Historically, evaluating investments focused solely on financial returns. However, with the growing significance of climate change, the concept of “triple bottom line” or financial, environmental, and social impact has been gaining traction. This push to look at investment decisions more holistically has given rise to ESG (Environmental, Social, and Governance) practices and policy.
ESG measures the societal and sustainability impact of every business activity. Investors are now looking to responsibly invest in companies that manage their impact on the environment and society at large. To serve this need of investors.
ESG rating agencies use analysts to measure the performance of various companies and compare them through ratings and rankings, this does not always show the full picture as the rankings can sometimes be as old as 6-12 months.
ESG Analytics is a platform that uses artificial intelligence and alternative data (data outside of corporate disclosures) to benchmark company ESG performance, this allows for more company coverage, real time insights and the ability to look beyond a score to determine whether a company meets the ESG criteria you are looking for.
We took a look at the Real Estate industry, to understand the best performers. Read on to learn how industry leaders like Regency Centers Corporation, Host Hotels & Resorts, American Tower Corporation (REIT), Federal Realty Investment Trust, Vornado Realty Trust demonstrate a well managed company, with low ESG controversy risk.
How were these companies selected?
Each day, ESG Analytics processes millions of documents to identify and manage ESG risk using our proprietary Natural Language Processing (NLP) algorithms. Once we identify a material event, we classify it according to the industry leading SASB framework (26 different ESG topics) and then run sentiment analysis to determine how positive of negative the event is. This chart below shows the ESG Pulse of companies in the Health Care sector. For accuracy, we excluded companies that did not meet a minimum threshold of events.
1. Regency Centers Corporation
Regency Centers is the preeminent national owner, operator, and developer of shopping centers located in affluent and densely populated trade areas. Our portfolio includes thriving properties merchandised with highly productive grocers, restaurants, service providers, and best-in-class retailers that connect to their neighborhoods, communities, and customers. Operating as a fully integrated real estate company, Regency Centers is a qualified real estate investment trust (REIT) that is self-administered, self-managed, and an S&P 500 Index member.
Regency's ESG Pulse is 1 out of 1, indicating a well managed public profile, free of ESG controversy.
Over the last year, Regency Centers issued an Annual Corporate Responsibility Report.
2. Host Hotels & Resorts, Inc
Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 75 properties in the United States and five properties internationally totaling approximately 46,500 rooms. The Company also holds non-controlling interests in six domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott, Ritz-Carlton, Westin, Sheraton, W, St. Regis, The Luxury Collection, Hyatt, Fairmont, Hilton, Swissôtel, ibis and Novotel, as well as independent brands.
Host Hotels & Resorts has an ESG Pulse of 0.99 out of 1, a standout performer using ESG Analytics AI based methodology.
There is virtually no identifiable controversy risk for the company, and this is echoed by other external providers with a score of 14 from Sustainalytics and a BBB from MSCI.
3. American Tower Corporation (REIT)
American Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of approximately 180,000 communications sites.
American Tower Corporation has an ESG Pulse of 1 out of 1, and is not included in any negative screens.
This pulse score highlights an extremely low controversy risk, and a well managed company from an ESG perspective.
4. Federal Realty Investment Trust
Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail-based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, Federal Realty's mission is to deliver long-term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply.
Federal Realty Investment Trust lands an ESG Pulse of 1 out of 1, and has a low amount of contraversies.
Federal Realty generally has low risk from external ESG providers, and their executive compensation is well within the acceptable ranges of their peer group.
5. Vornado Realty Trust
Vornado's portfolio is concentrated in the nation's key market, New York City, along with the premier asset in both Chicago and San Francisco. Vornado is also the real estate industry leader in sustainability policy. The company owns and manages over 23 million square feet of LEED certified buildings and received the Energy Star Partner of the Year Award, Sustained Excellence 2019. In 2012, Vornado commemorated 50 years on the NYSE.
Vornado has a ESG Pulse of 1 out of 1, and has no material ESG controversies of note.
There is virtually no identifiable controversy risk for the company, and this is echoed by other external providers with a score of 13 from Sustainalytics and a BBB from MSCI.