A Complete Guide to “Sustainable” ESG Data Management for Commercial Real Estate

If we know one thing to be true, it is that ESG is here to stay. As investors realize the risk and value associated with ESG, they continue to align their portfolios towards better ESG performance. 

In the absence of a single, mandatory ESG standard, organizations are forced to rely on a variety of voluntary reporting frameworks to communicate ESG performance to investors, including GRESB, the Carbon Disclosure Project (CDP), and the Global Reporting Initiative (GRI). They must identify relevant ESG frameworks and topics; collect, organize, and analyze all the necessary business data for tracking and reporting performance; and compile the data into the appropriate reporting formats for their external audiences. ESG interest and momentum cuts across industries and shows no signs of slowing down; more than 6,000 companies communicate their ESG progress each year via voluntary reporting frameworks.  

The challenge with this new and evolving field is just that: that it is new and evolving. And the cross-functional nature of ESG as a business practice means that the data needed for tracking and reporting tends to live in one too many spreadsheets distributed across business units, outside of centralized systems where it can easily be accessed and maintained. Many organizations only think about making sense of it all annually, when it comes time to report, meaning that ESG performance data is often not yet fully integrated into regular decision-making. 

With those challenges and opportunities in mind, here are three key steps you can take to efficiently collect and manage your ESG data with an eye towards future-proofing your efforts. 

1.  Spend time up front to identify the data you need. It will pay off!

ESG data frequently resides across multiple departments and disciplines and is often used for slightly different purposes. By taking the time upfront to identify and define data points that may be used across the company for slightly different purposes, you will not only save time, you will also learn how to best integrate ESG into your business operations – the ultimate goal. Whether you are at the beginning of your ESG journey or are level-setting post-reporting season, it’s important to take a step back and revisit the basics. Identify what data you need to collect. Here are the initial steps to do just that:

  • Identify which ESG topics and frameworks best align with your business
    ESG comprises a broad set of topics and hundreds of related performance metrics. Whether it be through your materiality assessment or otherwise, take the time to identify which ESG topics rise to the top. In real estate, energy consumption, carbon emissions, and climate risk are among the most important and relevant ESG topics, and GRESB and CDP can both be helpful frameworks for understanding how to monitor your performance and identify the information you need to collect.

  • Identify the relevant key performance indicators (KPIs) and individual data points you need to collect
    Once you’ve selected a reporting framework, parsing out the relevant KPIs (such as “whole building energy consumption”) can help you delineate the individual data points you will need for external reporting purposes. This, in turn, can help you begin mapping out your organization’s “chain of custody” for the data, or the stakeholders you may need to work with to get the information you need.

  • Define the units of measurement needed
    Finally, define the units of measurement and data sources needed to meet different business objectives and reporting requirements. For example: the energy data generally needed for ESG reporting (whole-building consumption data in kWh, aggregated monthly) could be acquired through different methods. While that level of data may not seem directly helpful to your engineers on the ground who are focused on day-to-day building operational efficiency, they may already have building-level systems in place to capture and trend load data for their own purposes. This data can often be rolled up into the necessary monthly intervals and leveraged for ESG reporting.

2. Identify sources and use data accessibility to guide your efforts.

In real estate, much of your environmental data will come from physical meters in buildings or electricity and gas bills. Sounds easy, right? In reality, data accessibility largely depends on how the building is built (i.e. the metering infrastructure) and who pays the bills. 

Once you’ve defined the universe of ESG data points you need and the units of measurement, a helpful next step is to scan your portfolio and map out the data you have direct access to. This will inform the best data source and data collection methods. 

To collect the whole-building energy data most commonly needed for ESG reporting, consider the following steps for collecting data based on your level of access:

  • Track monthly utility bill consumption data from buildings where you have access to the majority of the utility accounts.
    Where monthly data is sufficient, consider tracking consumption by scraping the data from your monthly utility bills. Be forewarned that you will likely need to work with individual property managers to collect each building’s historical bills, and that the process can be tedious to attempt manually for your entire portfolio. Bill data is notoriously unstandardized across utility providers, and parsing multi-page PDFs can be a slow and error-prone undertaking, so employing technology to help is a must. 
  • Track monthly and/or real-time interval data via tenant and/or utility authorization.
    In buildings where tenants are responsible for paying for utilities, you may need to obtain a Letter of Authorization to collect monthly consumption data directly from the utility company. If this approach seems unwieldy (since it hinges on getting permission from tenants who may not be naturally incentivized to provide it), you could also consider installing a switchgear meter to collect real-time data for the total building load. (Note that your utility company may have to provide approval if the switchgear is sealed.) If your organization has ambitious energy goals, you may decide that an overall approach involving real-time data over monthly bill data is preferable, as real-time data enables you and your teams to identify energy savings opportunities across your portfolio while also helping to facilitate ESG reporting.

