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Paper for Presentation at 2009 ULI Fall Council Forum

Metrics for Responsible Property Investing:

Developing and Maintaining A High-Performance Portfolio
November 2009
Lisa Michelle Galley
Founder and Managing Director
Galley Eco Capital

Jean Rogers
Principal
Arup

David Wood
Director
Responsible Property Investing Center
Boston College

Acknowledgements
The authors are indebted to Scott Zengel of Bay Area Council and Nick Stolatis of TIAA-CREF for their
willingness to participate in the case study and to test the RPI metrics in the real world. Their insights were
invaluable. The authors would also like to thank Andrea Fernandez of Arup for her tremendous assistance
in researching indicators, interpretation of data, and editing.
Contents
1 Introduction 5
2 Institutional Real Estate’s Volatile Investment Environment 6
2.1 RPI in the Contemporary Real Estate Environment 7
2.2 Impacts of Sustainability on Institutional Real Estate 10
3 New Metrics for a New Era 12
3.1 Gaps in current reporting efforts 12
3.2 Proposed metrics for RPI evaluation 13
3.3 Use cases for RPI metrics 13
3.4 Discussions of proposed RPI metrics 15
3.5 Portfolio characterization 20
3.6 Case Study Results 21
4 Implication for Reporting and Management 23
4.1 Adapting for higher performance 23
4.2 High-Performance Portfolio Dashboard 25
5 Notable Benefits and Conclusion 26

Tables
Table 1: Sustainability Impacts on Real Estate 10
Table 2: Proposed RPI Metrics 14
Table 3: Portfolio Characterization 20

Figures
Figure 1: Institutional real estate’s performance, 6
as measured by the NCREIF Property Index as of 12/31/08
Figure 2: “Market standard” fund performance characteristics 9

Appendices
Appendix A: Metrics Case Study – Acquisitions 27
Appendix B: Metrics Case Study – Portfolio Management 35
1 Introduction
Responsible Property Investment [RPI] is an
emerging investment strategy and discipline
concerned with integrating environmental,
social, and governance [ESG] data into
investment decision-making. Proponents
point to increased regulatory risk, resource
constraints, changing consumer preferences
and demographics – all as they relate to the
increased importance of environmental and
social issues -- as drivers of change in the real
estate investment industry.
To date, however, the industry has yet to
develop standards to evaluate ESG data
that compare to its traditional evaluation of
portfolio performance. The emergence of
third-party standards offer investors some
guidance especially on environmental issues,
but tend not to cover the range of RPI. In
any case, there has yet to develop a fully
elaborated set of issues, vocabulary, and
measurement that allow investors can use to
evaluate whether their portfolios are achieving
their environmental and social goals, or that
enable investors to evaluate the relationship
between ESG data and financial performance.
One important step along these lines will
likely be the development of an industry-
standard set of metrics to evaluate ESG
performance that allows investors to measure
performance across their own portfolios, to
enhance their acquisition and disposition
decisions, and to report their performance to
investment partners, regulators, civil society
organizations, and other stakeholders.
For ESG analysis to become industry best
practice, some system of measurement will
need to establish rigorous standards that hold
investors accountable for their claims, and
offer investors the capacity to favor higher
performing buildings and portfolios in practice.
These metrics must be rigorous enough
to allow for substantive analysis, but
flexible enough for investors to tailor them
to their specific needs. They have to be
comprehensive enough to capture real
performance, but simple enough to be usable
in the context of investments in the real world.
These challenges will require collaboration,
and a willingness to test ideal systems in the
day-to-day world of investing
This paper is a preliminary effort to address
these challenges. After reviewing the state of
real estate in the wake of the recent financial
crisis, and the role of RPI in that context, we
offer a set of sample RPI metrics, along with
2 case studies with actual investors (TIAA-
CREF and the Bay Area Fund of Funds). Our
hope is to catalyze a discussion on how to
make metrics that are rigorous and useful. We
5
want to raise the profile of this issue among
industry professionals, and draw from their
expertise and experience to develop a system
that helps the industry face the imperatives of
key environmental and social challenges, and
capitalize on the opportunities that will come
with a transforming economy.
Real estate investment plays a fundamental
role in determining how society uses
resources, how the built environment
shapes social life, how economic activity
can be sustainable over time. As an asset
class, real estate offers especially tangible
demonstrations of the importance of ESG
analysis in creating value for investors and
society alike. We believe that a robust
metrics system can help shape the market
to better create sustainable outcomes for all
stakeholders.
 2 Institutional Real Estate’s Volatile Investment Environment
Institutional real estate is in the midst of a major downturn, as real estate performance has
both driven and followed the plunge in US and worldwide economic activity. At their peak,
annual real estate returns for tax-exempt property owners (governments, pension funds,
etc), ranged from 14%-20% from 2003-20071.
1
Data from the National
NCREIF Property Index Total Return Council of Real Estate
Income Return Investment Fiduciaries as
8%
Capital Return of 12/31/08 (www.ncreif.
6% org; accessed on 4/6/09).
4% The graph shows the
Quarterly Return

2% returns for the NCREIF

0%
-2%
-4%
-6%
-8%
-10%
-12%
78
Figure 1: Institutional real estate’s performance, as measured by the NCREIF Property Index as of 12/31/08
2008 will be remembered as a year where
6
property returns for institutional investors
ended at an estimated -6.46%, reflecting
the impact of a national credit and housing
crisis, and speculative excess tied to real
estate investment. It is unclear to what extent
real estate investment will track economic
recovery, given the size of the bubbles that
have popped.
Most in the economy clearly recognize
that credit and investment capital is highly
constrained and an easy credit environment
will not be back for a long time. Real estate
owners must become experts at economic
sustainability; conserving and organically
growing cash flow though long-term
investment strategies, while becoming more
efficient users of capital the next several years
to come.
Property Index (NPI) for
the nation, which includes
over 4,200 properties at
a market value exceeding
$150 billion. The NPI
income graph shows
the return from the Net
Operating Income (NOI)
82 86 90 94 98 02 06
for the properties and the
Year NPI capital graph shows
the return from gain in
value net of any. Returns
are calculated by NCREIF
Hidden Rise of Un-Sustainability quarterly based on
appraised values and are
The current credit crisis has exacerbated shown on an unleveraged
basis as if properties were
other problems within commercial real estate all purchased on an all
–hidden during the boom years -- that have cash basis.
only recently come to light.
During the real estate boom years of 2004
to 2007, low interest rates, easy liquidity and
increased debt leverage had combined to
help inflate real estate prices. Many investors
focused on these speculative returns at the
expense of attention paid to the real rise in
energy and water costs on their properties.
During that period, rising (and fluctuating)
energy costs, particularly within the past 36
months, have been increasing consumer
cost of living and weakening the business
sector through higher costs of operations.
In addition, fuel costs for transportation
have also played a key role in the real estate
crisis, impacting with greater force on those
properties in suburban areas or locations with
poor access to public transit.
The potential long-term risks of exposure to
climate-related regulation, changing consumer
sentiment, and even the simple operating
costs of buildings in their portfolios have
become more apparent in recent years. As the
short term orientation of real estate markets
has suffered, the long term implications of
sustainability have risen in importance.
2.1 RPI in the Contemporary Real Estate Environment
The very widespread problem of energy,
water, and fuel supply and price risk helped
to propel environmental concerns to the
national agenda and even partially shaped the
outcome of the 2008 American presidential
election. Stakeholders from regulatory
agencies to consumers have become more
aware of the negative impact of buildings on
the use of natural resources and the related
effects building siting and operations have on
communities.
Widely cited statistics note that 40 percent
of primary energy use, 72 percent of U.S.
electricity consumption, 29 percent of
carbon dioxide emissions, and 13.6 percent
of potable water consumption are due to
buildings.
Against this backdrop, buildings constructed
using green building principles are present a
compelling alternative:
• Energy use in green building is 29 to 50
percent less than non-green counterparts.
• Green buildings use an estimated 40
percent less water.
• Carbon dioxide emissions in green
buildings are reduced by 33 to 39
percent.
• Solid waste attributable to green buildings
is reduced by 70 percent.
More comprehensively, the built environment 2
Mansley, definition of
Responsible Investing
shapes fundamental decisions about where
and how to live, social inequity in the provision
of housing, and access to public and private
services.
Responsible Property Investing (RPI) is a
response to increasing public concerns
about the environmental and social
impacts of buildings, in conjunction with
a growing awareness among investors
that environmental and social analysis can
enhance their ability to assess building and
portfolio performance over the long term.
RPI facilitates a more comprehensive
engagement between investors, their
properties, and tenants by “taking into
account social, ethical and environmental 7
factors in the selection, retention and
realization of investment, and the responsible
use of rights (….) that are attached to such
investments2. Responsible property investing
has emerged in response to the need for
investors to adopt responsible investing
principles, which are more tailored for property
investments.
RPI takes into account the social,
ethical and environmental factors in the
selection, retention and realization of
investment, and the responsible use of
rights attached to such investments
 The United Nations Environment Programme
Finance Initiative Property Working Group
has defined RPI in terms of social and
environmental dimensions of real estate
investment, including:
• Smart Growth (e.g., transit-oriented
development, walkable communities,
mixed-use development
• Social Equity and Community
Development (e.g., affordable housing,
community outreach, fair labor practices,
workforce development)
• Urban Revitalization (e.g., goods and
services provided to underserved
communities, infill development, flexible
interiors, brownfield redevelopment)
• Energy Conservation (e.g., energy efficient
buildings, conservation retrofitting, green
8
power generation and purchasing)
• Environmental Protection (e.g., water
conservation, recycling, habitat protection)
• Worker Well-Being (e.g., plazas, indoor
air quality, childcare on premises,
handicapped access)
• Health and Safety (e.g., property security,
avoiding hazards, first aid readiness)
• Local Citizenship (e.g., aesthetics,
minimum neighborhood impacts,
considerate construction, stakeholder
engagement, historical preservation)
• Corporate Citizenship (e.g., regulatory
compliance, sustainability disclosure,
independent directors, and adopting
of independent voluntary codes such
as LEED, Energy Star, Green Seal, UN
Principles for Responsible Investment, and
Global Reporting Initiative)
These principles highlight the range of RPI
issues, and also create a framework for
applying ESG analysis to the real estate
asset class. In practice, these issues have
been treated as vital by many investors – RPI
offers a means to bring them together into a
coherent framework.
Industry Practice Today
The application of responsible property
investing principles to institutional real
estate portfolios can best be framed by
understanding the current context for property
investment and investment metrics here in the
United States.
The Real Estate Roundtable estimates the
size of the US commercial real estate market
at $5 trillion, with approximately $2.5 trillion
in assets owned by institutional investors.
The balance is owned by corporations.
Institutional investors can be public funds,
union/multi-employers, foundations,
endowments, healthcare, insurance
companies, high net worth individuals or
mutual funds.
Those investors utilize a diverse array of
financial structures to achieve their investment
objectives, such as equity, fixed income,
non-US equity or fixed income, balanced
real estate or alternative investments. Each
of these financial structures have distinct risk
and return profiles.

