Home News Blog: Making ESG goals a reality
All News

Blog: Making ESG goals a reality

Turn the clock back to 2018, and the commercial real estate (CRE) industry in Canada had not yet systematically started to use Environmental, Social, and Governance (ESG) investment approaches and include climate risk assessments in their due diligence practices.

Today, ESG factors have moved to the forefront of our decision-making processes and are driving visible transformation across all industries – CRE included. It is now widely accepted that ESG investment significantly decreases downside risk. ESG has become an important indicator of how an asset performs in worst-case scenarios, because of asset resiliency to the impact of climate change and to political, regulatory, and reputation risks.

The need to manage ESG risks and opportunities is playing a significant role throughout the investment lifecycle of CRE assets from development and acquisition, to operation and maintenance, and redevelopment or disposition. There are some powerful drivers accelerating growth of ESG investing, such as a greater focus on net zero carbon operation and climate resiliency in a post-COVID-19 market. Simply maintaining the status quo is no longer sufficient. The market is shifting from traditional ways of doing business to a more sustainable approach that considers an investment’s impact on corporate ESG performance and achieving greenhouse gas (GHG) emissions reduction targets.

Although climate change is a global issue, the policies, regulations, and best practices that influence corporate ESG practices can be vastly different depending on the country and region. In particular, there is a fast-moving regulatory landscape shaping mandatory decarbonization in Canada. The recently published 2030 Emissions Reduction Plan aims to provide an achievable roadmap that outlines a sector-by-sector path for Canada to reach its emissions reduction target of 40 percent below 2005 levels by 2030 and net zero emissions by 2050.

Recent activity in the United States is another indicator of changes on the horizon. The U.S. government has proposed new rules that would require mandatory reporting on scope 1, 2, and possibly the more complex scope 3 emissions, as well as disclosure of climate-related financial information in line with the four overarching pillars of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. The rule would broadly impact companies traded on U.S. stock exchanges, but it will be eventually applicable to privately owned organizations as well. The bottom line is that there is a more pressing need for the CRE industry to establish a clear and integrated corporate approach to climate change that seamlessly connects strategy, risk, and governance.

Net Zero: Navigating transition planning

Despite the rapidly changing regulatory landscape in Canada, and globally, there are still some big questions that need to be answered. What are the strategies and best practices needed to achieve decarbonization targets and satisfy regulatory requirements? Affordability is the most overlooked component of sustainable development. To what extent can the cost of a deep retrofit be absorbed by the tenants, and how might landlords need to change their business models and investment strategies? Achieving net zero also will require electrification of building heating systems. What regulatory changes are required to accelerate electrification where continued economic and population growth will drive consumption higher, while the energy industry is going through transition? How can energy efficiency improvements and on-site renewable generation be targeted for specific asset classes to improve cost-effectiveness? How can buildings utilize energy efficiency as a resource combined with smart technologies to deliver greater affordability and higher performance to our future homes and commercial buildings?

These are all difficult questions, and the CRE industry is working towards solutions. Achieving net zero by 2050 requires technological innovation to reduce the costs of energy systems transformation, and this transformation is going to take time and investment. It is not going to happen overnight. The energy transition requires a substantial investment, and if it is not planned and implemented orderly, against a background of relative economic and social stability, tenants and ratepayers will face an affordability crisis exacerbated by energy inflation.

The most reasonable approach in achieving Canada’s decarbonization targets is to understand that managing costs and return on investment is a balancing act that requires customizing solutions for individual clients and assets. It requires innovative ideas and new ways of thinking. Asset managers need to be equipped with technology solutions that enable them to measure, manage, and monitor their ESG performance to help them make informed investment decisions. Triovest firmly believes digitization is an enabling medium to advance decarbonization, and more broadly, that technological innovation is an important factor in driving a more equitable, sustainable, and accessible economy. We also need to put a price on resiliency and consider negative impacts on property values, insurance premiums, and fines for non-compliance, not to mention leasing challenges and the risk of holding obsolete, stranded assets.

The publication “Five Steps to Net Zero Energy” by National Grid and the New Buildings Institute outlines what can be accomplished for asset managers looking to get their buildings to net zero energy:

1. Set a baseline for buildings: Start by analyzing energy and carbon performance and compare data against benchmarks to find out how much energy/carbon is typical for buildings of your type and use.

2. Set performance goals: With the assessment information, you can determine what energy and carbon reduction goals to set and how to reach them.

3. Scope the retrofit by looking at similar projects and buildings.

4. Implement the retrofit: You may consider timing and realities of the building, ownership, tenants, mandates, and market conditions when implementing.

5. Continuous commissioning: A net zero energy building needs to be operated as such, which begins with design. Include tenants, operators, and contractors when working with designers on how the building and its spaces are used and continue to include automated recommissioning going forward.

