This article originally appeared on the GRESB website on October 4, 2016.
The U.S. Green Building Council and Enterprise Community Partners have both introduced new health processes within their green building rating systems. Additionally, new, entirely health focused systems such as the WELL Building Standard and Fitwel are beginning to emerge. However, the ability for architects, designers and developers to apply these new tools depends on their ability to access financial capital, whether that be in the form of government, philanthropic or private funding. In the private real estate sector, institutional investors control the flows of capital that ultimately influence the decisions of individual built environment practitioners. The new GRESB Health and Well-being Module provides a snapshot into how real estate companies and investors are considering the health and well-being impacts of their real estate assets. Find out more about the GRESB Health and Well-being Module by reading this post on GRESB Insights and checkout a high level summary of results here. Stay tuned for an associated white paper that will provide a deeper level of analysis to be released later this year.
The GRESB Health and Well-being Module is a new tool to understand how property companies and funds around the world are promoting health and well-being in their internal operations and through the real estate and services they offer to customers. The Module is predicated on the recognition that health and well-being is emerging as an important source of both risk and opportunity for property investors and companies.
The Module includes ten new indicators addressing leadership, policy, needs assessment, implementation action, and performance monitoring related to health and well-being. Information from the assessment helps investors identify companies and funds that are taking systematic action to promote health and well-being. The information also provides companies and funds with measures to gauge their relative strengths and weaknesses in this rapidly emerging area of work.
In its first year, 174 entities – 23% of all entities participating in the GRESB Real Estate Assessment – participated in the voluntary Module. Their responses have been aggregated to provide a valuable industry snapshot in the form of our new infographic (download).
Here, I’ll highlight five findings from these initial results:
(1) Many companies promote health and well-being in their own operations; only a fraction are actively promoting health and well-being through their products and services
We learned that all participating companies and funds were beginning to manage health and well-being internally, to some degree. However, a relatively small sub-set of companies and funds are taking action to promote health and well-being externally through their real estate and services. We identified 62 leaders taking action in both domains. Interestingly, no companies or funds report taking external action without taking action internally. In other words, promoting health and well-being in internal operations seems to be a necessary precursor to offering this to customers.
(2) Health and well-being most often brings in new leadership; sometimes new responsibilities for ESG leaders
We see many sustainability professionals taking on health and well-being as an additional responsibility. Consequently, my personal expectation was that the majority of participants would indicate that the same individual in their organization is responsible for sustainability and health and well-being. I was surprised by the results. The data show that there are a significant number of such dual role professionals (32%); however, 60% of companies report that a different individual is in charge, most often from human resources. This makes sense with respect to internal operations; however, it is a double-edged sword. Human resource leaders may be in a good position to drive internal change, but they may have limited expertise and mandate to act externally. This creates a situation where no single leader has the expertise and mandate to promote health both internally and through products and services.
(3) Many firms have internal health and well-being policies; only a fraction of companies have policies to promote health and well-being through their products and services
Most, but not all, participants report having a formal policy to promote the health and well-being of the people operating their business. That’s good. However, such policies are not yet universal even in this self-selected sample. The data also show that policies regarding health promotion for customers lags behind. Barely half of participants have formal policies. Ultimately, policies matter because they are leading indicators that, ideally, express the direction and intent of management. The absence of policy does not necessarily mean the absence of action. However, the absence of policy is a warning sign that action may not be institutionalized or directed toward specific outcomes. The lack of organizational structure and accountability creates the risk of committing random acts of health promotion – well-intended actions without the coordination needed to make large-scale change.
(4) Many companies are acting to promote health; only a fraction are measuring performance
Companies and funds described a wide-variety of specific implementation actions intended to promote health and well-being. Internally, the most common actions included medical care, the provision of social interaction spaces, and access to recreational opportunities. Externally, the most common actions included attention to indoor air quality, toxic exposures, and thermal comfort. These make sense, but they beg follow up questions. For example, given the attention to material supply chains over the last several years, it is somewhat surprising that nearly half of firms do not report taking action to reduce toxic exposures. From a societal perspective, it is also interesting to see the gap between medical care and mental health care. For North American audiences, it may also be interesting to note the relatively low frequency of smoke free policies for property companies and funds in other regions. This serves as a reminder that even one of the most fundamental green building “prerequisites” (tobacco smoke control) is not yet ubiquitous among property companies and funds.
(5) Almost all companies face financial risks from health and well-being; however, risks are not spread evenly across the industry
We face some fundamental questions about the drivers of action to promote health and well-being. One elemental issue is the degree to which firms are acting to address financial risks or liabilities associated with health and well-being. This concern is often acute in the United States where private companies bear significant and rising costs for employee health insurance. We are often told that socialized medical systems elsewhere in the world isolate firms from these concerns.
We asked a simple question in the module to explore this issue: Is the company exposed to health and well-being related costs? North American firms report the greatest exposure; however, Asian firms also reported high levels. European and Australian firms reported much lower exposure, but a significant number of companies reported some exposure. This is a richer and complex story that warrants more investigation.
These initial observations are only the start of our efforts to understand how companies and funds are acting to promote health and well-being. GRESB is working with colleagues including Delos, the Green Health Partnership at the University of Virginia and the U.S. Green Building Council to dig deeper and understand more about industry strengths and weaknesses. We want to use this information to provide investors and participants with more visibility on this important issue and, ultimately, provide differentiation and recognition for high performing companies and funds.
At Greenbuild 2016 in LA, we hosted two sessions, including:
- GRESB Update, Session C14: Global trends in sustainable real estate and infrastructure
- Health and Well-being Track, Session EO3: Tools and incentives for health-focused design
You can learn more by asking one of the Health & Well-being Module participants. You can find a list on the back of the infographic.