We’re spotlighting Green Building United member, Uma Pattarkine, Investment Strategy Analyst and Global ESG Coordinator for CenterSquare Investment Management LLC. We spoke to Uma about how real estate investment responds to and drives social responsibility and environmental stewardship as well as the impacts of COVID-19.
Please describe your current position.
UP: As Investment Strategy Analyst and the Global Environmental, Social, and Governance (ESG) Coordinator for CenterSquare Investment Management LLC (CenterSquare), I focus primarily on research and product development while managing ESG investment capabilities across our private equity, private debt, and listed equity platforms. In this capacity, I developed the firm’s first Socially Responsible Investment policy and manage our affiliations with organizations like the UN Principles of Responsible Investment (UNPRI), Climate Action 100+, and Task Force for Climate-Related Financial Disclosures (TCFD.) Here I underscore CenterSquare’s commitment to aligning investment activities with the broader interests of society. I also manage the proprietary quantitative ESG assessments used in investment decisions across all platforms.
A meaningful part of my role as the ESG Coordinator also entails engagement with Real Estate Investment Trusts (REITs) and the industry more broadly. I work closely with REITs on a wide range of ESG issues, typically speaking directly with company executives and board members to assess their commitment to meaningful policies and strategies. For example, in a time of significant social unrest brought on by the Black Lives Matter movement, I challenged the presence of diversity and inclusion practices within REITs and have held management accountable for the organizations workforce diversity and pay gaps across all minority groups throughout all management levels.
As the subject matter expert within the firm, I serve as the spokesperson on ESG issues with media outlets, participate on panels on ESG investing in REITs, and represent CenterSquare at industry conferences and organizations (like GBU!). I am a contributor to CenterSquare’s thought leadership platform, authoring white papers and articles for both the firm and prominent industry publications. Lastly, as part of the REIT investment team, I play an active part in our portfolio management process and maintain coverage of three sectors by conducting bottom-up fundamental analysis.
What is CenterSquare Investment Management doing to advance a sustainable built environment?
UP: As a fiduciary, CenterSquare’s investment strategy is aligned with our clients’ long-term investment objectives, including a commitment to social responsibility and environmental stewardship. CenterSquare’s socially responsible investing stance has been developed based on our fiduciary duty to make purposeful and well-informed decisions on our clients’ behalf. CenterSquare has long recognized the basic tenets of socially responsible investments and the corresponding impact on investment portfolio performance. As real asset investment specialists, the analysis of ESG factors is integrated into our investment process because we recognize how this important work creates long-term and sustainable value. Our approach is three-pronged – integration, engagement, and transparency.
CenterSquare integrates a proprietary analysis of ESG factors when evaluating investments. As appropriate, CenterSquare favors investments that sustain superior ESG metrics. We assess companies along ten metrics that measure environmental stewardship, social responsibility, and corporate governance. We incorporate ESG considerations into our direct real estate equity and debt investment processes as well thorough environmental due diligence and climate-related physical risk assessments on new investment activities. As part of our commitment toward social responsibility and environmental stewardship, we support the Task Force for Climate Related Financial Disclosures (TCFD) and serve as an active member of Climate Action 100+ and signatory to the UN Principles of Responsible Investment (UNPRI). Separately, we conduct background checks on all parties with significant ownership or control of partners and employ a Responsible Contractor Policy designed to encourage social responsibility in the selection of independent contractors for real estate property investments.
Why is green building and sustainability important to you?
UP: Personally, I am the daughter of an environmental engineer and have been raised on the importance of coexisting with the environment around us. As a real estate investor, leveraging capitalism to creating a more sustainable (and ideally even regenerative) built environment is the best way for me to align my personal views and passions with my career.
What made you want to get involved with Green Building United?
UP: As an investor advocating for a more sustainable built environment, I felt the need to further my knowledge and network with those with the expertise in sustainable real estate. GBU was a great way to become involved with the local sustainable building community and stay abreast of the latest developments in the field from the perspective of the experts.
Which sustainability topics do you feel are most pressing in real estate investment at this time?
UP: One of the most immediate impacts of sustainability on real estate operations is cost efficiency. Today when the top-line is challenged, cost reductions flow directly to the bottom line. The lack of efficient resource management was highlighted during the height of the pandemic’s quarantine when most commercial buildings were empty, but some were still utilizing ~80% of their typical resources. The capability to safely reduce the flow of unnecessary building resources should be a focus to investors; smart HVACs that can adjust airflow based on the occupancy and indoor air quality, passive ventilation through operable windows, and smart power strips are a few examples. Retrofitting existing buildings with these types of improvements or developing new buildings to these standards requires capital. Today, real estate developers can access debt capital at lower interest rates through green bonds that are used to fund sustainable projects. At the end of the day, these assets are more profitable and valuable due to increased efficiency and lower financing costs.
How has the industry responded to COVID-19 (e.g. safe and health office buildings, transition from offices to work-from-home and its impact)? Do you think the changes will be lasting?
UP: As it relates to the impact of COVID-19, the most pressing sustainability topic in real estate investment today is wellness – cleaner air, plenty of outdoor spaces, lots of natural light for the benefits of the sun’s UV rays, and touchless solutions for doors and bathrooms. Safer spaces are going to be a recruiting tool and their importance will be here to stay.
From the perspective of commercial buildings, landlords are doing what they can to help their tenants feel safer returning to the office by adding more sanitization stations, social distancing solutions, plexiglass between workstations and the like. However, it will take time for many to feel comfortable with returning to 100% capacity in offices. In response, many large employers like Google have extended their work-from-home mandates into 2021. In this time of uncertainty, most office tenants are still taking a wait-and-see approach to their long-term needs. Once the dust settles, however, this work-from-home forced experiment has allowed employers to realize they can do more with less, which should lead to the reduction of their overall office footprint in the future.
Importantly, as more people work from home, the home will become an extension of the office. This means the same level of focus on wellness of the workspace will be applicable to the home as well. In this case, cleaner air, plenty of outdoor spaces, lots of natural light, touchless solutions will all be in focus for multifamily buildings as well. Over the last few years, we have seen multifamily units get smaller and smaller, but that is likely to change as tenants seek space to set up home offices. In situations where struggling retailers have emptied street-level commercial spaces in multifamily buildings, landlords have already created co-working spaces to allow their tenants to work from home safely and more easily.
Lastly, we have seen a large impact of regulation on real estate during COVID-19. The most prominent has been around moratoriums on tenant evictions and rent increases. These regulations have been much more prominent in blue cities, which include most of the country’s largest real estate markets. This increased regulation aimed at humane responses to COVID-19 is likely to give way to increased sustainability in the future. For example, NYC has already implemented regulations to curtail commercial real estate carbon footprint. As more cities work toward reducing their carbon footprint (in part thanks to the work being done by organizations like GBU), sustainability regulations are going to become more and more topical for real estate landlord investors.
What resources can folks seek out to learn more about real estate investment and its intersection with sustainability?
UP: One of the best resources that focuses on the intersection of real estate investment and sustainability is Global Real Estate Sustainability Benchmark (GRESB). More broadly, UNPRI, Climate Action 100+, CDP, Global Reporting Initiative (GRI), TCFD, and Sustainability Accounting Standards Board (SASB) are also great resources for sustainable investing more broadly.
