On this episode of REALtalk, Amy Erixon, Principal and President, Global Investment Management at Avison Young, joins REALPAC’s Manager of Research & Sustainability Kris Kolenc, to discuss leadership and trends across environment, social, governance, and wellness.
The episode covers:
- How Avison Young has set up its ESG practice and processes
- Current areas of focus
- Integration of these policy areas into all aspects of the business
- Data collection and mapping
- Climate risks and opportunities across portfolios
- Differences across North America and Europe when it comes to tackling ESG
- WELL and LEED cerficiations
- Net zero commitments
About Amy Erixon:
Amy Erixon founded and heads Avison Young’s Global Investment Management practice which is active across all major and select specialty property types in Canada, the US, Mexico, Germany and UK on behalf of major institutional investors.
Prior to joining Avison, she was CEO of IGRI, a full service development and investment firm that built the first LEED certified projects across Canada in the mid 2000s. With more than 30 years of industry experience she has acquired, developed, and repositioned portfolios valued in excess of $9 billion, and completed large scale rezoning and development projects in numerous North American cities.
Michael Brooks (REALPAC): Hello, everyone, thanks for listening and welcome to REALtalk, the show that brings you unique insights from leaders in Canadian and international commercial real estate. I’m Michael Brooks, CEO of REALPAC.
Kris Kolenc (REALPAC): Hello, my name is Kris Kolenc, I’m REALPAC Manager of Research & Sustainability, and I’ll be hosting today’s podcast. Our guest today is Amy Erixon, Principal and President, Global Investment Management at Avison Young. Amy founded and heads Avison Young’s Global Investment Management Practice, which is active across all major and select specialty property types in North America and Europe on behalf of major institutional investors. Prior to joining, ever since she was CEO of a full service development and investment firm that built the first LEED certified projects across Canada in the mid 2000s. With more than 30 years of industry experience, Amy has acquired, developed and repositioned portfolios valued in excess of nine billion dollars and completed large scale rezoning and development projects in numerous North American cities. Welcome, Amy.
Amy Erixon (Avison Young): Thanks, Kris. Nice to be here.
Kris Kolenc (REALPAC): Today we’re going to talk about environmental, social governance (ESG) and wellness. Clearly, both of these trends are surging right now and will continue to be part of our industry well into the future. So let’s jump right into it. Amy, clearly, you’re one of our industry sustainability pioneers. We’re really lucky to have you and you continue to push the needle when it comes to ESG. Can you describe how Avison Young has set up its own processes and what areas you are currently focusing on regarding ESG?
Amy Erixon (Avison Young): Yes, certainly our investment management team have been reporting and grasp since 2015 and we’re currently at top quartile reporter there at the corporate level. We last year adopted the UN Sustainable Development Goals as a framework through which our strategy is being executed. That led to improvement in a number of our internal policies, particularly around ESG and Diversity & Inclusion. And we have now developed key metrics that we’re tracking so that we can report out on our progress against that framework. And we adopted that framework because it is universally accepted as one of the key policy frameworks around which people are understanding how we’re all collectively working in the same direction. In our investment management group last year to continue moving that needle, we launched our inaugural TCFD Report. TCFD is the Task Force on Climate Related Financial Disclosures, and it’s the Financial Stability Board’s way of incorporating climate risks and opportunities into financial reporting. And we also became a PRI – that’s the UN Principles of Responsible Investing Signatory. Now each of those frameworks is considered a best in class position and that’s the reason why we pursued them. We wanted to not just do all the work, but report out on these internationally recognized frameworks and and get the scores to demonstrate how well we’re leading from an industry perspective across these issues.
Kris Kolenc (REALPAC): Perfect. That’s great. I mean, clearly, yourself, and Avison Young has had great leadership. I mean, we have some of our REALPAC members reporting to TCFD and PRI, but it’s not a huge cohort quite yet. So it’s great to see Avison Young leadership there. So that’s great to see the progress you’re making. Of course, it’s a very busy field ESG, as you know, and there’s lots of challenges as well. So for you, Amy, with Avison Young you can speak to the industry in general, what are some of the main challenges you see when companies like yours are supporting ESG? Do you have any other thoughts on how we can overcome those challenges?
Amy Erixon (Avison Young): Well, I think that, you know, I’ve talked about this a couple of times this year, that the silver lining of Covid has really shine the light on a number of these issues and how urgently we need to address them. So from the standpoint of the naysayer resistance, I think that that has substantially fallen away in the last year. And so it’s not so much about demonstrating the urgency of addressing these issues, but it’s the integration of these policy frameworks into how we deliver our services, how we think about our products, and making sure that we are walking the talk both in terms of our own operations, but also assisting our clients through our service delivery model to achieve their specific goals.
Kris Kolenc (REALPAC): And our feed data is a big piece. We love data. We need you to support everything. How can you talk a bit about what you’ve seen? Avison Young’s data management, not just on the quantitative side, but also soft data and qualitative. How are you tackling that?
Amy Erixon (Avison Young): Yeah, sure. We have a data warehouse and we are collecting all of the normal real estate data on a real time basis. But we have also picked up a number of adjacent data fields. When you’re starting to think about climate risks and opportunities in your portfolio, obviously the flood maps are pretty wrong. I mean, we have an asset, a large asset in Nashville, Tennessee, who have had two 1 in 1000storms in the last 11 years, so that’s sort of indicative of you need to actually start tracking insurance premiums, you need to start looking at where adjacent data that is going to help you get closer to understanding the trends that have the potential to physically impact your portfolio holdings from a transition perspective, which is another angle that TCFD approaches that’s really keeping track of the regulatory changes and the rate of change. And that’s a lot more difficult to forecast. So if you’re planning if you have a long term perspective on your portfolio and our clients do, then it’s not so important to have the precision of exactly when will these impacts hit as understanding and using screens in order to screen out assets where we feel those kinds of risks are unacceptable and or phasing out assets that have exposure to risks that we are worried may not be insurable in the future.
