Social and environmental metrics for US real estate portfolios. Sources of data and aggregation methods
| Published date | 07 August 2009 |
| Pages | 481-510 |
| DOI | https://doi.org/10.1108/14635780910982359 |
| Date | 07 August 2009 |
| Author | Gary Pivo |
| Subject Matter | Property management & built environment |
Social and environmental metrics
for US real estate portfolios
Sources of data and aggregation methods
Gary Pivo
Planning Degree Program, School of Natural Resources,
University of Arizona, Tucson, Arizona, USA
Abstract
Purpose – The purpose of this paper is to assess the availability of information in the USA for
measuring the social and environmental performance of real estate portfolios.
Design/methodology/approach – A search is conducted for relevant indicator data sources using
internet,library andgovernment resources.Priority is placedon information thatcould be accessed on line,
by any user, free of charge, fromreputable sources, using available search parameters, for all types of
propertiesand for any properties anywhere in the USA. Usefulsources are identified and assessedusing
dataquality indicators.Information gaps are also identified.A previously publishedmethod is adaptedfor
comparingthe social and environmentalperformance of propertiesand portfolios and datacollected from
identified sourcesare used to illustrate the constructionof indices useful for making comparisons.
Findings – Nationwide data sources are available for most important dimensions with greater
availability for the most important ones. There are, however, important data gaps related to such
issues as water use, day light and ventilation, aesthetics and others. Most sources only require a
property address for queries but do not support batch processing. There are no data quality problems
for most data sources but a substantial minority of the sources does have at least one data quality
issue. Available data can be used to construct indices useful for comparing properties and portfolios.
Practical implications – Fund managers can use these results to compile extra-financial
information on sustainability and corporate social responsibility and socially responsible investors
can use them to evaluate investment opportunities.
Originality/value – This is the first effort to identify and assess data sources needed for creating
responsible and sustainable metrics and indices and responds to demand for better metrics in the field
of sustainable and responsible property investing.
Keywords Sustainable development, Property,Investments, Corporate social responsibility,
United States of America
Paper type Research paper
1. Introduction
This paper assesses the availability of information in the USA for measuring the social
and environmental performance of real estate portfolios. It also demonstrates how this
information can be aggregated into indices useful for comparing properties and
portfolios. It is intended to assist fund managers who want to compile extra-financial
information on sustainability and corporate social respons ibility and socially
responsible investors (SRIs) and researchers who want to evaluate the social and
environmental merits of property investment opportunities.
1.1 Responsible property investing
Almost a decade ago, Mansley (2000) predicted that property would join the main
debate on socially responsible investing because “it is at the frontline of many social
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Social and
environmental
metrics
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Journal of Property Investment &
Finance
Vol. 27 No. 5, 2009
pp. 481-510
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/14635780910982359
and environmental debates [...]”. Since then, research on the built environment has
only served to reinforce its significance for various contemporary issues. For example,
according to the Intergovernmental Panel on Climate Change (2007), just over ha lf of
the total energy-related greenhouse gas emissions produced worldwide in 2004 came
from operating residential and commercial buildings (including related electric al
production) and the road transport of people and goods between them. Evidence is
growing that buildings affect the social and environmental footprints of individuals
and organizations. For example, Junilla (2004) estimates that as much as 82 per cent of
the environmental impact per employee of service sector companies is associated with
the design, location and operation of their premises.
Scholars, organizations and practitioners have begun developing a field that merges
the disciplines of property investing, building science and urban planning into what is
being called responsible property investing (RPI). Academic editorial writers and book
reviewers have called attention to the topic (Sayce, 2003; Jayne, 2003; McAllister, 2005)
and research papers have examined its dimensions. So far, studies have focused on the
role of property in socially managed funds (Newell and Acheampong, 2002), metrics for
measuring the responsibility of property portfolios (Sayce and Ellison, 2003a, b;
Kimmet and Boyd, 2004; Boyd, 2005a, b; Boyd and Kimmet, 2005; Pivo, 2008), the
impact of social and environmental issues on property valuation (Sayce et al., 2004;
Lutzkendorf and Lorenz, 2005; Pivo and Fisher, 2009), the emergence of RPI as a
business strategy (Pivo and McNamara, 2005; Pivo, 2005; Rapson et al., 2007), and the
attitudes of investors toward RPI (Pivo, 2007; Sayce et al., 2007). Property investment
practitioners have also been leaders in the field, creating viable and innovative
investment opportunities and management practices (UN Environment Programme
Finance Initiative – UNEP FI, 2007, 2008; RPI Center, 2007).
The issue of finding good metrics to measure RPI runs throughout the literature. In
a series of annual conferences on RPI, the need for metrics to gauge the responsibility
of property investments was emphasized repeatedly as an important priority for the
further development of the field (Pivo and Wood, 2006; Arnaud, 2007; Wood, 2008). In a
national survey of senior American property executives, 90 per cent agreed “it would
be useful to know more about the social and environmental merits of our activities and
investments” (Pivo, 2007). Unfortunately, there have been no scientific surveys
published in the academic literature on the attitudes of property executives in other
countries toward metrics.
While some investment firms have begun to develop such measures (UNEP FI,
2008), RPI metrics is still in its infancy. Szekely and Knirsch (2005) have identified a
variety of approaches used by European corporations to measure social and
environmental performance. They studied several business sectors excluding proper ty.
They concluded that “the assessment of environmental performance is still very
limited” and the assessment of social performance is “much less developed than the
assessment of economic and environmental performance”. More research is needed to
determine if that is an accurate description of the property sector and whether RPI
metrics are being used by more than just the leaders in the field (UNEP FI, 2007, 2008).
1.2 Social and environmental accounting
RPI can be viewed as a branch of corporate sustainability and social responsibility
(CSR). As Perrini and Tencati (2006) observed, “a sustainability-oriented company is
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