NAREIM Sustainability meeting

Key takeaways

March 4-5, 2025

While 95% of NAREIM member firms expect their reporting requirements for ESG performance metrics will increase or remain unchanged in 2025 compared the prior years, the goals of that reporting are expected to continue shifting. Increasingly, investors are focused on how ESG initiatives integrate with the rest of an investment manager’s business, members shared at NAREIM’s Sustainability meeting in Charlotte this week. 

“Investors want to know how sustainability measures are impacting liquidity,” a member said.

 

At the same time, some ESG reporting responsibilities is being shifted to compliance and “what are firms legally required to report?”

Given how much of the burden for collecting the critical data that ESG reporting requires falls on property managers, members at the meeting shared strategies for working effectively with this sometimes misunderstood professional group.  

In whole-room and peer-to-peer tabletop discussions, members at the meeting discussed the importance of finding a common language with property managers and leveraging asset managers' and portfolio managers' buy-in to increase the accuracy of ESG data collection and the success of project implementations.  

Click here to see the presentations and poll results from the Sustainability meeting.

Strategies for working effectively with property managers

One of the biggest obstacles to ESG data collection is the complexity of surveys property managers are being asked to complete. Property managers may recognize ESG terminology but lack the expertise needed to accurately complete extensive surveys, which frequently contain up to 100 questions. 

One member shared that property managers are being asked to provide information about the existence of Trombe walls on their properties. To answer, they first need to educate themselves on “What a Trombe wall is.” This takes time and resources that property managers lack. 

The result?

“Whole sections of surveys are coming back blank,” one member shared.

Effectively engaging property managers requires understanding their multifaceted roles. Property managers are juggling rent collection, property inspections, management of tenant improvements (TI) projects, leasing, accounting, and more.  

At the same time, the burden of ESG related reporting placed on property managers has increased over the years. 

To mitigate these bottlenecks, organizations should provide support structures for property managers. 

Some member firms shared they have established dedicated ESG support teams to assist with data collection. Others, who outsource property management to third parties, ensure that ESG reporting expectations are outlined in RFPs to secure the necessary resources from the outset of the engagement. Still other members shared they allocate budgets for consultants to support property managers with data collection and reporting. 

Overall, members found that getting buy-in for property management for ESG initiatives requires empathy and investing the time to translate sustainability industry jargon into terms property managers understand. 

Additional Session Takeaways:

• Express gratitude and give credit to property managers.

• Explain why data is being collected, how it is being used, how frequently it is being used, and how it impacts investment strategy.

• Pre-fill sections of surveys whenever possible rather than expecting property managers to just know: “Focus on asking them for what you actual need that only they can provide.”

• Invite building engineers into meetings with property managers to leverage their expertise.

• Communicate priorities: cost reduction or energy efficiency?

• Pilot ESG surveys with a small group before rolling out portfolio-wide.

• Remember that every building is different, hence every property manager’s job description will be different.

• Rather than send out a survey from the ESG department, have the request come through a Director of Property Management.

• Invite the Property Management leadership to serve on the ESG committee. 

ESG Reporting is Changing 

Investors continue to be the primary driver of ESG reporting, with 92% of meeting attendees citing it as the main motivator. However, members shared they have noted investors’ focus is shifting towards how ESG initiatives are laddering up to the overall running of the business. 

Members said emphasis on producing glossy annual sustainability reports is waning, even as most of them plan to continue publishing such reports. 

Only 5% of attendees at the meeting said they expected their firms would provide less ESG reporting in 2025 than in prior years. 

European investors, in particular, are pressing managers for more granular ESG data.

“European investors are nervous,” one member shared. 

High turnover in ESG talent has raised concerns about continuity, including on the ESG reporting front, prompting investors to inquire about ESG team structures within organizations. 

“Investors are asking more pointed questions about this,” one member shared. 

Additional Session Takeaways:

• Documenting weather-related risks and climate patterns at the asset level is becoming a reporting requirement.

• Investor DDQs are getting longer and more detailed. With members sharing examples such as:

  • “What is the vegetative cover area at the asset?”

  • “What’s your approach to human rights?”

• ESG reporting is evolving into a compliance function.

More Tips Members Shared:

• When implementing a lengthy ESG audit, don’t wait for the big “reveal” to implement the easy wins, like upgrading to ENERGY STAR certified appliances.

• To protect yourself from discovering massive capital expenditure requirements at an asset post-acquisition, request a “down-and-dirty” energy audit from the seller as part of the due diligence process. 

• Structuring ESG committees with high-level participation from investment, HR, legal, development, and capital markets teams sets them up for higher chances of success.

• Pre-meetings between ESG officers and committee members help ensure committee meetings remain efficient and actionable.

Click here to see the presentations and poll results from the Sustainability meeting.