The Bottom Line

There is no such thing as one size fits all. The path to net zero carbon operation will not be the same for every asset or every jurisdiction. It requires tailored solutions. Deep retrofit can be a costly process upfront, but upon completion, building owners will start to see immediate operational savings and increased asset valuation. There are costs associated with decarbonization, but the cost of not taking an action is far greater. Identifying decarbonization solutions requires commitment, collaboration, and engagement with owners, investors, and building occupants. Government should significantly increase their spending on green research and development to ensure the CRE industry achieves technological advancement that makes energy transition as smooth and cost effective as possible. Cost and reputational implications for an organization that is not doing business sustainably and mitigating future risks are significant. Staying ahead of the curve in today’s fast-moving ESG market requires working with strong partners who can embrace innovation, accept change, and challenge the status quo.

Ali Hoss, PhD, PEng
Vice President, Sustainability & Innovation, Triovest


Other News

Triovest Wins 2022 National Pinnacle Award

Blog: Canada’s demographic trends fuel stability for CRE investors

Blog: Making ESG goals a reality

9925 Building Team Wins Operations Team of the Year Award

Lululemon to Open Flagship Store at 2 Bloor W

Triovest Acquires Warehouse Facility in Mississauga

Blog: Investing in Canadian Commercial Real Estate

Triovest Joins FSB Task Force

4455 Rue Cousens Acquisition

Harwood Business Park Development

Acquisition of 22-Acres in Pickering, Ontario

Cathedraltown Acquisition

1-8 Prologis Wins International TOBY Award

Triovest Adds VTS Lease Technology to its Operating Platform

Triovest Recognized with Multiple Honourable Mentions at BOMA Toronto’s 2021 CREST Awards

Triovest Acquires 525,000 SF of Logistics Space in Etobicoke

Triovest Achieves 4 Stars in 2020 GRESB Assessment

New 55+ Residential Development for Taunton Gardens

Coril Welcomes Mark Renzoni and David Gerofsky to the Board of Directors

Triovest Appoints a New President and CEO

Triovest Supports Fitwel Viral Response Module

Leading Sustainability Performance at the 2020 HOOPP LEAP Awards

ATB Operations Team Wins Building Operations Team of the Year Award

Triovest Joins Fitwel Champions Program

Triovest Receives 2020 Employee Recommended Workplace Award

1 Prologis Boulevard at Mississauga Gateway Centre Receives BOMA BEST Gold Certification

2-8 Prologis Boulevard at Mississauga Gateway Centre Receives BOMA BEST Gold Certification

Atrium Receives LEED Gold and Energy Star Certifications

Three Wins for Triovest at the 2019 BOMEX Awards

Triovest Presents its 2018 Sustainability Report

Jean-Marie Saint-Georges Inducted to the HOOPP LEAP Hall of Fame

Trio of Wins at the 2019 HOOPP LEAP Awards

Triovest Receives Management of Atrium on Bay

Triovest Recognized as a 2019 Employee Recommended Workplace

2 Bloor Street West Achieves Platinum Wired Certification for Best-in-Class Internet Connectivity

Triovest Recognized as a Green Lease Leader

Triovest Presents its 2017 Sustainability Report

6880 Financial Drive Reaches for the Star!

Triovest Recognized Globally for Sustainability Achievements

Triovest Celebrates Final Phase of Construction at River Landing

6880 Financial Drive Achieves Rick Hansen Certification

Happy Holidays from Triovest

Keynote Tower First in Calgary to Achieve Gold Wired Certification for Best-in-Class Internet Connectivity

Triovest Wins 2019 BOMA Pinnacle Innovation Award

Triovest Joins ‘Disclosure Challenge’ to Champion Building Data Transparency

Triovest Receives Canada’s Greenest Employer Recognition

Triovest’s 2019 GRESB Score Among Best in Canada

Triovest Recognized by Edmonton Building Energy Benchmarking Program

Alan MacKenzie Appointed to President of Triovest Realty Advisors

Triovest Applies its New Mission at Centre on Barton

1 Prologis Blvd, Mississauga, Earns LEED® CS Gold

Centrium Place, Calgary, Earns LEED® EB:O&M Gold

Triovest Shows Sustainability Leadership at HOOPP LEAP Awards with Five Wins

High Energy Star Scores for two Triovest Properties

Triovest Presents its 2016 Sustainability Report

Triovest receives BOMA Certificate of Excellence for 11 King Street West

The HUB at King George Station and Marine Gateway Achieve LEED® CS Gold

Triovest Awarded Management of Spectrum Square in Mississauga

Triovest Achieves Five Green Stars in 2017 GRESB Assessment

Triovest Awarded with Best Peer-Reviewed Sustainability Report

Triovest Launches Spectrum Square Phase Two

Triovest Wins the Industrial Lease of the Year at REX Awards

Official Ground Breaking Kicks Off Development of Sugar Wharf

Triovest Recognized as an Employee Recommended Workplace

Triovest Receives Green Lease Leader Recognition

Triovest Achieves its Strongest Performance at the HOOPP LEAP Awards

Triovest Receives Kingsett Innovation Award

ATB Place Wins TOBY Award


Yves-André Godon Moderates Panel at MREF

Skyview Power Centre Offers Support for Fort McMurray Residents

Triovest Represents Greystone Managed Investments Inc. in the Acquisition of a $260 Million Development on Toronto’s Waterfront Anchored by the LCBO