Professional real estate investment operates
through the contract between the institutional
investor and the asset manager, also
called the real estate manager. The goal of
the management contract is to establish
relationship guidelines, performance goals,
and regulate investment discretion. The
typical selection criteria that institutional
investors use to select real estate managers
are:
• Experience and stability managing real
estate
• Competitiveness of fund performance
• Competitiveness of fees
• Appropriate fund diversification and use of
leverage
The classic measures of success, which
ultimately determine whether the institutional
investor is receiving satisfactory performance,
appear in portfolio characteristics below
and in Figure 2, which are the most direct
measures of fund performance:
Portfolio Characteristics
1. Fund strategy: core, value-added,
opportunistic, etc.
2. Legal structure and fund type: closed-end,
open-end, private REIT, etc.
3. Number of properties
4. Use of leverage
Fund Life Cycle Performance
Diversification Diversification Summary
Property type Existing buildings Year
Geographic Redevelopment Quarter
Property size Development Income
Land Appreciation
Gross total return
Net total return
Dividend paid out
Figure 2: “Market standard” fund performance characteristics
In other words, contemporary institutional real
estate investing happens through a diverse
array of financial vehicles, managed by real
estate managers. These arrangements are
considered ‘market standard’ because they
are thought to encompass nearly all of the
most relevant criteria and processes needed
to obtain market or above market rates of
return on an investment of institutional capital
9
within real estate.
RPI Metrics as Enhanced Investment
Analysis
The endgame of using metrics is to
provide real estate market participants with
transparency, benchmarking, risk assessment,
performance evaluation, and an unbiased
way to compare asset managers’ investment
efforts.
The likelihood or reaching that endgame,
however, relies on one fundamental, largely
unspoken, assumption, which drives many
of the explicit agreements and assessment
parameters – that the current set of
information used by institutional real estate
investors is complete, and delivers predictable
forecasts of future performance. In other
words, the key assumption within the system
of performance criteria and measurement
outlined above is that there are no new issues
or factors beyond that highlighted above,
which would affect the business system of
real estate including the results (returns) of the
investment process.
In the next section, we examine why that is no
longer the case.
 2.2 Impacts of Sustainability on Institutional Real Estate
Many experts have written extensively about
global sustainability challenges and the
impacts are now being observed in many
kinds of systems. The increased global and
Sustainability-related Drivers
Global natural resource depletion in particular
fossil fuels and water.
Increased global atmospheric carbon levels
Negative impacts of suburban land development
patterns
10
Dearth of clean, economical public transportation
Demographic trends toward urban environments
Growth constraints due to municipal utilities
Building energy labeling requirements
Impending carbon legislation
Utilities facing renewable portfolio standards
Insurers overexposed to climate chvange risks
Increased attention on indoor environmental
health
Table 1: Sustainability Impacts on Real Estate
social awareness about sustainability in
general has sharply impacted institutional real
estate in several interrelated ways, as shown
in the table below.
Impacts on Institutional Real Estate
Opportunities
“Green” or resource-efficient buildings
Sustainable mixed use developments
Commissioning and retrofitting green
Zero-carbon eco districts.
TOD, urban-infill properties
Adaptive reuse
Increased value of TOD sites
TOD, urban-infill properties
Self sufficiency:getting off the grid for power
and water
New financing tools through ESCOs
Competitive positioning for owners of Energy
Star rated buildings
Monetization of carbon reductions from energy
efficiency measures
On-site generation can be win-win
(33% in California)
Green building policies offered through some
insurers (Fireman’s Fund, Traveler’s) Increased
attention on indoor environmental health
Lower insurance premiums for implementing
green and/or energy efficient approaches
Green buildings with healthy materials,
and good access to daylight and views
Challenges
Potential obsolescence of non-green buildings
Unreliable energy supply and pricing
Unreliable water supply and pricing
Increased building construction and costs
Increased regulation
Meeting zero carbon targets at building scale
Financing renewable on-site energy generation
Land use restrictions
Cost of public transit
Increased competition for prime urban locations
Increased operating costs for power and water
Increased risk of business interruption due to
power failures
Limitations on development OR requirement to
fund adequate water and power supply facing
limits on supply
Financing investment in sustainable water and
energy infrastructure
Heightened legal compliance associated with
disclosure
Market leasing and sales risk, if disclosures are
unfavorable
Carbon tax on properties in the near to mid-term
Contract risks
Space requirements for on-site generation
Higher insurance costs for a host of business
liability issues
Withdrawal of insurers from some real estate
markets
Some green building techniques perceived as
“risky”
Decrease in tenant satisfaction
Legal risks of poor indoor air quality
The above are sustainability-related forces
which constitute risks and opportunities
for institutional real estate investors. At the
portfolio level, these risks and opportunities
will express themselves in the following
property performance features:
• Increased or reduced revenue and overall
cash flow
• Rent growth, occupancy rates and
ongoing investment cost management
• Asset operating expense efficiency and
cost escalation management
• Depreciation and obsolescence
• Risk profile of target properties
• Discount and cap rates applied to
properties
To the extent that a real estate portfolio
may benefit due to the presence of these
impacts, they constitute portfolio performance
opportunities. Nonetheless, most of today’s
“market standard” portfolio performance
metrics do not directly account for any of
these forces, meaning that sustainability-
related opportunities and risks that may be
present within these portfolios currently lie
outside the real estate business system,
unmeasured.
The presence of these new forces within the
real estate universe means that institutional
investors and their managers will have to
expand their measurement and definition of
performance to include an assessment of
these sustainability-related factors. By doing
so, they gain an understanding of portfolio
performance which reflects important new
trends and comes closer to what they always
strive for: transparency, objectivity, and
credibility within the new context of investing.
In order to create measurements that are 11
meaningful across regions, sectors, and
investors, there is a need for a relatively
uniform set of additional metrics which are
better suited for the new issues facing real
estate investing.
In 2008, the Global Reporting Initiative undertook a review of major
sustainability reporting efforts in the construction and real estate
sector. It aimed to understand the relative frequency of which key
sustainability indicators were measured and reported by leaders
in the field. Among those already producing detailed sustainability
reports, the review shows that portfolio-level performance is under-
reported and that no standard exists for metrics at this level. The
reporting frequency of identified indicators varies widely across
the sample of investors, making valuable cross-industry analysis
impossible. Even many of the leaders in the industry report much
more on CSR and philanthropic issues than those of portfolio
performance. We hope that the GRI Sector Supplement for
construction and real estate, now in development in coordination
with a quorum of participating industry leaders, will address these
concerns before its anticipated release in 2011.
 3 New Metrics for a New Era
3.1 Gaps in current reporting efforts
A number of initiatives, both industry-wide and
investor-specific, have attempted to quantify
and report on sustainability metrics outside
the traditional scope of portfolio analysis.
These include the Global Reporting Initiative
and Principles for Responsible Investing at the
industry scale, and, for instance, the Investa
Sustainability Indicators and CBRE Standards
