As ESG and sustainability-focused funds continue to increase exponentially from one year to the next, growing by more than 127% since 2019, real estate owners around the globe are quickly shifting their priorities and drafting up new initiatives to meet the demand. But in this highly competitive marketplace, owners need to do much more than merely pivot to be seen as a worthwhile investment. They need to develop goals and initiatives that are SMART and specific—uniquely tailored to the needs of their stakeholders, businesses, communities, and the world.
Why Specificity Matters
In the late 1960s, a renowned organizational psychologist, Dr. Edwin Locke, conducted a workplace research study to understand the internal motivators for goals and tasks. As a result, Locke found that detailed and specific goals experienced a higher level of performance 90% of the time, and they also increased the motivation of participating individuals. Since then, other studies have also found that vague goals are much less effective and only succeed roughly 3% of the time.
Because of these results and many others, specificity continues to be a core component of renowned goal-setting methodologies such as SMART goals, Locke and Latham’s Five Principles, OKRs, and more.
Finding Your Why
Regardless of where you are in the strategy development process, you must understand the driving forces behind your initiatives, your reasons for approaching ESG and sustainability. If those reasons are shallow and hollow, your strategies will crumble, and success will easily fall by the wayside.
Remember, your “why” should always be the foundation and heart of your strategy—the force that guides you as you develop and implement specific sustainability goals.
To establish this foundation:
- Work closely with every affected audience. Collaborate with your investors, employees, customers, and other stakeholders to understand their needs and expectations. Use their feedback to shape your strategy and outline potential KPIs.
- Review your core business objectives to align your developing strategy with your business.
- Research existing trends, values, and requirements to ensure relevance, compliance, and alignment.
Charting the Course
After you understand the purpose behind your initiatives, you can then examine your current data and performance, reporting standards, and benchmarking frameworks to identify baselines, locate problem areas, and define reasonable starting points.
For example, if you want every building you own or manage to be ENERGY STAR-certified—but the current score for most of your buildings is less than 30 or even 50—setting a goal to certify them by the end of the year would be unrealistic. In this situation, a more reasonable approach would be to set a recurring annual goal of bringing ENERGY STAR scores up by 5-10 points until every property has reached or exceeded the required certification score of 75.
As you work to define what your starting points should be, don’t be afraid to dig a little deeper. Research incentive funds for local jurisdictions and utility service providers and take advantage of them while you can. Find potential projects that provide a high and rapid ROI. It may take some additional time, but the results are well worth the cost.
Setting a Deadline
As you may have gathered from the example above, specific timeframes are just as valuable as specific starting points—if they are appropriate and reasonable. Like the bears’ beds in Goldilocks, ESG strategy deadlines can be too easy, too hard, or just right. For example, initiatives with poor deadlines are expected to fail 52% of the time. But deadlines that are “just right” can provide an acceptable challenge and multiply your chance of success by up to 11 times.
As you are defining your timeline(s), ask yourself the following questions:
- Do you have the resources you need to begin now and meet the desired deadline? If not, what do you need?
- How long has it taken to complete similar tasks in the past? If you haven’t completed similar tasks, how long has it taken similarly-sized companies to achieve a goal of this magnitude?
- Which goal duration is most achievable: short-term or long-term?
- Does the current timeline align with the needs of your stakeholders (e.g., investors, employees, customers, etc.)?
Assembling Your Team
After you have established your “why,” defined your starting point, charted your course, and ultimately nailed the specifics of your ESG strategy—you can then assemble the team that’s going to implement it. This team may include company executives, shareholders, employees, consulting firms, outsourced support teams, and any other individual with the power to impact your initiatives and propel them forward. Depending on your strategy, it may also include and require participation from individuals or groups within the communities or buildings themselves.
Ensure that everyone clearly understands both the goal itself and the role they have to play. Then establish regular follow-ups to track your progress and increase individual accountability.