A sustainability benchmarking tool has supported the efforts of global financial services company TIAA-CREF to reduce the energy consumption across its US real estate portfolio by 17 percent—an achievement that is all the more significant when considering that the company’s portfolio spans more than 600 buildings.
“That translates into the avoidance of 54,500 metric tons of carbon dioxide in 2013, which, according to the EPA, is equivalent to taking 10,500 cars off the road,” says Nick Stolatis, senior director of global sustainability and enterprise initiatives at TIAA-CREF.
In the United States, TIAA-CREF has more than $35 billion in direct real estate assets across the four major asset types—office, retail, residential, and industrial—and the company has long stressed efficient operations in its investment properties. “It’s the way one should run a real estate portfolio,” says Stolatis, who’s been with the company for 31 years, rising up through the portfolio-management space.
In 2002, however, the company made its first formal step into sustainability when it took Stolatis’s recommendation to join Energy Star. “Energy Star is all about measuring your performance against a database the government maintains and updates,” Stolatis says, “and our initial goal was to use it as a tool to help us quantify performance because you can’t manage that which you can’t measure.”
Percent of TIAA-CREF’s portfolio Energy Star certified over the past five years
Years the company has been named an Energy Star Partner of the Year
Metric tons of greenhouse gas emissions avoided by energy-efficiency initiatives
TIAA-CREF uses third-party property managers such as Cushman & Wakefield, JLL, and Transwestern for on-site operations. Although many of these firms were familiar with Energy Star, the property teams were not using the tool consistently. During the early years, Stolatis says that “some of the managers used it once, determined they wouldn’t get a certification, and said, ‘What’s the point?’”
That was the driving force behind TIAA-CREF’s Global Real Estate Sustainability Initiative (GRESI) platform, the formal commitment of TIAA-CREF to implement sustainability across its investment portfolio, which provides important information about the efficiency of the company’s entire global real estate portfolio. “I wanted to emphasize the use of benchmarking as a tracking mechanism, not a marketing mechanism,” Stolatis says. “It wasn’t about pursuing labels. It was about pursuing improved operational performance.”
TIAA-CREF began requiring all properties to benchmark in July 2007. Third-party property managers enter information from utility bills—including energy, water, and waste—into the GRESI platform, and a sustainability consultant then helps Stolatis aggregate the data. Ultimately, he can view efficiency at three levels: by property, by investment fund, or across TIAA-CREF’s entire portfolio.
It was a monumental achievement, allowing TIAA-CREF to track the operational efficiency of its US portfolio. Over the past five years, at any given time, roughly 65 percent of the total square footage in TIAA-CREF’s office portfolio—the only significant sector eligible for Energy Star until only recently—has been certified. For its efforts, the company has been named an Energy Star Partner of the Year for seven straight years and at the Sustained Excellence level for the past five years.
The company also has seen the initiative impact the company’s bottom line, with the improvement in energy efficiency translating into approximately $15 million in cost savings in 2013 over the baseline of 2007, when the benchmarking effort began. “The benchmarking tool allowed us to translate the environmental benefit into an economic benefit,” Stolatis says.