of Sustainability at the individual company
scale.
To varying degrees, these efforts track (or
aid in tracking) data on natural resource use,
building performance, environmental and
community impact, and other key indicators.
Many of them focus on (or are derived from)
an understanding of building performance,
12 conducting analysis at an asset level rather
than a portfolio level. In the meantime,
gaps at the portfolio level are present to the
extent that sustainability data may be both
inconsistent and misrepresented, keeping
this valuable information from reaching its
full potential for investors, asset managers,
stakeholders, and industry analysts alike.
The field of RPI lacks a powerful, standardized
set of portfolio-level metrics which is
recognized and used by investors and
managers across the real estate industry,
thereby defining and giving credibility to the
practice of RPI. Such a system would not
only create improvements in building and
portfolio performance, but would also allow
for benchmarking and development of a
database of “comps”. Currently, reporters
are selective about which metrics to include
or exclude, and data is not comprehensive
or comparable from one portfolio to
another. Even those firms leading the field
of responsible investing and sustainable
asset management may report only one-off
examples of buildings or initiatives which
cannot be extrapolated to obtain a view of
portfolio level performance.
Showcasing exemplary projects can be
helpful to outside parties and a great method
of generating positive feedback, but should
not be done without providing relative
performance with respect to both the rest
of the portfolio and the industry as a whole
(where possible). For example, two pages
of discussion in a report of a single LEED-
Certified building may mask the fact that the
majority of the portfolio consists of business-
as-usual properties. A unified system of
RPI metrics to measure performance at
the portfolio level would prevent these
discontinuities and help establish standards
and best practices for high-performance
portfolios sector-wide.
In 2004, Paul Hawken studied the makeup of socially responsible
investment (SRI) funds against traditional funds and determined
that an SRI portfolio had almost identical characteristics and
holdings as non-SRI investments. Furthermore, he found that
there were no standards, definitions, or formal codes of practice
for SRI. To continue to remain relevant, portfolios aiming for RPI
achievement should have a markedly different, more sustainable
mix of assets than non-RPI portfolios. This difference should be
quantitatively demonstrable, an aim which this system of metrics
can help to achieve.
RPI metrics, therefore, must use
vocabulary that is flexible enough to
allow for a variety of financial, social and
environmental advantages, and still be
able to differentiate responsible property
investing from more conventional real
estate projects
3.2 Proposed metrics for RPI evaluation
The scope of RPI is broad. It includes, for
example, “deep green” projects that focus
on poor communities or environmentally
fragile areas, energy efficient buildings that
offer clear financial advantages through
reduced operating costs, affordable housing
projects that draw upon local tax credits,
and now carbon reduction projects that
hedge risk and result in renewable energy
certificates. RPI metrics, therefore, must use
vocabulary that is flexible enough to allow for
a variety of financial, social and environmental
advantages, and still be able to differentiate
responsible property investing from more
conventional real estate projects.
3.3 Use cases for RPI metrics
We envision three primary uses for RPI
metrics in practice: informing acquisition
decisions, enhancing portfolio management,
and reporting performance. Metrics can be
used to guide investors across the life cycle
of responsible property investment, from
existing buildings to new development, from
acquisition to disposition.
Because of their different purposes -- at the
acquisition stage (evaluation of one property)
or at the level of portfolio management
(evaluation of the portfolio of assets in its
entirety), RPI metrics take different forms
depending upon the use case.
Building off of the ten elements of social and
environmental impact and opportunity in real
estate as defined by the UNEP FI Property
Working Group, we have developed a set
of 26 quantitative metrics that can help
investors to find, create and articulate value
through improving the economic, social, and
environmental profile of their investments. We
recognize, of course, that individual investors
will tailor their adoption and use according to
their specific investment strategies. These
metrics were selected for their ability to allow
real estate professionals to better address
risks and identify opportunities for long-term
value creation. The metrics take two forms
to support different use cases: acquisition and
portfolio management, as described below.
13
Reporting can happen in both instances:
characterizing the nature of an RPI
opportunity, or demonstrating for stakeholders
how investment values have been put into
practice in an RPI portfolio, and how a
particular investment strategy can create value
over time.
Our case studies (see Appendices A and
B) test the validity of these use cases, and
establish links to value, where possible.
 RPI Metric Acquisition Portfolio Management
Energy Conservation and Carbon Management
Energy Use Intensity For property, BTU/sf Average across portfolio, BTU/sf
Total Annual Energy Use For property, BTU/yr Total across portfolio, BTU/yr
Renewable Energy On-site generation at property location, % of total On-site generation across portfolio, % total
demand demand
CO2 Emissions Intensity From energy use, for property, pounds/sf/yr Average across portfolio, pounds/sf/year
Energy Star Rating Energy Star Score for Property Average Energy Star Score across Portfolio
Retrocommissioning Performed last 24 months, yes/no Properties on regular commissioning schedule,
across portfolio, %
Environmental Protection
Water Use Intensity For property, gal/occupant/day Averaged across portfolio properties, gal/
occupant/day
Total Annual Water Use For property, MG/yr Total for portfolio, MG/year
Recycled Water Use On property, % of total water use Average across portfolio, %
Water Management Fees For property, combined water and wastewater Total for portfolio, $/yr
charges, $/yr
Solid Waste Generation For property, tons/yr Total for portfolio, Million tons/year
Diversion Rate For property, % diverted from landfills through Average across portfolio, %
recycling programs
14 Green Leases In place on property, yes or no Properties in portfolio operating under green lease
structures, %
Urban Revitalization and Adaptability
Brownfield Yes or no % brownfield properties in portfolio
Infill Yes or no % properties in CBD in portfolio
Smart Growth and Transit Oriented Development
Walkscore Rating Rating for property Average rating across portfolio
Health and Safety
Risk Management Plans Prepared for property, yes or no % properties in portfolio with risk management
plans in place
Vulnerable Location Yes or no % properties in coastal areas and/or earthquake
zones
Worker and Tenant Well Being
Tenant Satisfaction Survey Score on Kingsley survey Average score across portfolio on Kingsley Survey
Social Equity and Community Development
Benefits to CRA area Property located in a CRA census tract, yes or no % of properties in census tracts designated by the
Community Reinvestment Act (CRA)
Essential services Project brings essential services to an underserved % of properties in the portfolio bringing essential
area, yes or no services to underserved areas
Local Citizenship
Community Engagement Community Engagement Plan in place for property, % properties in portfolio with community
yes or no engagement plans in place
Public space Amount of public space maintained by the project, Amount of public space maintained, as % of total
sq ft area in the portfolio.
Voluntary Certification
Third Party Certification Property is certified under USGBC LEED, Energy % of properties in the portfolio with third party
Star, or other green building rating system, yes certification underway or in place
or no
Governance
Reporting Performance Performance of the property is reported against Is the performance of the portfolio reported against
triple bottom line metrics, yes or no triple bottom line metrics?
Alignment of Incentives Property manager is evaluated on triple bottom % of property managers evaluated and
line performance, and it is tied to compensation, compensated on the basis of triple bottom line
yes or no performance

