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Capturing Data to Simplify Sustainability Reporting

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The commercial real estate industry is facing new challenges related to multiple regulations that require building owners and operators to report energy and water consumption along with greenhouse gas (GHG) emissions.

New regulations are enacted every month at the national, state, county and city levels. These regulations often overlap and create confusion due to different reporting requirements and timelines. Since most of these regulations require reporting that uses the same underlying data sources, it is beneficial to identify what data is needed and how it can be organized for efficient tracking and use. Systems designed to capture data once, and share it where needed, provide optimum efficiency including a better process to maintain accurate and verifiable data.

Sustainability regulations can be grouped into three general categories:

  • Regulatory compliance
  • Corporate sustainability goals
  • Finance/investor requirements

As a best practice, commercial building owners, managers and investors should collaborate and agree on data points required for internal and external reporting. Following agreement, the next step is to understand who has access to what data and how to get the data into a system for effective management and use.

A key component of reporting is to agree on normalized data values to minimize any uncertainty in the story the data is telling. Items to consider when normalizing data include units of measure, weather impacts, occupancy, building uses, GHG factors and building types. By effectively identifying these factors, the process of data normalization can be automated to assure repeatability and fitness for the purpose of the data collected. By capturing data in its native values, then automating normalization, the process of auditing and verifying data becomes much more efficient.

Regulatory compliance

This type of reporting is prescribed by laws, regulations and ordinances enacted by a government body. These laws fall into two subcategories of benchmarking and performance. Benchmarking is reporting data in a standard format to a government body and usually requires building operators to report all energy use, including tenant space. Some benchmarking laws also require reporting on water usage. The most common benchmarking method in North America is through ENERGY STAR® Portfolio Manager®. Data in Portfolio Manager is normalized, resulting in buildings receiving a score of 1-100. This provides building owners with an understanding of how efficient their buildings are compared to similar buildings.

Building Performance Standards (BPS) usually begin with benchmarking data then add requirements designed to improve efficiency and report on those improvements. The requirements may prescribe operational processes such as recommissioning or outcomes such as reduced GHG or energy use. Some standards also require increased use of renewable energy and reduced use of carbon fuels onsite. BPS are active or planned in over 50 jurisdictions throughout the U.S.

Corporate sustainability goals

Sustainability reporting is now commonplace across commercial real estate for owners, managers and investors. Usually referred to as ESG reporting, this typically includes Environment, Social and Governance components. Environmental data (energy, water, waste and GHG) collection and management is the most challenging component. ESG reporting may be for internal purposes only, such as inclusion in corporate reports, or may be through a third-party reporting system such as GRESB®. Regardless of the system used, it is important to have the data organized so you can efficiently and accurately summarize the information for reporting purposes. Tracking progress toward stated goals is necessary for meaningful reporting. In order to track progress a building needs to establish a baseline, which should use the same metrics and data sources as future reports. Determining what data sources are appropriate and when an accurate baseline can be established are challenges that are most easily solved by having all relevant data in one system.

Finance/investor requirements

These reporting requirements pertain to today’s capital markets and are expected to expand into more markets in the future. Not having ESG data available to share with potential investors limits building owners’ access to some capital markets. The European Union (EU) has laws requiring investors, insurers, brokers and others in commercial real estate to report on ESG data. Since EU investors are active globally, these laws impact the availability of investment capital in every market around the world. Additional pending regulations from the U.S. Securities and Exchange Commission, along with state and local laws, are making data availability for investors a key consideration in real estate transactions. Given today’s competitive capital markets, having data that is accurate and verifiable is key to achieving the lowest possible costs for financing.

Another component of financing is the increase of green loans. Green loans offer significant savings in mortgage costs but require additional reporting to confirm sustainability commitments are being met. These loans usually require reporting on all energy and water use at properties including tenant consumption. As properties implement these loans there is usually a concurrent implementation of green leases. These leases include clauses requiring tenants to share energy and water consumption data with building owners. But even with these lease clauses, collecting data from tenants remains challenging. As buildings are constructed or remodeled, consideration should be given to how this energy and water data is collected in the future so it can be used to maintain reporting required by investors. Having this building data flow into a single system enables efficient data management for future reporting requirements.

The road ahead

Collection of sustainability data is here to stay for commercial real estate. As building owners, managers and investors look to the future, they must consider what data they will need, how to collect the data and how to efficiently manage it, as well as what reporting the data will support. While nobody has a crystal ball to accurately see the future, it’s safe to say that reporting of sustainability data is likely to increase in detail and intensity over time. Given that more sustainability reporting is likely in our future, the sooner your buildings’ data collection systems and processes are centralized, the sooner you will be able to efficiently manage your data and quickly respond to new reporting requirements.

Randy Moss, Manager, Energy Products, Yardi
Randy Moss is a seasoned energy management and sustainability expert with over 30 years of experience. As Manager of Energy Products at Yardi, he is responsible for helping clients and internal teams identify how Yardi's systems and products can most effectively address specific sustainability needs. Randy has a deep understanding of the ENERGY STAR and GRESB reporting frameworks, and he has led teams in developing and implementing innovative solutions to help clients achieve their sustainability goals.

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Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.