising her as a trailblazer in sustainability.
Tema Goodspeed has been with RE Tech Advisors for over a decade, working in roles ranging from Green Building Certifications (GBCs), leading and implementing sustainability reporting frameworks and now serves as the Senior Director of Sustainability Programmes. As the Senior Director of Sustainability Programmes at RE Tech Advisors, Tema leads a seasoned team of professionals who advise clients on improving the performance of buildings and real estate portfolios. Her responsibilities include strategically advising clients on the development, implementation and reporting of their sustainability programme. This involves assisting clients in navigating and reporting to the ever-growing list of sustainability reporting frameworks. Tema oversees the teams that are responsible for the implementation of sustainability programmes for nearly 100 clients. Since 2011, Tema has managed over 500 Global Real Estate Sustainability Benchmark (GRESB) [the global environmental, social and governance (ESG) benchmark for real assets] submissions on behalf of her global roster of clients. With an acute understanding of diversified real estate investment portfolios, emissions data and industry knowledge, Tema is well-positioned to help her clients improve efficiency, conserve resources and strengthen relationships to improve their sustainability practices and further their sustainability goals.