Table 2: Proposed RPI Metrics

3.4 Discussions of proposed RPI metrics
3.4.1 Energy Conservation and Carbon
Management
Metrics relating to energy conservation
and renewable energy generation have
the advantage of being tied directly to
reduced operating costs. Therefore, it is no
coincidence that the metrics surrounding
building energy use and associated
greenhouse gas emissions have been the
focus of many green building initiatives
to date. However, these are generally
communicated as gross totals across
investments rather than in normalized or
percentage terms which allow comparisons
between properties and between portfolios.
When evaluating a portfolio, it is most useful
to set targets and interpret performance by
building types and climate zone. Recently
enacted EPA GHG reporting requirements
and legislative initiatives promoting net zero
buildings (California Energy Commission) will
drive adoption of metrics such as these for
portfolio management.
An Energy Star rating of 75 is needed to get
an Energy Star certification and for LEED-
EB. 85+ is good, and 90+ is very good. The
score is essentially the percentile compared to
the rest of the EPA database, so 95% would
mean only 5% of buildings perform better.
For an office building (based on Commercial
Building Energy Consumption Survey, or CBECS
data) typical energy use (energy and gas) is in
the range of 90 kBtu/sf/year (electricity use of
17 kWh/sf/yr = 59 kBtu/sf/yr plus gas use of
32 kBtu/sf/yr). Of course, energy use is climate
specific, but a well designed low energy office
building might achieve 30 to 50 kBtu/sf/yr total.
A net zero energy building might beat code 15
baseline by 60% and then make up the rest with
renewable and offsets. While energy intensity
is a metric that can identify underperforming
buildings, total energy use for the portfolio is
also important. This indicates the magnitude of
the value opportunity for even small increases in
energy performance.
RPI metrics take different forms
depending upon the use case:
acquisition or portfolio management
 3.4.2 Environmental Protection
The management of other resources used
or generated by properties, namely water
and waste, is also a key issue for investors to
consider for their portfolio. These parameters
have direct links to value, with reduced water
potable use, reduced wastewater and solid
waste volumes resulting in reduced operating
costs.
According to the DOE, commercial buildings
consume 88% of the potable water in the US4.
A typical office building can use up to 60 gals/
sf/year, or 70 gals/person/day for indoor use,
cooling, and irrigation5. This is compared to
a highly water efficient building, which can
achieve up to 10 to 15 gals/sf/year or gals/
16
person/day through water efficient fixtures,
xeriscaping, and use of recycled water. While
potable water savings represent significant cost
savings, wastewater charges can be double
to quadruple water charges in some areas
with limited capacity and aging infrastructure,
or communities with new wastewater plants
that must be amortized. Therefore, reducing
wastewater volumes is even more important to
the bottom line that reducing potable water use.
3.4.3 Urban Revitalization and
Adaptability
Focusing investments on sites and properties
which return brownfield sites to productive
use or which take advantage of under-
utilized urban space reduces the need for
greenfield development and encourages land
conservation. Additionally, government and
market incentives are increasingly directed
toward investments which make efficient use
In San Francisco, commercial rates for potable 4
http://www.buildings.
com/ArticleDetails/
water and wastewater are escalating, with rates tabid/3321/ArticleID/6461/
proposed at approximately $10.00 per ccf Default.aspx
(hundred cubic feet = 748 gals)6 for provision of 5
http://www.seco.
cpa.state.tx.us/
water and wastewater services by 2012. So, waterconservation.pdf
a 30 storey office building with a floor plate of 6
SFPUC 2009-2013
30,000 sf could save over $50,000 per month proposed water and
wastewater rate package
by investing in conservation and efficiency
7
California Integrated
measures. Waste Management
Board, Estimated Solid
Solid waste generation can be 0.08 lb/sf/day Waste Generation
or 1.24 lb/ employee/day7 for a typical office Rates for Commercial
Establishments,
building. However, diversion rates of 75 % or http://www.ciwmb.
more can be achieved for an office building ca.gov/WasteChar/
WasteGenRates/
with robust sorting, recycling, and composting Commercial.htm
programs in place. With solid waste collection
and disposal rates approaching $150/ton, the
magnitude of the value opportunity for even
50% diversion significant (for our hypothetical
30 storey office building it could be over
$1M per year). Green lease arrangements tie
tenant efforts to conserve resources directly
to the savings realized by such efforts, so that
investors, managers, and tenants alike each
have motivation to maximize reductions.
of space as opposed to conventional sprawl.
Some real estate funds invest exclusively
in brownfield properties (e.g. Cherokee).
However, most funds do not report the scale
of these types of investments at the portfolio
level either as a percentage of properties or a
total square feet in the portfolio.
3.4.4 Smart Growth and Transit
Oriented Development
Compact, walkable communities are the
solution to some of our biggest shared
challenges, from childhood obesity to social
isolation, from crash deaths to disappearing
farmland, from the high price of gas and GHG
emissions, to the architectural blight of strip
malls.
Investing in areas with existing density and
access to essential services and public transit
is one of the principal ways that RPI can
support smart growth. Walkscore ratings can
serve as a proxy measure for smart growth
and transit orientation, since with density
comes public services and “walkability”.
Measuring the walkscore for a property is
a simple as putting in the address into the
walkscore calculator (www.walkscore.com).
The property walkscore is a number between
0 and 100. General guidelines for interpreting
the score are as follows:
• 90-100 = Walkers’ Paradise: Most errands
can be accomplished on foot and many
people get by without owning a car
• 70-89 = Very Walkable: It’s possible to get
by without owning a car
• 50-69 = Somewhat Walkable: Some
stores and amenities are within walking
distance, but many everyday trips still
require a bike, public transportation, or car
• 25-49 = Car-Dependent: Only a few
destinations are within easy walking
range. For most errands, driving or public
transportation is a must
• 0-24 = Car-Dependent (Driving Only):
Virtually no neighborhood destinations
within walking range. You can walk from
your house to your car!
Similar to the manner in which some portfolio 8
http://www.u.arizona.
edu/~gpivo/
managers aggregate EnergyStar ratings and Walkability%20Paper%20
establish a portfolio wide target, walkscore 8_4%20draft.pdf
ratings can also be aggregated across a
portfolio, providing a useful view into the
character of the properties in the portfolio.
The effect of walkability on property value
was the subject of a study by Dr. Gary Pivo,
professor of planning and natural resources
and senior fellow at the University of Arizona,
and Dr. Jeffrey Fisher, professor of real estate
and director of the Benecki Center for Real
Estate Studies at Indiana University8.
Dr. Pivo and Dr. Fisher pulled real estate
data going back a decade from the Nation
17
Council of Real Estate Investment Fiduciaries
(NCREIF) and obtained walkability ratings for
nearly 11,000 buildings using a Walk Score.
For each of the property types analyzed –
office, retail, multi-family and industrial – higher
walkability scores equated to higher overall
property values and net operating incomes.
Comparing properties with a Walk Score of
80, defined as “very walkable,” to properties
with a score of 20 (“car-dependent”), the
study found that the walkable properties were
29 percent to 49 percent more valuable and
generated 34 percent to 71 percent more NOI
per square foot.
The positive correlation between walkability
and property value and NOI was expected,
Dr. Pivo and Dr. Fisher said in the study.
According to Dr. Pivo, the premiums suggest
higher rents, occupancy and general market
demand for walkable properties.
 3.4.5 Resiliency
Properties that endure are inherently
sustainable. Properties can be vulnerable
to all kinds of disasters which in turn could
jeopardize the sustainability of the occupants
and/or community. Additionally, rebuilding
damaged properties has an enormous
environmental impact. Looking at the age
of buildings in a portfolio is revealing, as
building codes have become more stringent
over time. However, dDesigning to code
protects life safety, but does not protect the
asset. Therefore, a portfolio manager should
assess the resiliency of the portfolio to risks
associated with climate change, earthquakes,
other natural disasters, and security. Rather
18 than establishing metrics for performance
of the asset against specific risks, having
a risk management plan in place serves
as a proxy for performance. As investors
become more sophisticated, they can begin
to look into specific risk parameters with the
potential to affect health and safety such as
location: climate, floodplain, or earthquake
zones, structural stability, life safety systems,
façade integrity, or business continuity plans.
Adequate knowledge and mitigation of risks
increases disaster resiliency and overall
sustainability by improving the durability and
longevity of properties. With certain risk
mitigation measures in place, appraised value
can be higher and insurance premiums can
be lowered, thereby establishing a direct link
to value.
3.4.6 Worker and Tenant Well-being
Taking an interest in the personal health and
wellbeing of tenants not only demonstrates
a dedication to RPI, but can bring benefits
in the form of increased property values
and occupancy rates. Occupancy surveys
provide valuable feedback on the occupant
experience in a building and can lead to a
better understand of what makes occupants
satisfied. Numerous studies have found
benefits in monitoring and improving occupant
comfort, particularly in productivity gains.
Providing services such as childcare and
wellness programs on-site are another way
to improve worker well-being, and aiming to
institute these types of programs across a
portfolio is a valuable RPI commitment.
We have chosen the property score on the
Kingsley survey as a metric that can establish
occupant satisfaction across a broad range
of factors, and be aggregated across the
portfolio. The Kingsley Index is the largest
and most comprehensive performance-
benchmarking database in the industry.
Compiled from over 20 years of analyzing the
performance of real estate industry leaders,
the proprietary Index represents the standard
for measuring tenant, resident, employee and
client satisfaction, as well as broker relations
and operational effectiveness. Many portfolio
managers, such as TIAA-CREF, routinely
conduct Kingsley surveys for their properties.
Scoring high on occupant satisfaction has a
direct link to value, as tenant turnover will be
lower.
3.4.7 Social Equity and Community
Development
Three pressing and interconnected issues
have caused increasing amounts of concern
for real estate development as urban land
has become scarcer: gentrification, housing
affordability, and exclusionary policies and
practices. In low income areas, sustainability
equates to jobs as a first priority. Underserved
areas typically need not only buildings, jobs,
transportation and green space, but access
to essential services, including local markets
for food and sundries, health care, places of
worship, community centers, and day care
services. Investment practices can help to
bring essential services to underserved areas,
either through direct investment in retail, food
markets, or urban agriculture, or through
inclusion of space for essential services as
part of a development program. By tracking
the ability of properties to create jobs and
provide services for underserved areas,
investors can lower risks associated with
regulation and community opposition as well
as setting an example of social sustainability.
For existing assets, the two metrics we
selected to represent this element of RPI
include investment in a CRA area (Community
Reinvestment Act), and the amount of space
allocated to essential services provided to
an underserved area as part of the project.
These metrics are easily tracked across a
portfolio but are currently under-reported,
even for funds that have a stated goal of
targeting low to moderate income census
tracts or benefitting CRA areas.
3.4.8 Local Citizenship
Buildings – even green buildings – often lack
a close connection to their surrounding area
and community. Developing Community
Engagement plans on a site-by-site basis
allows projects to be sensitive to the needs
of the citizens and areas in which they are
constructed. Understanding issues such as
site context, cultural resources and concerns,
and potential for shared use agreements
ensures that negative impacts and public
opposition to projects will be minimized.
These plans should also include provisions
for the public use of private space, which has
well-documented success in San Francisco
and other cities. Across a portfolio, investing
in projects that positively contribute to the
community in which they are anchored
creates a positive image, minimizes, risk, and
improves social sustainability.
3.4.9 Voluntary Certification
LEED has established itself as the
predominant green building certification for
new development in the United States and
several other parts of the world, with its
marketability and value being realized by many
investors and managers across the country.
Still, many green building initiatives and LEED
certification achievements are reported as
single-property accomplishments and the
true sustainability impacts of the portfolio
remain hidden . Because of the time,
complexity and cost of LEED certification,
many portfolio managers have indicated an
unwillingness to make LEED certification a
portfolio-wide policy. Energy Star is emerging 19
as the premier portfolio wide approach for
certification of energy performance, due to
low cost of certification, ease of use of the
Energy Star Portfolio Manager software, and
focus on value drivers. Portfolio manager can
manage energy and water consumption for
all buildings, help set investment priorities,
identify underperforming assets, verify
efficiency improvements, and receive EPA
recognition for superior energy performance.
TIAA-CREF, for example, has set a goal of
Energy Star labeling for 100% of their office
buildings. Setting a goal of certifying most
or all of a portfolio’s properties and tracking
progress toward this goal makes a profound
statement of a company’s true commitment
to sustainability, reaching much beyond the
demonstration of the system’s benefits in a
single building.
 3.4.10 Governance
This category represents the degree to which
metrics have been adopted and institutionalized
within the portfolio management process.
Reporting performance on RPI metrics is
a shared responsibility between property
managers and portfolio managers. Systems
must be put in place to track performance
of individual assets, with the capabilities to
aggregate and view performance across the
portfolio. Finally, incentives must be aligned
with goals, if a commitment to RPI is to be
diffused throughout the portfolio. This means
that property managers must be not only
evaluated, but compensated, on the basis of
triple bottom line performance.

3.5 Portfolio characterization

In order to make sense of the performance of a
portfolio with respect to RPI metrics, portfolios
20 must be characterized according to their
asset composition, geography, strategy, and
other factors. This can help in benchmarking,
review of progress against goals and in
identifying trends over time. In order to have
a complete picture of performance, progress,
and opportunities, certain measures need to
be understood at the outset and tracked along
with the performance metrics. We have called
these attributes “characterization” indicators.
They are quite useful for normalization and
comparison of performance data. They take a
slightly different form for acquisition vs. portfolio
management, and they are shown below.

