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Top Three ESG Reporting Challenges You Can Solve with Tech

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Driven by new regulatory requirements, sustainability or ESG reporting is evolving rapidly. ESG exposes important aspects of environmental impact (E), social impact (S) and governance (G).

In addition to regulatory pressure - including a new rule proposed by the SEC to create a “framework for disclosures about ESG-related strategies,” investors, tenants and communities are engaging with property owners to understand the larger environmental impacts of their buildings. For CRE operators, ESG reporting is expanding rapidly and requires the highest level of data integrity along with tracking many new data points.

What does ESG reporting encompass?

Environmental reporting covers environmental aspects of a property’s existence. These aspects are generally energy, water, waste and greenhouse gases. This reporting can begin with tracking materials used during construction and continue for the life of a building through demolition. The environmental component of ESG reporting generally drives the highest percentage of scoring in ESG reporting systems, such as GRESB. The GRESB reporting tool in Yardi Pulse currently focuses on the ongoing operations of buildings, referred to as standing investments.

Social reporting covers aspects of a building that are impactful on tenants, employees and surrounding communities. Areas defined as having impact on stakeholders drive scoring for social reporting. Questions to aid in understanding how a building impacts tenants, employees and the surrounding community are scored with points often awarded for partially completing reporting requirements or for showing improvements over previous years in specific areas.

Governance reporting is usually at the organization level, instead of property level. Governance covers leadership, policies, reporting and risk management throughout an organization. Documentation is required to verify assertions made in the ESG reporting process. Collecting and structuring this evidence for reporting requires knowing who has the information, where it is kept and how to confirm policies are followed as described in response to the governance questions.

When it comes to efficient and accurate ESG reporting, most CRE operators face three key challenges. Read on to learn about these challenges and how they can be solved using technology.

Challenge #1: Data Aggregation

To maximize data aggregation and report on an entire building, you need data from both tenants and utility vendors. But, what if they will not or cannot share that data with you? Using the right software platform, you can access all the data you need through multiple sources. You can leverage:

• Electronic utility invoice processing for access to utility payables
• ENERGY STAR® for access to aggregated utility vendor data
• Direct access to building systems and submeters for real-time information

Solution: Software can maximize data access and automate collection through multiple sources, including utility invoice processing that extracts utility payables information, and aggregated utility vendor data that can be found in compliance reporting systems including ENERGY STAR. With full-service vendors who manage and maintain your meters including reading all site meters for you, direct access to building systems and submeters provides current and accurate data.

Challenge #2: Data Collection

When it comes to data collection throughout your buildings and across your portfolio, you need to know:

• Have I collected all my ESG Data?
• How can I track data year-round?
• What should I schedule now to be ready for ESG reporting?
• Who has the answers I need and how can I track getting that information?

Solution: Automation is the best way to collect accurate data in a timely fashion. Yardi’s GRESB solution tracks all data points inside of Yardi, syncs directly to GRESB, assigns and tracks data collection tasks to any user in Voyager and identifies errors in data ahead of compliance dates.

Challenge #3: Greenhouse Gas (GHG) Reporting

You need GHG data for scopes 1, 2 and 3. Essentially, scopes 1 and 2 are those emissions that are owned or controlled by a company, whereas scope 3 emissions are a consequence of the activities of the company but occur from sources not owned or controlled by it. You need to know:

• How can I track greenhouse gas and compare to previous years?
• How do I report GHG into the correct scopes for GRESB?
• How can I track my GHG vs my carbon budget?

Solution: As part of your energy management platform, GRESB software maps each meter to GHG source and scope, calculates GHG based on usage of each meter, automatically assigns GHG to correct scopes for reporting and reports real-time actual GHG vs goals.

Are you ESG ready?

If you’re struggling to collect data and verify its accuracy, now is the time to assess your strategy. By leveraging and combining the various data sources available, ESG reporters can effectively choose the data source that provides the most accurate and verifiable answers to each ESG indicator question. By automating the aggregation of data, once data sources are chosen, Yardi Pulse, including its GRESB solution, provides clear visibility into data as it flows into reports - so you can more easily meet compliance and reach your sustainability goals.

Joe Consolo, Industry Principal, Yardi Systems Joe Consolo is an industry principal with more than 20 years of business leadership experience. He has expertise in business development, operational excellence, sustainability and team leadership. Joe worked in multiple industries, including the energy, commercial, oil and gas, semiconductor, and medical fields. He started his career at Yardi in 2016 and has been instrumental in leading our growing energy business.

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