Aaron Livingstone
Chris Poropat
Beni Dimitri
Dalhousie University
Kent Williams
Cassia Gohl
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What do you think needs changing? Ecosystems, both land, and sea? Sustainable communities and societies? Or perhaps, you’re like me and didn’t really want to open your mind that wide and settle for something a little closer to home. A zucchini garden in the backyard, or a high-efficiency lightbulb in your bathroom. Whatever that change is that you think of, did you think about it constantly before joining this project? Let’s jump back to that idea around the lightbulbs, the average apartment unit in Canada uses 20-30 kWh a day. Approximately 0.92 pounds of Carbon dioxide is emitted during the creation of just one kWh. Now, this appears as a terrifying number based on how many homes are located in Canada alone, but there are some companies combating this energy crisis and making a sustainable change, not only for our environment but for profit as well. CAPREIT is one of Canada’s largest real estate investment trusts managing over 65,000 residential rental properties in Canada, Netherlands, and Ireland, with a goal to decrease energy consumption in all 65,000 units. This is where our story begins.
Turning an idea on its head is a pretty large pill to swallow, but what about turning an entire firm on its head. That was the goal of CAPREIT’s ESG and investment strategy team. CAPREIT wanted to change its goals from a focus on exclusive shareholder returns into a mission to be the most environmentally conscious and best landlord in Canada. To do this they implemented an entirely new protocol when it came to investing. Weigh the environmental and social risk metrics the same as the financial metrics. According to Irena Stankovic the Director of ESG strategy, “there was no point in purchasing an asset that wouldn’t bring Capreit towards a greener future, it was actually totally counterproductive”, but Stankovic didn’t stop at the purchasing of assets, she wanted to retrofit every unit in Canada with the most environmentally sustainable appliances, lightbulbs, and water treatment facilities. “In a matter of just 2 years, Capreit turned its mission statement around from being an investment machine to a green machine.”
Capreit's ESG Goals for a Greener Tomorrow
How can an international real estate company, pave the way to a greener tomorrow? It started with the CEO of the company Mark Kenney and trickled down from there, in 2016 he was interested in making their buildings more cost-efficient and more environmentally friendly. After that, Irena Stankovic, the Director of ESG strategy at Capreit brought the idea to fruition from planning to execution. “There is something so simple and yet so impactful about a lightbulb, that’s really where this strategy came from. You can’t live in the dark, but at the same time you can’t kill the environment to live.” Ms. Stankovic explained in the interview. That was the goal, create a protocol for new investments and totally revamp current assets to go totally green.
In this section, we will break down the different impact metrics and goals that Capreit has seen to date. This ESG movement has impacted all stakeholders of Capreit, with reduced emissions, water usage, and electricity coupled with profitable investments and community outreach. It is safe to say that the communities that Capreit is a part of the benefit from all the hard work the staff has conducted.
Let’s begin with how the sustainability protocol changed CAPREIT from a business point of view. According to the finance team at CAPREIT, they were expecting a loss in profits due to the decrease in ESG exposed assets, and a decrease in retained earnings because of the green change revamp for all the current assets. However, quite the opposite occurred, unit rentals rose by 1.2% and CAPREIT actually saved money by not purchasing assets that were deemed a high-risk factor based on previously set protocols. CAPREIT was also able to charge higher unit rents due to the new appliances and environmentally friendly protocols put in place for existing assets. However, CAPREIT did have to invest $47 million in energy and hydro conservation measures in order to stay on track with their goals.
Next, we can see the impact on social groups, because of this movement, other REITs are following suit and converting to a green format of expansion, and continuance. CAPREIT has also encouraged its employees to reach out and get interactive in the communities they live and work in. These include $217K in charitable funds raised in 2019 and over 50 community charitable initiatives supported by CAPREIT and our employees since 2017. Going green was the initiative but getting more involved with the community was a byproduct in their mission statement changing as discussed earlier.
Finally, the most important impact with regards to this project, the impact it had on the environment. According to CAPREIT’s 2020 ESG report
- 15% reduction in water consumption over the 3-year period
- 25% Reduction in energy use over the next 10 years
- 8% energy savings since the initiative started, the equivalent of providing 5551 homes with electricity for 1 year.
- GHG emission reductions of over 8,500 tCO2e, the equivalent to taking 2686 cars off the road for 1 year.
With such tremendous success, CAPREIT is leading the way to a much greener future, one light bulb at a time.
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Iren Stankovic, Director of ESG Strategy
CAPREIT is one of Canada’s largest real estate investment trusts managing over 65,000 residential rental apartment and townhouse suites and manufactured home community sites in major urban centres across Canada, the Netherlands, and Ireland.