Characterization Acquisition (Asset) Portfolio

Asset type Property sf and type (office, Asset type in portfolio by sf
industrial, retail, apartment)

Size Gross sf of property Total gross sf held in portfolio

Climate Zone CBECS zone % property held in each CBECS climate
zone
NCREIF region NCREIF region for property % property held in each NCREIF region
Occupancy rate Most recent quarter Most recent quarter occupancy rate
occupancy rate (average across portfolio)

Age of Buildings Age of building Average age of buildings in portfolio

Ownership structure
Property Manager (s)
# of Distinct Properties
Strategy
Return on Investment
For building Within portfolio (direct or commingled)
For building Number of property managers working
with portfolio
In investment opportunity In portfolio
Core, value-added or % of portfolio invested in core, value-
opportunistic added, opportunistic
Targeted for deal Targeted for portfolio

Table 3: Portfolio Characterization

3.6 Case Study Results
The development of the RPI metrics for
acquisition and portfolio management was
undertaken by piloting an original, longer
set of draft metrics with two real estate
funds—TIAA-CREF and Bay Area Fund of
Funds. Individual case studies are presented
in the Appendix. The pilot testing sought to
determine if the metrics are valid, reasonable,
informative, linked to value, and relevant for
decision-making. The metrics presented in
this document reflect the findings of this pilot
testing.
Use of Metrics to Screen Potential
Assets during Acquisition
Successful property acquisition rests on
equal parts judgment and execution. While
investment managers have to make sure
that their due diligence is accurate, the
most successful develop a reputation for
closing in a timely and reliable fashion. Unlike
portfolio management which is an on-going
monitoring function, acquisition evaluation is a
collection of one-off evaluations that must be
accomplished within a very limited timeframe.
So the use of responsible property investing
metrics has to fit the timing of real estate
acquisition.
Our work indicates that an investor can
develop decisions and execute on a potential
investment utilizing many of the proposed
metrics. Moreover, the inclusion of RPI
metrics within the acquisition process may
strengthen a key objective: identifying the
areas of potential value enhancement within
the investment.
For many of the issues covered within the
realm of RPI, the acquisition decision is the
most critical stage in defining performance
achievement, as improvement may depend
on outside factors (such as CRA location
or walkability) or quite simply, the metric is
static (such as brownfield site or vulnerable
location). It is essential then that performance
results for these metrics be at an acceptable
level at the acquisition stage.
Several categories contain RPI metrics
which investment managers could directly
tie to value either through their indication of
decreased operating expenses or indirectly
aid in obtaining higher rents, lower vacancy or
selling the property at a higher price. Other
categories do not link directly to asset value, 21
rather allow the investor to property determine
the correct ESG measures which must be
in place in order to achieve maximum RPI
benefits.
The key to obtaining the biggest benefits
from RPI metrics during acquisition is to
conduct the review of the right metrics at
the right stage of the acquisition process.
Some metrics are more easily obtained
during the pre-LOI stage, others require more
investigation and so can only be obtained
during formal due diligence. A few might not
be available until post-closing.
No matter when performance is measured, it
is clear that the RPI metrics lend themselves
to the classic investment process and can
supply valuable information for both ‘classic’
and triple bottom line acquisition decision
making.
The inclusion of RPI metrics within the
acquisition process may strengthen a key
objective: identifying areas for potential
value enhancement
 Use of Metrics for Portfolio
Characterization and Management
Managing a real estate portfolio requires
measuring and monitoring a variety of financial
fundamentals, including asset value, operating
income, occupancy rates, and others. Use of
ESG metrics can provide insight into risks and
opportunities across the portfolio, however,
the burden of additional data collection
requirements must be balanced with the
potential insight to be obtained. Metrics
must point to potential actions to take, or
indicate the results of those actions, or they
are not worth the additional cost and time.
Our work indicates that RPI metrics can be
incorporated into standard procedures for
22 portfolio management, even where multiple
property managers exist. The performance
results help to drive strategies for improving
performance across the portfolio—beginning
with low hanging fruit, such as no cost
and low cost measures to improve energy
efficiency, to measures that may involve more
significant capital cost but deliver greater
payback.
A view into ESG performance across the
portfolio helps to prioritize investments that
can be implemented portfolio wide. Our
research indicates that once ESG metrics
are in place portfolio wide—managers take a
“horizontal” rather than a “vertical” approach
to greening the portfolio—in other words,
rather than greening one building at a time,
strategies are enacted in tranches across the
portfolio. Moving to a “horizontal” portfolio
management approach is one of the best
ways to achieve value—value creation from
the initial measures can help to make the
business case for subsequent measures.
Additionally, leveraging the size of the
portfolio can mean economies of scale for
implementation.
Prudent portfolio managers will look to
enter into portfolio wide contracts for
commissioning, efficiency, renewables, and
other measures to improve performance,
and use RPI metrics to track the value of
improvements portfolio wide.
The ability to benchmark ESG metrics
portfolio wide provides deep insight. While
external benchmarks are helpful, the ability to
evaluate progress over time and characterize
the changing nature of the portfolio is viewed
as even more beneficial.
Once RPI metrics are in place, portfolio
managers take a “horizontal” rather than
a “vertical” approach to greening the
portfolio—implementing strategies in
tranches across the portfolio
Environmental metrics are perceived as having
more direct links to value, however social
metrics are seen as helpful in characterizing
progress on advancing the social agenda of
the fund, while maintaining financial returns.
Environmental metrics are more malleable
than social metrics—in other words, most
environmental metrics can be improved over
time across the portfolio, whereas social
metrics are often determined at the point of
acquisition, and remain static (walkability, CBD
properties, etc.) Over time, both environmental
and social metrics may help drive investment
strategy and portfolio management, by setting
targets for certain parameters.
In summary, tracking RPI metrics in addition
to standard financial metrics can provide
added insight into risks and opportunities
(useful for all investors), and can provide
tangible evidence of a socially responsible
investment agenda.
4 Implications for Reporting and Management
4.1 Adapting for higher performance
Implementing a system which tracks all of the
key performance indicators recommended
for RPI will take some investment and require
changes to current reporting and management
processes. However, implementing these
changes will contribute positively to long-
term portfolio performance and help foster
better relationships between investors and
asset managers around RPI and sustainability
objectives. Additionally, reporting across RPI
metrics will help to develop a new literacy
of investment criteria and performance.
Portfolio managers, property managers,
and stakeholders will be able to engage in
a dialogue regarding value created across
the triple bottom line through responsible
investment practices.
Adapting portfolio reporting processes to
include RPI metrics involves:
1 Establishing a commitment to
obtaining, managing and reporting
on the metrics
A concrete commitment to tracking a new
set of metrics at the investor level is an
important first step toward realizing benefits
for the portfolio, as well as toward gaining
acceptance for the metrics industry-wide. An
investment of time and resources should be
put toward understanding existing available
data, establishing a baseline, benchmarking,
and performing a gap analysis to target key
improvement areas. Examples of this type of
action are available from industry leaders who
have proven that this approach has benefits for
reporting and performance9.
2 Implement a system for tracking
and updating the listed metrics
To ensure ease of collection and interpretation 9
Responsible Property
Investing: What the
of the additional data, systems should be put leaders are doing, UNEP-
into place to ensure the metrics are tracked Finance Initiative, 2008I
at each property and easily aggregated to the
portfolio level. This should generally align well
with current information-gathering practices,
though may require improved relationships
with managers to be fully effective (discussed
below). Furthermore, having an individual
or team dedicated to RPI and sustainability-
related analysis and management would help
the metrics reach their full potential as portfolio
improvement tools.
23
In 2007, Lend Lease released a
framework for tracking and assessing its
progress in reaching key sustainability
targets. Among these was a
commitment to ensuring that energy,
water, and waste data are measured and
monitored in a comparable way across
all assets under management. This
commitment is an essential first step
toward using the metrics to improve
performance.
Reporting across RPI metrics will help
to develop a new literacy of investment
criteria and performance
 3 Institute education programs
with managers to increase
awareness of needed changes at
the property level
Many key improvements at the portfolio level
rely heavily on improvements occurring at the
property level – through design and siting as
well as operations. Creating a standardized
education program tailored specifically toward
managers, promoting awareness of new
metrics and their implications should provide
for participation and consistency across
the portfolio. Effective relationships with
educated managers will greatly improve the
accountability associated with many of the
operational issues in particular, and improve
24 performance in the long-term .
Use of new KPIs to characterize portfolios
is akin to creating a new language- a way to
articulate value beyond financial performance,
using standardized metrics and benchmarks.
Over time, property managers and portfolio
managers alike will become fluent in this new
language of RPI.
In 2008, CB Richard Ellis established
its “Standards of Sustainability” which
create a minimum set of sustainability-
related actions to be completed for all
of its office buildings. These include
seeking ENERGY STAR certification for
any eligible buildings, providing relevant
training at each building, and reporting
internally on sustainability performance
each month to ownership. These
standards align well with RPI goals,
and could be very powerful if applied
successfully at the portfolio level.
4 Educating appraisers and
seeking support for increased
appraisal values where
appropriate
Investments which improve performance
across key RPI metrics, particularly in areas
such as energy performance, GHG emissions,
resource management, and connection to
transit and essential services, may bring an
added value compared to standard assets
without such considerations. As energy
prices fluctuate and government regulations
become increasingly stringent, these benefits
will bring risk reduction, reduced operating
costs, and other benefits which are generally
not accounted for in the current standard
appraisal process. Though these may be
difficult to quantify directly in the short term,
making a case for their incorporation into the
appraised value of assets in some form is one
of the most important ways for investors to
realize their value across a portfolio .
The chicken and egg situation should be
avoided—some portfolio managers want to
see clear links to value before committing
the additional time and energy to reporting,
while reporting on these metrics over time
is the only way to demonstrate clear links
to value. A common complaint of investors
who are committed in principle to RPI is that
appraisers are slow to recognize value beyond
BAU. Appraisers are often unclear how to
value specific sustainability techniques for
atypical assets. Appraisers notoriously default
to “comps” to assess property, and the only
way to create a comparable database of
sustainable properties is to begin reporting on
those metrics that matter, beyond traditional
financial metrics for real estate valuation. This
situation may improve with the emergence of
the new National Green Building Underwriting
Standards, a tool that can be used to assign a
green value score to a property.
4.2 High-Performance Portfolio Dashboard
Ideally, a unified approach could also be taken
to visualizing, analyzing, and managing the
data obtained for individual metrics, building
upon the action items mentioned above
to create a dashboard for monitoring and
improving portfolio performance in the context
of RPI and investor and stakeholder interests.
In the short-term this would take the form
of a standardized aggregation of data from
properties across the portfolio (gathered
quarterly or monthly) which could be analyzed
for specific trends. This data should be fairly
easily accessed, particularly once relationships
with managers are streamlined. This would
allow quick identification of the “winners” and
“losers” in a portfolio with respect to the RPI
metrics. From this analysis, best practices
from the “winners” could be applied to
underperforming properties to maximize the
performance of the portfolio as a whole.
Finally, in the mid- to long-term there is
potential for real-time information monitoring,
benchmarking, and analysis across a portfolio.
Sensors exist which are capable of monitoring
building resource use and transmitting this
data for analysis and visualization for every
minute of the day. This technology, combined
with regular manager reports and occupant
surveys, can give an incredibly a timely and
accurate picture of performance across a
portfolio, and lead to new realizations and
improvements.
There are many useful software tools on the
market- from EnergyStar Portfolio Manager
(mentioned previously) to proprietary systems
such as Tririga (www.tririga.com). Tririga
combines portfolio management tools with 25
portal views for property managers, and
facilities management functionality. This
helps to integrate goals and establish
common metrics from asset to asset, which
roll up to a portfolio wide view of costs,
benefits, and performance.
 5 Notable Benefits and Conclusion
The benefits of committing to RPI are
potentially significant, but a lack of uniform
metrics which can be adopted industry-
wide has hindered the potential impact of
RPI on the real estate sector. By adopting
the metrics listed above and following the
suggested implementation program, individual
investors can realize substantial gains which
could be quantified and managed without
significant additional reporting burden. The
most notable of these gains are:
• Long-term value creation through
increases in assessed value of property
• Greatly reduced operating costs by driving
environmental metrics
• Minimization of risk in several key areas
26
during acquisition
• Improved public image and investor
confidence
• Improved relationship between investors
and asset managers
• Increased visibility and transparency
• Demonstration of values in practice
Through adoption of these KPIs, investors
can become literate in responsible property
investing. RPI literacy is powerful—it
enables us to finally begin to articulate the
connection between the values of mission
driven investing, the actions that are taken
by investors to shape a sustainable portfolio,
and the resulting performance of the portfolio.
And literacy enables us to communicate
our shared values in a shared language—
managers with investors; investors with
shareholders. In a changing and volatile
investment environment, there is a unique
and urgent need to better understand
the benefits of making a commitment to
responsible property investing. The potential
for improvements at the portfolio level is
great, with benefits accruing to investors,
the industry, and society as a whole, and the
potential for these considerations to improve
the industry as a whole is even greater. There
is no better time for their adoption than now.
RPI literacy is powerful—it enables
us to finally begin to articulate the
connection between the values of
mission driven investing, the actions
that are taken by investors to shape a
sustainable portfolio, and the resulting
performance of the portfolio
APPENDIX A

