Welcome to ‘The ESG Crunch’ with Tom Allport, a Q&A focused on Sustainability & ESG in the Built Environment.
This Q&A series is an opportunity for our Lead ESG & Sustainability Consultant, Tom Allport to discuss all things Environmental, Social, and Governance (ESG) with some of the leading players and decision-makers in the space. Each week we will ask burning questions centered around the critical role of ESG in shaping business strategies, fostering sustainable innovation, and driving societal impact. This series will provide a platform to share insight into how these leaders are integrating ESG principles into their organisations, navigating challenges, and advice for aspiring entrepreneurs looking to join the ESG & Sustainability industry.
Nuveen is a global investment manager across traditional and alternative investments and has over $1 trillion in AUM, under TIAA leadership. Nuveen Real Estate is a top 5 global real estate manager with $155 billion in AUM. With over 85 years of real estate investing experience and more than 385 real estate employees located in over 30 cities throughout the world, our platform offers unparalleled geographic reach, which is married with deep sector expertise and a long history of prioritising responsible investing.
How did you find yourself working in the ESG & Sustainability space?
If there has been one thing I’ve known with certainty since young, it is that my world would revolve around sustainability. Since my senior year of high school, I have been studying and/or working in the field, absorbing all that I could from policy, human health and the environment, ecological economics, to land conservation and beyond. After graduating with an Environmental Studies degree, I earned my Master of Public Policy with a concentration in Environmental Policy, then immediately landed at a sustainability consulting firm, focused on energy efficiency in the built environment. After a few years of involving myself in every project and subject area feasible, I pivoted to move “in house” on the Nuveen Real Estate sustainability team. I aggressively worked my way to become the Head of Sustainability for Americas – and the view is nothing shy of wild.
What does your role at Nuveen entail?
With most sustainability teams, we are lean and serve several stakeholders – which means we rarely grow without understanding all corners of the business to some extent. I oversee the ESG/sustainability program for our real estate business and execute the strategy to meet program goals, including climate risk integration, net zero by 2040, and market leadership. A key focus is ESG/sustainability integration, to ensure the strategy is sufficiently embedded across business areas including product development, portfolio management, investment management, client reporting, and governance. I believe that the greatest signal of a successful ESG/sustainability program is when it is sufficiently embedded across job functions, where it does not sit siloed but is executed systematically. I think of the program as twofold, it is about integrating ESG/sustainability with investment decision-making and business procedure, and it is about protecting and driving asset value through smart, sustainable buildings.
Could you share some insights into the ESG & Sustainability priorities at Nuveen?
Hitting on that last point, at the core of our ESG/sustainability program, we are responding to megatrends, risks, and opportunities to protect and enhance asset value. We have a fiduciary duty to our clients, and ESG/sustainability is undeniably part of that responsibility. I bucket our focus areas into physical risk, transition risk, responsible property management, and disclosure. Climate change threatens our global economy and condition and safety of our assets. The subsequent demand for and regulation around low-carbon buildings means we need to maximize energy efficiency and source renewably. We need to respond to occupier needs and provide healthy, smart spaces for our communities. And we need to cleanly communicate back to our clients how we are stacking up against this strategy across a number of KPIs – which is where ESG comes from, it is a framework for measuring environmental, social, and governance factors that may be considered financially material.
With ESG being so broad across industry and so nuanced within Real Estate, what specific focus do you and your team have?
Broad is an understatement! My team is a lot of things to a lot of different people. Sustainability teams practically touch all corners of the business, from product, to acquisition, asset management, governance, marketing, legal, and so on. To give a snapshot of our core focus – we’re continuing to map out our Net Zero Carbon pathway and translate that into action plans for our portfolio managers and broader investment teams. We’re keeping up market research and intel to drive investment strategies, revolving around sustainability, technology, and people, as well as responding to growing demand in regulation and disclosure. As climate science updates, so does our investment guidance and management. And the business recently launched a global impact investing sector, focused on preserving quality, affordable housing.
What unique challenges and opportunities do you see with ESG in the UK compared to other global regions?
Sustainability acumen and culture are different across regions, which means rolling out a consistent program at scale is challenging. Processes and approaches that work in one region may need to be modified to be adopted elsewhere. However, being a global company means we are well versed in what’s coming before it hits the US. Our European and other global investors expect sustainability to be a core piece of investment strategy, and so when US regulators and investors follow suit, we already have the trail blazed.
Globally there is a skills talent gap in the ESG & Sustainability Real Estate sector, what skills are particularly important when developing and implementing the Nuveen ESG Strategy?
There is a skill gap in terms of finding the perfect fit, but I think the sustainability/ESG knowledge is the critical piece because it is so nuanced and its own language. Working at a real estate firm means you’re surrounded with resources, trainings, and people to impart that knowledge, but no one else knows sustainability thoroughly except the subject-matter experts. Generally, I think key qualities are critical/holistic thinking, ability to take initiative, interpersonal skills, and flexibility. There is no manual for sustainability, and it is an ever evolving, expanding field – as we are change agents – so there isn’t this comfortable systematic well-oiled machine to operate. It takes a lot of energy and commitment to drive a program forward and regularly bring creative solutions to problems.
How have your client’s ESG & Sustainability needs and priorities changed in the last 12-18 months?
Sustainability is growing and growing and growing. Our program has exploded since I joined in 2018 because it grew from a focus on just asset-level implementation, like certifications and LEDs, to authentic ESG integration. That means embedded ESG policies and procedures throughout the business operations, and again, working across all business units. Demand continues to grow as the ESG industry becomes disclosure-obsessed without true consistency – despite all the reporting frameworks out there attempting to standardize better than the last, investors still ask for bespoke metrics and formats that makes it challenging to keep pace with.
What challenges and opportunities does Nuveen have with ESG & Sustainability?
I think I’ve shared a bit about the challenges and the flip side is the opportunity. The more integrated ESG becomes, as in, a true function within different teams, the less siloed and more common knowledge it becomes. Sustainability at its core is about longevity, so it makes good business sense to respond to realities of our world to sustain the company’s purpose and that requires adapting.
How have you found the market in 2023?
The sustainability industry is facing a pesky battle around ESG communication and misinformation, which stems from the term being pulled into the political landscape. ESG is about looking at non-traditional factors that have a potentially material impact to financial performance and considering those factors in investment decisions. It is every bit our fiduciary duty to respond to environmental, social, technological, regulatory, etc., disruptors. I say this all the time, but when realizing global climate change presents a threat to the global economy in the order of 10-18% of GDP, then it is clear that it is in our best interest to understand the risk to the business.
Finally, what advice would you give to aspiring ESG & Sustainability talent in today’s market?
Every day I find purpose in what I do because I know I am expanding the sustainability acumen across an industry that otherwise would be less informed on the topic. Always, but especially in this industry, find a way to speak the language of your audience and meet people where they are at. Find those that are innovative, forward-looking, and open-minded, build a few successes with them, and then others will follow. Feel comfort that the sustainability professional community is incredibly supportive – we uphold a culture that strives to share insights and seek solutions together to move forward, and that keeps me motivated most of all.
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