Achieving ESG Goals Part II: Engaging Tenants

Deborah K. Vick

Last week, we launched Part I of our series on achieving the aggressive carbon reduction goals that have been put forth in many commercial real estate portfolios, focusing first on the performance of on-site operators.

This is Part II of the series, where we shift focus to tenants.

Tenant consumption has bedeviled sustainability teams for a long time. On one hand, it must be part of the overall strategy; tenants generally consume around 70% of the utilities in a building.

On the other hand, the landlord has no control over what tenants do. If tenants want to run their systems 24/7 and leave the lights on, the landlord cannot tell them not to.

And so, most landlords have struggled to affect change in this area. Occupancy rates will always be paramount and there’s often concern that advice could come off as having a negative impact on comfort and experience.

But there are two key insights that the most sophisticated owners and operators have picked up on that, when taking advantage of, change the frame of the conversation and lead to meaningful reductions in consumption.

The first insight is that increasingly commercial tenants have their own ESG goals and reporting requirements. Just like the landlords, they need to disclose to their shareholders on their carbon footprint, a sometimes significant portion of which comes from their offices, warehouses and retail locations.

The second insight is that many landlords already have a built-in touch point with their tenants that they’re not taking advantage of. That is, providing monthly tenant utility bills based on submetered usage.

Seeing ESG Through a Tenant’s Lens

Enertiv mostly serves landlords across every property type, from office to industrial, multifamily and retail.

But we also serve large occupiers, who lease space of every variety as well.

Many industrial spaces are triple net leased, and directly metered by the utility (ironically flipping the script and putting the landlord in the position of not having access to data). However, the majority of office and retail spaces are either submitted or billed based on some other methodology, like square footage or RUBS.

In the case of these office and retail spaces, large occupiers are leveraging the Enertiv Platform to process and aggregate their submeter bills in the same way (and for the same reason) that landlords want to aggregate their utility bills.

This utility data, converted into GHG emissions, allows them to track their performance, generate accurate reports to their investors, and create a baseline for their own sustainability teams to work from.

Let’s unpack that a little.

The landlord is paying a vendor to generate monthly submeter bills for tenants. These bills are opaque and generally paid for by the accounting department without much attention to the contents other than the cost.

There’s no way for tenants to aggregate the valuable energy data contained in these bills, especially when they occupy numerous locations, each with different submetering vendors. 

Leave a Reply

Next Post

In My Own Words... Rocky Lano, Superintendent 2

Being a superintendent at Wohlsen Design (Wilmington Place of work) is a fantastic match for my expertise. I graduated from vocational school with a masonry history and worked as a masonry teacher ahead of deciding I wished to get out in the industry and build. I joined Wohlsen about five […]
In My Own Words... Rocky Lano, Superintendent 2

You May Like