Metrics Case Study:

Acquisitions
 Using Metrics in Property Acquisitions:
Bay Area Council Family of Funds Case Study
Objectives
The objective of this case study was to trial
the draft metrics for assessing a property
acquisition according to the principles
of Responsible Property Investing. The
draft metrics were developed through a
collaborative research effort between the
Responsible Property Investing Center, Arup
and Galley EcoCapital. The findings from the
trial were used to refine, streamline and evolve
the metrics into a final set that best reflected
the RPI principles and a triple bottom line
approach to investing.
The Bay Area Council Family of Funds (FOF)
offered to participate in the trial by testing the
metrics on three recently acquired properties.
28 The study considered:
• Which RPI metrics can provide the best
indicators of value during the acquisition
process?
• Which RPI metrics can be most easily
applied by investment acquisitions staff
during the acquisitions process?
• Would the use of RPI metrics materially
change the investment acquisitions
process?
About the Bay Area Council Family of
Funds
The Bay Area Council Family of Funds is a
regional effort developed by the Bay Area
Council to attract private capital into low-to-
moderate income (LMI) neighborhoods of the
San Francisco Bay Area. FOF acts as a Fund
Sponsor and Special Member for several
commercial real estate investment funds.
It works with Kennedy Wilson, the Fund
Manager, who manages the investments on
a day-to-day basis.
Portfolio Strategy
The three properties studied are part of FOF’s Per FOF, the expected
combined “target” size
Smart Growth Portfolio of Funds, which are of the funds will be $191
two private real estate equity funds, with a million.
combined size of approximately $191 million.
The Funds have a 10-year term. They are
comprised of 17 assets, totaling 1,971,172
square feet commercial space and 1,066 for-
sale homes and 514 rental units.
The Smart Growth Portfolio of Funds’
objectives are two-fold:
• First bottom line returns: to seek market
returns from office, industrial, retail and
multifamily properties in low-to-moderate
income submarkets, generally located
along transportation corridors. The Fund
believes that these assets are typically
under-managed and that insufficient
organized competition plus enjoys
the support of local government and
community groups for investment in these
areas.
• Second bottom line return: to benefit the
communities the investments are made
in, by focusing on improving jobs, housing
and environmental impact.
The Smart Growth Portfolio of Fund’s
investment parameters are to focus on LMI
census tracts within the nine county Bay Area
region, provide equity to real estate projects
and invest mainly in value-add opportunities,
with a no more than 20% of fund capital being
made available for new development.
Current Use of Metrics
The FOF has a defined strategy and process
for assuring double bottom line outcomes
on its investments. The FOF, as Sponsor,
has the formal responsibility of establishing
the double bottom line strategy for each
of its investments. The Sponsor and the
Fund Manager have joint responsibility for
implementation of the established double
bottom line strategy. Within implementation,
the Sponsor and Fund Manager track the
progress of the double bottom line factors
on all investments on a quarterly basis. The
following criteria are among the criteria that
are part of the double bottom line strategy
that the Sponsor and Fund Manager may
adopt:
• Overall, qualitative assessment of
environmental return/impact
• Economic Impact: Catalyst for increased
economic activity and value creation in
the priority neighborhoods, particularly for
current residents.
• Wealth Creation: Home, business and
real estate ownership, better quality
community shopping centers, and access
to mainline financial services (e.g. local
banking), particularly for current local
residents.
• Community Impact: Job creation,
affordable housing and home ownership,
joint ventures with community developers,
and local and minority contracting.
• Community Engagement: Incorporation
of community input in projects through
the entitlement process and/or other
community participation vehicles.
• Environmental Impact: Energy
conservation, waste reduction, recycling,
pollution prevention, alternative energy,
and green building construction and
operations.
It should be noted that, while double bottom
line results are critical to the FOF investment
thesis, the Sponsor indicates that it does
not set double bottom line “targets” per se
for its acquisition and portfolio management
process. This is because the potential for
double bottom line impact for any given
investment can vary widely by type and
amount mainly due to local market factors,
and so decision making on individual assets
can require tradeoffs between equally good
options that are very hard to quantify.
Methodology for pilot test
The pilot test was carried out by providing
the Smart Growth Fund investment manager
with a worksheet containing a draft large set 29
of RPI metrics that could be used to evaluate
property acquisitions. The investment
manager selected three recently acquired
properties to test the metrics so that a
minimum base of observations could be used
to draw common themes about the exercise.
The investment manger was asked to:
• Identify performance data for each
indicator
• Asses potential for improvement
(post-acquisition)
• Assess value impact:
a. Does this metric currently factor into
your due diligence? (Yes/No)
b. Do you think this metric can directly
or indirectly impact the property’s
value? (Directly, Indirectly, No Impact,
or Not Sure)
c. Link to Value (if possible, list where you
would account/budget for the impact
on value)
d. How important is this info for acquisition
decisions? (1=no importance, 2=some
relevance, 3=critical)
 Property Characterization
The three properties studied were of different asset classes and in different urban locations within the
San Francisco Bay Area.

Property A B C
Asset Class Office Retail Multifamily
Location San Francisco Marin Richmond
Age 1958 1995 Late 1980’s
Square Feet / Units 124,980 182,000 712 units
Tenancy Multi-tenant Multi-tenant Multi-tenant
Certified Green or Energy-Star Labeled? No No No
Located In CRA-designated census area? Yes Yes Yes
Energy Mix Gas & electric Gas & electric Gas & electric

30

Application of the Metrics

The table below summarizes the results of applying the metrics to the three properties.

RPI metric Currently Data Perceived Perceived relevance

Tracked? available? link to Value for acquisition decisions
Energy conservation and No No Yes High
carbon mangement
Environmental protection No Some tYes High
Urban revitalization No Yes No Medium
Smart growth / TOD Some Some Yes Unknown - medium
Health & Safety No Yes Yes High
Worker and Tenant Well-being No No No None
Social Equity and Community Some Some No High
Development

Local Citizenship No Some No Medium

Voluntary Certification No Yes Yes Unknown

Other specific insights include:
• Interestingly, on projects A and B, value
potential through decreased vacancy
allowance/rent concessions was perceived
to be linked to the percentage of tenants
with green leases and quality of green
space.
• One set of data that was readily available
is the walkscore, which relies on an
external data source. Properties A
and B had walkscores of 80 and 97
respectively. Property C had a walkscore
of 52. The properties distance to public
transportation ranged from 0.25 miles to
0.75 miles.