Seven Wins for Triovest at Recent BOMA Awards

John Crombie to Receive a 2016 Researcher Award

Marine Gateway Wins Mixed Use Development Award

Triovest Shows Sustainability Leadership at HOOPP LEAP Awards with Seven Wins

Saks Fifth Avenue OFF 5TH to Open at Skyview Power Centre

Triovest Realty Advisors and Balboa Investments Announce Unification

Triovest Breaks Ground at River Landing

Triovest Awarded Four Green Stars in the 2016 GRESB Real Estate Assessment

Triovest’s “TESA” Wins the 2016 BOMA Canada Pinnacle Award for Innovation

Triovest Presents its 2015 Sustainability Report

ATB Place Achieves LEED® EB:O&M Gold Certification

Three Wins at UDI Awards for Triovest Managed Properties

Triovest Supports Anti-Bullying Across Canada

ATCO Centre Receives BOMA Edmonton Earth Award

Triovest Nominated as Global Finalist for Best First-Time Sustainability Report

Certificate of Excellence for ATB Place in Edmonton

Triovest to Take Part in Canstruction Vancouver

Triovest Creates UnCANny Art for Canstruction Vancouver

Triovest Receives a BOMA Certificate of Excellence for Foresters Centre

Triovest’s Property Management Team in Calgary Receives President’s Award for Sustainability

Great Plains I Awarded with Service Excellence

Triovest Awarded with a TOBY® and Certificate of Excellence Award for Centrium Place in Calgary

Triovest Demonstrates Sustainability Thought Leadership by Solidifying Its Priorities

Triovest Receives Seven Awards at BOMA Gala

Triovest Implements an Innovative Sustainability Management System

Triovest Featured in 2015 BOMA BESt National Green Building Report

Triovest Acquires RBC Meadowvale Campus

Triovest Takes Over Management of 5150 Spectrum Way

Triovest Appointed Manager of 2 Bloor Street West

2014 Sustainability Report

Triovest Acquires Staff from Mackenzie Goulais Inc.

River Landing Acquisition

National Retail Portfolio Achieves BOMA BEST Certification

Triovest Presents Inaugural 2014 Sustainability Report

Three BOMA BEST Gold Certifications for Triovest

Triovest Announces Two Executive Appointments: New President and Chief Operating Officer

HOOPP Honours Triovest with Two LEAP Awards

Cross Roads Achieves BOMA BESt Level 3 Certification

Exciting New Mixed-Use Development Begins in Waterloo

South Fraser Industrial Centre Acquisition, Delta, British Columbia

BOMA BESt Certificate of Achievement for Keynote Office Tower in Calgary

Triovest Receives Three BOMA BESt Certificates of Achievement in Montreal

Skyview Power Centre in Edmonton Achieves BOMA BESt Level 2

Triovest Opens a New Office in Saskatoon

Gold and Platinum Marcom Awards for Two Triovest Earth Initiative Marketing Campaigns

Triovest Acquires a Large Industrial Development Site in Halton Hills

Triovest Acquires 8530 Cambie Street in Vancouver, BC

Property Management Team of the Year Award for Edmonton

Construction to Begin on Industrial Development in Halton Hills

Triovest Acquires Asset Management Responsibilities for a Portfolio of Properties in Quebec

WestHills Towne Centre Receives BOMA BESt Level 3 Certificate of Achievement

Scottsdale Centre Achieves BOMA BESt Certification

Triovest Acquires One of the Largest Fully Serviced Industrial Development Sites in Greater Montreal

Triovest Acquires a 240 Acre Development Site in Calgary

Eastgate Square Wins Marketing Award at ICSC

4321 Still Creek Drive Wins EARTH Award

400 St. Mary Avenue Wins HOOPP 2014 LEAP – Energy Saver Award

5799 Route de L’Aèroport Wins the HOOPP 2014 LEAP – Industrial Engagement Leader Award

18,103 Trans-Canada Wins the HOOPP 2014 LEAP – Industrial Tenant Leader Award

4321 Still Creek Drive Earns Silver LEED EB:OM Certification

Sunnyside Mall Supports Local Talent with a Design & Artistry Showcase

Triovest Announces Two Senior Appointments

720 King Street West Achieves LEED EB:OM Gold

320 Bay Street Achieves BOMA BESt Certification

Vince Brown Appointed President & CEO of Triovest

Triovest Receives Three BOMA BESt Certificates of Excellence

Four LEAP Awards for Triovest

Yves-André Godon Appointed COO of Triovest

Triovest Awarded Green Star in the 2015 Global Real Estate Sustainability Benchmark

Triovest Awarded Management of Wellington Commons

Keynote Office Tower 1 Receives LEED EB Gold

Yves-André Godon on Panel for GRESB Results

Philippe Bernier Honoured with Canada’s 2016 Clean50 Emerging Leader Award

Triovest Wins Canada’s 2016 Clean50 Project Award

ATB Place Honoured with BOMA Canada’s National Earth Award