Building a Path to ESG Success

November 3, 2021

Sustainability Executive Insights National Retail

Insights into best practices and the power of a proactive strategy, from Taubman Centers' Steven Moore.

Though ESG principles have been around for decades, it’s only recently that environmental, social and governance issues have formally become part of the U.S. business fabric. Before the trend took hold more broadly, some real estate investors and operators understood that ESG practices are a must for good corporate citizenship. One such early adopter was The Taubman Co. Steven Moore, the retail REIT’s director of facilities, energy and sustainability, recently offered insights into creating a successful strategy.

Even before the pandemic, The Taubman Co. steered its attention toward sustainability and ESG practices. What made you take a proactive stance instead of a reactive one?

Steven Moore, Director of Facilities, Energy and Sustainability, The Taubman Co. Image courtesy of The Taubman Co.

Moore: Even in our company’s earliest days, our founder, Alfred Taubman, ensured that sustainability was considered. We have always taken the viewpoint that our shopping centers are a significant gathering place in the community, but the original intent of our shopping centers was to allow a shopper to accomplish multiple tasks, in one visit, close to home. Furthermore, our shopping centers were designed to be accessible for people of all abilities.

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Looking at the E, S and G components individually, tell us how you tackled these criteria.

Moore: For the Environment, we had programs in place to reduce our energy usage long before our formal sustainability effort arose in 2015. In fact, since 2008 we have reduced our controllable electrical energy usage by 51 percent. Additionally, we have set targets around energy reduction, renewable energy generation, water reduction and greenhouse gas emissions reduction to help continue our progress going forward.

On the Social front, we have multiple programs in place to help our stakeholders. From Employer of Choice awards and unlimited time off for our employees to charitable giving and community involvement, Taubman has positively impacted the communities in which we operate.

Lastly, on the Governance front, prior to going private at the end of 2020, we had a majority female board, had many new members with expertise in their fields, and had implemented shorter board terms. All of these actions were seen as highly positive by the investment community.

How would you recommend priorities for a successful ESG strategy? What key measures would you suggest focusing on?

Moore: I think a successful ESG strategy starts with commitment. Several years ago, we were fortunate to have support from our executive leadership team for the program we wanted to proactively develop. Other companies that did not have a strategy in place over the past few years have had to react to outside pressures, which is not ideal.

With commitment from the top, we moved forward with strategies such as benchmarking against peers, focusing on stakeholder sentiment, talking to employees about what matters to them and analyzing the ESG landscape overall. We also quickly settled on using the Global Real Estate Sustainability Benchmark (GRESB) as our measuring stick. This move helped us to focus on key metrics and deliverables important to our work and the industry.

What have been the biggest changes in the shift from a sustainability strategy to an ESG strategy?

Moore: Taubman had ESG in mind from the very beginning. In fact, it is common for me to start conversations around ESG and sustainability by saying, “Sustainability is not just saving energy and turning off the lights.” We have embraced all aspects of ESG in our program and have expanded our reporting to reflect that.

How do you measure success in an ESG strategy? Can you tell us how much you’ve invested in ESG and what you’ve found the ROI to be?

Moore: One critical way in which we measure the success of our ESG program is our annual GRESB score. We are proud that we have achieved a Green Star rating ever since participating, earned recognition as a sector leader and been five-star rated the past two years. Having this independent benchmarking tool is critical to the development of our ongoing strategy, as well. Our energy-saving projects typically have paybacks in under four years, so they both pay for the project and provide a positive financial contribution to the company.

International Market Place, Honolulu, Hawaii. Image courtesy of The Taubman Co.

Between 2009 and 2020, Taubman reduced controllable electric consumption at its U.S. shopping centers by 40 percent. What measures did you apply to reach these reductions and what further improvements are you planning?

Moore: The reductions we have seen are from many efforts, not the least of which are the individual contributions from the people that run our shopping centers every day, who have really great ideas on where we can achieve efficiency and savings.

To cite specific examples, we have invested in multiple lighting projects over the years and are now over 75 percent LED in all of our centers’ common areas. We have also implemented numerous HVAC upgrades and are piloting artificial intelligence software in two of our buildings to help save even more.

One of the larger projects we implemented was an enterprise energy management system that enables us to continuously monitor our equipment and discover opportunities for enhanced efficiency.

What about water conservation, waste management and transportation upgrades?

Moore: We definitely have a sharp focus on water conservation and reducing usage where possible. We have been installing remote-read water meters that allow for real-time monitoring. We also invested in a water technology that provides real-time leak detection and diagnostics. Lastly, we have used native plants and efficient irrigation systems at our centers.

As for waste management, over the past few years, we have achieved diversion rates above 50 percent through a combination of recycling, composting and waste-to-energy facilities.

Our transportation initiatives include electric vehicle car charging, which we are looking to greatly expand in the next year or two, and partnerships with local public transportation efforts to locate bus stops on or near our properties.

Last year, you partnered with the Science-Based Targets Initiative. Tell us more about the collaboration and the actions you’ll be taking to reach the greenhouse gas reduction goals (20 percent by 2025 compared to 2014 levels and 30 percent by 2030 with a 2018 baseline).

City Creek Center, Salt Lake City, Utah. Image courtesy of Taubman Co.

Moore: We took a look at the goals we had in place and sustainability best practices to understand how best to update our science-based targets. After much research, we decided to follow SBTI’s guidelines on how to reduce greenhouse gas going forward.

To reach these targets, we must continue the actions we have implemented but look beyond those to be successful in our actions. We are looking to implement more LED, HVAC and solar projects to help us hit our goals, but we are also considering power purchase agreements and other methods to reduce our environmental impact.

Taubman recently announced that its corporate office and 17 U.S. shopping centers have earned WELL certification from the International WELL Building Institute. What was behind the decision to pursue the WELL rating?

Moore: We studied the WELL program and quickly realized that our best practices in place, and those we added during the pandemic, would make us a good candidate for obtaining the certification at our corporate office and across our portfolio of shopping centers. We are pleased to be able to share with our customers and other stakeholders that all of our U.S. properties are now WELL Health-Safety Rated.

How has this focus on ESG practices impacted the company’s relationship with employees, shoppers, tenants and communities where your centers are located?

Moore: Our tenants recognize that we are a company that cares about the well-being of the planet, our customers and our employees. Many of these tenants share the same values so it aligns us nicely in our operations.

I also believe that our customers feel better shopping and dining with a company that is committed to being a good corporate citizen.

Is there a property or two that you would identify as Taubman’s sustainability/ESG flagships? What are the key features?

Moore: It would be hard to pick one or two centers when they all have many great characteristics in this arena, including plenty of natural light, recycling programs, efficient equipment, electric vehicle car charging stations, public transportation options and a connection to the community through charitable giving or volunteerism.