Social value: reporting’s next frontier

COMMENT Is your asset BREEAM or NABERS certified? AirScore rated? What are its Fitwel and GRESB scores, or its WELL rating? In short, what frameworks are you using to determine the environmental and social impact of your portfolio? The reality is that the myriad of building credentials available to asset owners vastly overcomplicate ESG reporting and act as a significant barrier to occupiers and investors, for whom developing an accurate picture of ESG performance is increasingly important throughout the investment, leasing and occupation process. Furthermore, the accreditations which are available often lack quantified metrics that can inform capex programmes targeted at optimising sustainability performance. Deeper understanding To address this unsatisfactory ESG reporting landscape, Griffen partnered with sustainability advisory and software business Route2 to develop a sustainability accounting system and metric for commercial real estate. Called Value2Society, it builds on the conventional measure of contribution (gross value added) through the addition of positive societal impacts, such as increased access to natural light and improved biodiversity, and subtraction of negative societal impacts, such as greenhouse gas emissions and night-time light pollution. Quantifying societal impacts is achieved through assessing how an asset uses and invests across its life cycle in six types of capital stock – human, social, intellectual, natural, manufactured and financial. Real estate developments can now be configured with a deeper understanding of the drivers of positive and negative societal impact. The framework also eliminates several other deficiencies inherent in sustainability reporting tools, including their propensity to reward businesses for activities that do not directly lead to more sustainable outcomes. Comprehensive analysis To test the applicability of the tool, we applied the model to our flagship logistics campus at Desford in Leicestershire. We delivered what we believe is the most comprehensive ESG performance analysis of a UK industrial and logistics scheme to date, during both the construction and in-use phases of the project, across 49 indicators. The analysis revealed that the construction phase delivered net positive impacts totalling £13.6m in societal value, including through the provision of health and wellbeing programmes, investment in R&D and job creation. In use, the scheme delivered additional societal benefit via factors including natural lighting for workers, good indoor air quality and the creation of new green space. The insights helped us to fine-tune our asset management approach to maximise the positive value of the campus to society, factoring in inherent trade-offs in the management of sustainability performance that would have been significantly less transparent within the matrix of traditional ESG accreditations. This was followed by a second phase – the development of a prototype real estate standard providing a cost/benefit tool to demonstrate how Value2Society could be utilised during the design phase. Leveraging insights from the Desford case study, it explored what “good” looks like and how to address deficiencies in current real estate sustainability reporting frameworks. Positive potential Introducing additional indicators, providing an optimisation tool to maximise Value2Society for the construction phase or assessing social value will further increase its accuracy and better inform our approach to integrating sustainability-focused capex plans across our portfolio. This work has so far provided unique insights into the sustainability performance of Desford. As our understanding of the built environment’s role in delivering more equitable and positive societal outcomes evolves, so must our means of measuring and improving these outcomes. Accurate and easily comparable reporting is central to this, unlocking insights and informing actions that will help the sector fulfil its positive potential. Rui Nobre is chief executive of Griffen Photo © Griffen