    Interested in a portfolio-wide solution that helps you aggregate data across sources, from bills to meters? Aquicore can help.
  • Consider installing sub-meters to better allocate usage by space.
    Depending on your level of access, budget, and timeline, you could also opt to install sub-meters. This approach allows you to not only collect real-time data but to allocate it by the user or tenant, which can be helpful for optimizing and reporting on performance with more granularity. This approach should be considered on a building-by-building basis where it makes sense as sub-metering can be a resource-intensive project. 

In general, mapping out data accessibility should serve as the foundation for your data collection plan, but your efforts should not stop with merely identifying coverage and gaps. For example, while collecting and monitoring tenant-owned data often presents numerous challenges, there are many good reasons to try to overcome them, including the growing emphasis on Scope 3 emissions accounting across voluntary ESG frameworks, and local laws that impose hefty fines on landlords that exceed whole-building emissions limits. Once you have a sense of the parts of your portfolio where data may be trickier to acquire, you will be able to focus your efforts accordingly. 

3. Don’t rely solely on technology. Do build processes to complement technology.

Technology and process are two sides of the same coin. They can save you time and effort at virtually every juncture and help your ESG program run more smoothly, increasing your probability of success (and achieving that higher score that management has its sights set on). After developing a clear picture of data sources and collection methods, the next and final step is to identify opportunities for automation and build supporting processes that encourage continuity and quality on an ongoing basis. Specifically, we recommend that you: 

  • Identify technology solutions that can help you automate data collection.
    As mentioned above, commonly-used technology approaches that can expedite the collection of energy data for ESG reporting can include:
    • Installing smart meters to automate meter readings
    • Finding a technology partner to aggregate consumption and cost data from utility bills 
    • Finding a technology partner to track and aggregate efficiency measures and building projects, so it’s easy to know which projects have already been completed at a given building and compile project information for annual reporting (Hint: Aquicore can help in all three of these areas!
  • Identify where you are not yet able to automate data and delegate data collection responsibilities, where possible. Supplement technology with process! 
    It may not be immediately feasible to automate the collection of all your ESG data. In fact, it’s highly unlikely – so don’t be too hard on yourself. Rather, identify where you cannot yet automate the gathering of data and work to build consistent business processes around data management, accounting for all the various stakeholders who may need to be involved and taking a long view when it comes to maintenance and upkeep. Consider the following:
    • How frequently does the data need to be updated? 
    • Who do I need to coordinate with to collect this data? How can I motivate them to engage with this initiative? 
    • What are the best channels for operationalizing the process? (e.g. email; standing meetings)
    • Are there any security or compliance considerations? 
    • Is the data only needed for internal consumption, or is there a need to upload and/or share it externally? 
    • Do external stakeholders have specific requirements for the format the data should be in – and do they differ from how you are able to access or acquire it? 

While technology can give your ESG program a boost, it should not be considered a wholesale replacement for good organizational processes. Irrespective of your portfolio’s approach to technology, it is always important to spend time building robust internal processes and communication channels around data management and governance. For example, you may find you need to devote significant resources to coordinating with tenants, utility companies, and operators to get all of the data that you need – and that some parties are more responsive than others. Knowing all the players and the best ways to reach them will go a long way.

  • Conduct regular data quality checks
    As you work to build out new business processes, make sure you’re accounting for the need to verify the accuracy of your data on an ongoing basis. You and your teams know your buildings best, and you may find that you need to go back to your teams with specific questions or to deal with unforeseen issues that might arise. Conducting regular data quality checks to identify gaps and/or overlapping data will help you stay ahead of the ball and be well prepared for next year’s ESG reporting season. In the course of analyzing your energy data, you might notice anomalies that could be the result of a leak or change in space use, requiring further investigation and collaboration with property teams. Another possibility? You could be dealing with a billing error from your utility company. Either way, having a plan and process in place to validate your data is essential. If you’ve gotten this far, you should have already thought through establishing lines of communication with the necessary internal and external stakeholders, ensuring you can get the answers and assurance you need down the line. 

Final Thoughts

It can take time to get all of the data together for ESG reporting and make it useful, so don’t be too hard on yourself if you fall short of gathering everything in year one. It’s a tough balance between getting the data for reporting by any means necessary, and implementing technology and change management to make the process itself efficient and sustainable for the long haul. Prioritize the data you can collect based on its significance and relevance to your business, but don’t be afraid to set ambitious goals for the future.