31

Findings
1 The use of responsible property
investing metrics during acquisition
can help pinpoint opportunities to
improve an asset’s tangible value and
its environmental and social profile at
the same time.
FOF indicated that opportunity analysis during
prospective acquisitions is a critical task of the
investment manager, particularly opportunities
to improve asset value. They indicated that
the performance benchmarks and indicators
of many of the metrics within the following
categories directly and indirectly linked to
asset value as well as provided helpful or even
critical information for acquisition decision
making.
• Energy conservation and carbon
management
• Environmental protection
2 Some RPI metrics correspond to
double bottom line characteristics
already in use during acquisition
screening process.
FOF would be able to build on that foundation
if they chose to broaden their RPI approach.
A metrics-based approach works better
if there is a foundation of compatible
assessment criteria to build upon. We
determined that FOF already uses some RPI
metrics as acquisitions assessment criteria:
• Distance to public transportation
• Management reporting on ESG
characteristics
• Tenant sub-metering (on certain
properties)
• Minority and women-owned business
contracting

• Smart growth/TOD
• Voluntary certification
• Health and safety
 3 RPI Metrics should be grouped
according to acquisition stage.
Upon use of the metrics, it became
immediately clear that certain types of
information is made available to the
investment manager at different stages of
the acquisition process, and so some metrics
could be evaluated in the initial, pre-LOI
stage, while many would be evaluated later
during formal due diligence. A few, such as
“worker and tenant well being” would only
be obtainable post-closing. The investment
manager indicated that separating the metrics
according to their applicable acquisition stage
made the evaluation process much easier. An
easier process makes for more likely use of
the metrics in investment decision making.
32
4 Consider adding or revising some of
the metrics for better acquisition review
FOF also recommended that certain
changes to the metrics helped them to
deliver more insights to the acquisitions
personnel. Of primary interest were metrics
which more clearly helped to identify value-
add opportunities, such as opportunity for
commissioning, or opportunity for upgrading
energy and water systems. This sort of
assessment fits well with the typical objectives
of an acquisition analysis.
RPI Metric Acquisition Property A Property B Property C

Energy Conservation and Carbon Management

Energy Use Intensity For property, BTU/sf Not available Not available Not available

Total Annual Energy Use For property, BTU/yr Not available Not available Not available

Renewable Energy On-site generation at property 0% 0% 0%

location, % of total demand

CO2 Emissions Intensity From energy use, for property, Not available Not available Not available
pounds/sf/yr

Energy Star Rating Energy Star Score for Property No No No

Retrocommissioning Performed last 24 months, yes/no No No No

Environmental Protection

Water Use Intensity For property, gal/occupant/day Not available Not available Not available

Total Annual Water Use For property, MG/yr Not available Not available Not available

Recycled Water Use On property, % of total water use Not available Not available Not available

Water Management Fees For property, combined water and Not available Not available Not available
wastewater charges, $/yr
33

Solid Waste Generation For property, tons/yr Not available Not available Not available

Diversion Rate For property, % diverted from landfills Not available Not available Not available
through recycling programs

Green Leases In place on property, yes or no Not available Not available Not available

Urban Revitalization and Adaptability

Brownfield Yes or no Not available Not available Yes

Infill Yes or no Yes Yes Yes

Smart Growth and Transit Oriented Development

Walkscore Rating Rating for property 97 80 52

Health and Safety

Risk Management Plans Prepared for property, yes or no Not applicable Not applicable

Vulnerable Location Yes or no Yes Yes Yes

Worker and Tenant Well Being

Tenant Satisfaction Survey Score on Kingsley survey Not available Not available Not available

Social Equity and Community Development

Benefits to CRA area Property located in a CRA census Yes Yes Yes
tract, yes or no

Essential services Project brings essential services to an Yes Yes Yes

underserved area, yes or no

Local Citizenship
 Conclusion
This was a very insightful exercise for Bay
Area Council Family of Funds, which revealed
a deep sensitivity to achieving the goals of
double bottom line investing. The firm is
already oriented towards the principles of
responsible property investing, with a defined
strategic and implementation process for
achieving its double-bottom line objectives on
its investments.
In its feedback on the study properties,
the FOF was able to tie many of the RPI
performance benchmarks to positive
asset value impacts, mostly by decreasing
operating expenses but they also identified
some instances where RPI characteristics
might point to asset value increases through
possibly higher rents and lower vacancy.
34 Several metrics had direct or indirect links to
asset value and would improve investment
decision making by providing important
information for acquisition decisions.
Through its work with the study properties,
the FOF demonstrated that responsible
property investing principles can not only
be achieved, but are measurable. Critical
to the success of the measurement during
acquisition is to recognize the time sensitivity
of the acquisition process. For example, they
recommend the grouping of the assessment
of metrics performance and characteristics
around the natural stages of acquisition,
in order to make the process practical
and useful for investment managers. Also,
certain revisions to the proposed metrics
might facilitate data gathering and enhance
opportunity-seeking, which is a core objective
of the acquisition team.
Turning to the industry as a whole, it appears
from this study that the acquisitions process
presents a ripe opportunity to not only use
the metrics to screen for certain socially
responsible characteristics within a potential
acquisition, but also drive decision making
and strategy – because the metrics reveal
areas where social responsibility, asset quality
and value can be demonstrably improved with
a single action, revealing solid opportunities
during acquisition.
The introduction of RPI metrics to the
acquisition process helps investment funds
that want to demonstrate social responsibility
and are in need of appropriate real estate
investment criteria. At the time of this writing,
the triple bottom line criteria established
by the very few funds exhibiting leadership
in this space is mostly self-selected and
not transparent. Moreover, the unclear
benchmarks attached to most self-selected
metrics makes it difficult to establish the
proper expectations, not to mention any sort
of comparable track record for an investment
manager’s triple bottom line success with
investment over time.
By employing RPI metrics during acquisition,
users can avoid these sorts of problems. The
particular value of this metrics structure and
process during acquisition is that it helps the
investor to change from monitoring social
responsibility post-acquisition to driving
it because the assessment is happening
during at the earliest stages of an investment
and the potential for achieving social and
environmental objectives would be known
prior to closing.
Finally, a comprehensive and systematic
application of RPI metrics would allow any
investor to clearly define, communicate
and reliably replicate their Fund’s social and
environmental performance and opportunity
assessment across different kinds of assets,
in diverse market settings and differing
property construction.
APPENDIX B

Metrics Case Study:

Portfolio Management
 Using Metrics in Portfolio Performance Assessment:
TIAA-CREF Case Study

Objectives Managing across the triple bottom line is

not new to TIAA-CREF, the large provider of
The objective of this case study was to
pension services for the academic community.
trial the draft metrics for assessing the
They have implemented socially responsible
performance of a portfolio of properties
investing programs geared towards
according to the principles of Responsible
competitive returns through investments
Property Investing. The draft metrics were
with broad social appeal, such as workforce
developed through a collaborative research
housing and urban infill development in low
effort between the Responsible Property
to moderate income areas. In 2006, they
Investing Center, Arup and Galley EcoCapital.
surveyed their stakeholders and determined
The findings from the trial were used to refine,
that while financial return was a top priority,
streamline and evolve the metrics into a final
environment, human rights and community
set that best reflected the RPI principles and a
impact were also top concerns. It was also
triple bottom line approach to investing.
noted that there was a deep need for more
The study was focused on: information about SRI strategies and particular
• Assessing if the draft metrics are valid and fund accounts.
useful In 2008, TIAA-CREF announced that it would
36
• Identifying those metrics for which data seek to reduce energy usage in its real estate
were currently unavailable, but TIAA-CREF holdings by 10% by 2010. The results have
would like to track in the future been impressive. TIAA-CREF was named a
2008 and a 2009 ENERGY STAR Partner of
• Considering link to value (direct or indirect)
the Year for outstanding energy management
• Considering the importance of the metric and reductions in greenhouse gas emissions.
to investment strategy and portfolio Over the past six years, 67 of the nearly 200
characterization office buildings in TIAA-CREF’s real estate
TIAA-CREF offered to participate in the trial by portfolio have earned an Energy Star label
testing the metrics on real estate properties in one or more times, with 47 of those buildings
its General Account. doing so in 2009. Thus far, the buildings that
comprise the office portfolio have reduced
About TIAA-CREF energy use by 125 million Kilo British Thermal
Units, which is equivalent to an estimated 37
TIAA-CREF is one of America’s largest
million pounds of carbon dioxide emissions.
institutional real estate investors in the United
The aggregate annual savings is equal to
States, with an approximate $70 billion global
approximately $6.1 million.
portfolio of direct and indirect investments
(12/31/07). TIAA-CREF originated its first
commercial mortgage in 1934 and began
direct investment in commercial real estate in
1947. Today, on behalf of individuals, public
and private institutions in the U.S. and abroad,
TIAA-CREF Global Real Estate directly owns
over $25 billion (2008 data) of primarily high-
quality properties in the office, retail, industrial
and multifamily sectors across the U.S.,
Canada and Western Europe.
Portfolio Strategy Methodology
The real estate portfolio under study is part of The pilot test was carried out by providing
TIAA-CREF’s General Account, an insurance TIAA-CREF with a worksheet containing a
account that is funded through fixed annuities draft set of RPI metrics and benchmarks that
and is not open to investors. could be used to evaluate a property portfolio.
The fund strategy is described as “hybrid
core”. In other words, some assets are TIAA-CREF was asked to:
acquired for their potential to be upgraded,
• Obtain data across the portfolio, if possible
and some assets are selected because they
are already exhibiting high performance on • Provide a perspective on the link to value
RPI metrics, or they help to advance the (direct or indirect)
overall goals of the portfolio. It should be • Comment on the importance of the metric
noted that several times during our case to investment strategy and portfolio
study, it was stressed that TIAA-CREF’s characterization
focus was first to fiduciary duty, and that
• Identify those metrics for which data were
any attention to RPI metrics should be seen
currently unavailable, but TIAA-CREF 37
as supporting fiduciary duty rather than
would like to track in the future
superseding it. For this reason, TIAA-CREF
was most interested in considering those KPIs
that had a direct link to value. TIAA-CREF was given 2 weeks to work with
property managers to compile the data and
evaluate the proposed indicators for relevance
Current Use of Metrics
and utility.
According to Nick Stolatis (Director, Strategic
Initiatives), TIAA-CREF Global Real Estate
tracks its portfolio using primarily energy
metrics, in addition to standard operating and
financial performance metrics. It has plans
to implement water and wastewater tracking
using Energy Star Portfolio Manager software.
This case study provided an opportunity for
TIAA-CREF to think about those metrics that
would be relevant in terms of triple bottom
line impacts and value created, all while
maintaining a focus on fiduciary duty.
 Portfolio Characterization located in the South, and the rest distributed
evenly throughout the East, Midwest, and
The portfolio is comprised of 15.9 M sq ft of
West. Tellingly, the average age of the
office space (approximately 60% Class A,
property holdings is 18 years old. Fifteen
the rest B and C), 12.2 M sq ft of industrial
different property managers answer for the
property, 1.8M sq ft of retail, and 1.4 M sq
performance of these properties to TIAA-
ft of residential properties. The fund also
CREF. The most recent quarter occupancy
includes some undeveloped land holdings.
rate, averaged across the portfolio was
The fund is made up of approximately 164
86.75%.
distinct properties, about half of which are

Characterization TIAA-CREF Data

Asset type 15.9M sf office (60% Class A); 1.8M sf retail; 1.4M sf residential

Size 19.1M gross sf in portfolio

Climate Zone Not available
NCREIF region 50% South; 50% East, Midwest and West
38
Occupancy rate 86.75% average
Age of Buildings 18 years
Ownership structure Not available
Property Manager (s) 15 property managers
# of Distinct Properties 164 properties
Strategy 100% Hybrid core
Return on Investment Not available
Application of the Metrics In some cases proxies for performance had
to be adopted, in order to gain momentum on
Application of the draft set of metrics – which
the topic and establish preliminary data sets.
was considerably longer than the final set--
For example, rather than trying to characterize
was a challenge. The K in KPI is critical—a
TOD properties on the basis of transit options
small number of KPIs are essential if they are
available within a certain proximity of the
to be actually used by portfolio managers.
property on a daily basis (an onerous and data
With the input of TIAA-CREF, the original list of
intensive task), the more efficient alternative
metrics was streamlined from over 50 metrics
was to instead look at the relative percentage
to just 26 high impact metrics that still cover
of CBD properties vs. the rest of the portfolio,
the 10 dimensions of RPI. The KPIs that
as well as walkability scores.
survived were the ones that demonstrated
clear links to value, and were attainable with The table below summarized the tracking,
a minimum level of effort, now or in the future. availability, value and relevance of each metric.

RPI metric Currently Data Perceived Perceived relevance

Tracked? available? link to Value for portfolio management 39
decisions
Energy conservation and Yes Yes Yes High
carbon mangement
Environmental protection No Some Yes High - plans in progress
Urban revitalization Some Some Low Low
Smart growth / TOD Some Some Yes Medium - CBD proxy
Health & Safety Some Some Yes Medium
Worker and Tenant Well-being Yes Yes Yes Medium
Social Equity and Community No Some No Low
Development

Local Citizenship No Some No Low

Voluntary Certification Yest Yes Yes High

While TIAA-CREF agreed some of the metrics would be nice to know, since data had not been
tracked previously, there was no chance of getting them in time for the study. For example,
CBECS zone is far more telling in terms of energy opportunities and climate risk. However, the
portfolio was characterized only by NCREIF data. Walkability score also fell into the category of
nice to know, but not able to obtain quickly enough.
 Findings
TIAA-CREF already had a pretty good
handle on energy use, and progressive
programs in place to obtain Energy Star
ratings and benchmark. It was a surprise
to them, however, to learn that the average
age of the buildings in their portfolio was 18
years. This provided insight into the future
competitiveness of the current holdings, as
well as opportunities for energy efficiency and
upgrading energy systems.
The general fund was already well below
average in terms of Energy Use Intensity
(EUI)—77 kBtu/sf/yr combined gas and
electric as compared to a CBECS average
of 90 kBtu/sf/yr, with an Energy Star rating
40 across the portfolio of 75 (better than 75%
of buildings). This energy performance
represents a 6% reduction in energy use
across the portfolio since the target of 10%
reduction was announced. Only 40% of the
properties have been assessed to date, so
there is still room for improvement, despite the
aging assets. TIAA-CREF pays on average
10 cents per kWh for energy across the
portfolio, a reasonably competitive rate. Total
energy costs per year amount to $45M across
the portfolio. Each percentage decrease
in energy use saves nearly a half million in
operating costs annually.
While TIAA-CREF does not have any
renewable energy generated on-site as
part of their general fund portfolio, they
have established a target of 10%. Plans
are underway to implement similar tracking
systems for water and solid waste, although
performance data were currently unavailable
for these metrics.
TIAA-CREF is heavily invested in infill/urban
properties, with 45% in the CBD. Walkability
scores were unknown at this time, although
a parameter that TIAA-CREF will track in the
future.
95% of properties have risk management
plans in place, and 95% undergo occupant
satisfaction surveys. This is an excellent
start. In the future, TIAA-CREF can begin
to benchmark the actual survey scores,
to identify and address underperforming
properties. They can also dig deeper into risk
management, to begin mapping properties to
exposure to specific risks such as seal level
rise, flooding, storm events, and earthquakes.
Surprisingly, metrics related to social equity
and community development were not
currently tracked for the General Fund. This
is in contrast to the stated goals of socially
responsible investing for TIAA-CREF. Tracking
key indicators such as qualified investment
in CRA census tracts, and public space
maintained within the portfolio would help
TIAA-CREF to demonstrate tangible actions
and performance with respect to their
publicized values.
Approximately 40% of properties have
undergone some sort of voluntary certification
(LEED or Energy Star)—and 35% have
obtained Energy Star labels. A full 100% of
eligible properties have undergone a LEED
gap assessment, although there are currently
no plans to implement a LEED certification
program portfolio wide.
One of the factors property managers are
evaluated on is their contribution to achieving
sustainability goals.
A summary of performance is provided in the
following table.
RPI Metric Portfolio Management TIAA-CREF Results

Energy Conservation and Carbon Management

Energy Use Intensity Average across portfolio, BTU/sf 77

Total Annual Energy Use Total across portfolio, BTU/yr 1,470,700,000

Renewable Energy On-site generation at property location, % of total demand 0%

CO2 Emissions Intensity Average across portfolio, pounds/sf/yearr 22

Energy Star Rating Average Energy Star Score across Portfolio 75%

Retrocommissioning Properties on regular commissioning schedule, across portfolio, % Not available

Environmental Protection

Water Use Intensity Averaged across portfolio properties gal/occupant/day Not available

Total Annual Water Use Total for portfolio, MG/year Not available

Recycled Water Use Average across portfolio, % Not available

Water Management Fees Total for portfolio, Million tons/year Not available

Solid Waste Generation Average across portfolio, % Not available

Diversion Rate Properties in portfolio operating under green lease structures, % Not available

Urban Revitalization and Adaptability

Brownfield % brownfield properties in portfolio Not available

Infill % properties in CBD in portfolio 45% 41

Smart Growth and Transit Oriented Development

Walkscore Rating Average rating across portfolio Not available

Health and Safety

Risk Management Plans % properties in portfolio with risk management plans in place 95%

Vulnerable Location % properties in coastal areas and/or earthquake zones Not available

Worker and Tenant Well Being

Occupant Satisfaction Survey Average score across portfolio on Kingsley Survey Not available

Social Equity and Community Development

Benefits to CRA area % of properties in census tracts designated by the Community Not available
Reinvestment Act (CRA)

Essential services % of properties in the portfolio bringing essential services to underserved Not available
areas

Local Citizenship

Community Engagement % properties in portfolio with community engagement plans in place Not available

Public space Amount of public space maintained, as % of total area in the portfolio Not available

Voluntary Certification

Third Party Certification % of properties in the portfolio with third party certification underway or in 40% LEED or Energy Star
place

Governance

Reporting Performance Is the performance of the portfolio reported against triple bottom line Partially
metrics?

Alignment of Incentives % of property managers evaluated & compensated on triple bottom line 100%
perormance
 Conclusion
TIAA-CREF has done an admirable job of
tracking KPIs related to energy to date, with
plans for water and waste—parameters with
a clear impact on operating expenses and
therefore a direct link to the bottom line. It
could benefit from instituting portfolio wide
tracking on additional parameters, particularly
on factors related to social equity and
community development, to demonstrate a
tangible link to the stated values of socially
responsible investing. While risk management
plans are a good proxy for management
attention to the issue, knowing that 100% of
the properties have risk management plans
does not equate to insight and ability to make
investment decisions regarding the potential
to mitigate or transfer specific risks across the
42
portfolio. Risk management practices would
improve markedly with a concerted drill down
into specific parameters such as earthquake
readiness and climate change vulnerability
for each property, aggregated across the
portfolio.
Finally, the authors would like to acknowledge
the invaluable input of TIAA-CREF in shaping
the final list of proposed RPI metrics, with an
eye towards simplicity, ease of use, materiality,
and value creation across the triple bottom
line.
Jean Rogers
Arup
Jean.rogers@arup.com

Lisa Michelle Galley

Galley EcoCapital
lisa@galleyecocapital.com

David Wood
Responsible Property Investing Center
Boston College
wooddl@bc.edu