Kris Kolenc (REALPAC): That’s great. And on the flood mapping side, we’ve done some work on that. It’s nice to see the federal government and their Budget 2021. They’re doing a national infrastructure assessment, the first of its kind. Hopefully we got some flood mapping as part of that because that’s just one piece where we need some better data. And maybe just before we move on, I think it’s really interesting your position since you’re global, especially in North America and Europe, when it comes to tackling ESG. Do you see differences in those two jurisdictions or just globally? Do you see some areas where challenges are more prominent than in others?
Amy Erixon (Avison Young): Oh, for sure. It’s a spectrum. I mean, the Europeans have been embracing these initiatives and policy changes for longer than North America has in North America, and particularly the US and Canada are major oil producers. And just in general, that the weight of that segment of the economy weighs heavily on the policy makers and I think has caused us to lag in terms of development of national standards and the Balkanization of provincial controls versus federal controls or state controls versus federal is also an issue in North America. Whereas in Europe, most countries operate their own grid and so they’re able to integrate renewables and it’s one system. So those are two sort of factors, I think, that Canada has been at, particularly in our industry, a real leader in terms of getting in front of climate risks and GHG reduction and the efficiency of our buildings. And our grid is already 80% renewable. So we’re well ahead of the US in that regard. But my my track record working the US market for some 40 years suggests that the Americans can turn on a dime. And they did put a man on the moon. So I wouldn’t rule it out. I just think that there’s a big spectrum of takeup and actual actions to support what needs to get done to get there from here.
Kris Kolenc (REALPAC): Totally. And now with the Biden administration are starting to see some action. Sometimes I think Canada’s going out to play catch up because they’re moving quite quickly on that. So moving on, we’ve talked about climate risks, data, ESG generally. Let’s talk about health and well-being. Obviously, that’s important. But with covid-19, of course, that’s being amplified. So Avison Young recently partnered with the World Green Building Council and the WELL Building Institute to develop a new health and wellbeing framework. Very exciting. Can you tell us a story about how this framework was formed and what it seeks to achieve?
Amy Erixon (Avison Young): Yeah, for sure. I mean, for those people who have been active in the devices, which are the green councils in the US or Canada or who have been following LEED certifications, are aware of the fact that Rick Fedrizzi, who really pushed that effort forward through the Green Building Councils, launched the WELL Building Institute. And so there’s a lot of compatibility between the frameworks of the well certification and the lead certification. And so it was a natural partnership for them to come together to address this point. And the collaboration was in part designed to respond to the complaints of signatories or certifiers, entities like ours, that go and obtain building certifications about the fact that the certification systems use different metrics. They have different questions and they’re covering quite a significant overlap of items. So we were trying to streamline that and make it easier for people who have buildings that have LEED certifications to obtain, well, certifications. But as we started exploring what that looks like, I think it became readily apparent to the participants that one of the issues that we have to get beyond is thinking about the buildings on a standalone basis and that we. Need to think about them in the context of the community, and there are some places like Hamburg with the HafenCity where they have tried some experimentation and sort of communal zoning approaches in order to achieve a whole set of social objectives, in addition to the environmental standards that are applied to each building individually, for example, each building has to use some form of onsite renewable energy production. There doesn’t have to be the same. They’re allowing each owner to develop their own solutions and provide social support for the community context in order to get a better district out of the effort. So I would encourage people, if they aren’t familiar with the Building Better Places initiative, to reach out to either Kris or to me and we can get you those materials. It’s really interesting reading about how to think about what we’re doing here from a community perspective.
Kris Kolenc (REALPAC): That’s great. And I totally agree to the kind of take a more macro lens of sustainability issues or the built environment rather than just, you know, my one building got a good lead score. Let’s move on. There’s so much more to it. And I know you and I were speaking before me. It’s kind of funny that for the WELL standard, that’s becoming a little more mainstream because now there’s a commercial with Lady Gaga, Robert De Niro just speaking to that. So, I mean, similar to how people recognize the lead label on buildings, maybe WELL and other things will become part of the Canadian knowledge as well.
Amy Erixon (Avison Young): Well, along those lines, I saw that the Biden administration convinced the dating sites to put her on their scoring sheet for are you vaccinated? And the point is that men are less likely to get vaccinated than women. And so they wanted to demonstrate that women are twice as likely to select to date a man has been vaccinated than not, and it appears to be driving vaccination rates. So this stuff is all from a community context, amusing, but experiments work.
Kris Kolenc (REALPAC): That’s so amazing. And the last big topic that’s really part of the conversation right now is carbon emissions net zero. We’re seeing more and more companies make net zero commitments, fewer in commercial real estate. Obviously, there’s challenges to that. I know our members want to make sure they have a very credible approach before they release anything in regard to that. But just on the on the state of net zero emission. So what do you think are some of the opportunities you should really be focusing on right now to hit net zero by 20, 50 or sooner?
Amy Erixon (Avison Young): Yeah, well, this question really echoes the one two prior where there’s a big difference between how this is being tackled in Europe from North America. And our U.K. team has been privileged to be hired as the lead consultant to develop the net zero programs for the government of the United Kingdom and Scotland. And they’re starting to work for other countries. So the government is looking at their own footprint first, and they’re using that to inform how they develop financing tools and and policies and zoning standards and so on in order to drive net zero across the real estate community in North America. That leadership has really come out of the Canada Green Building Council and REALPAC and it’s really been the industry titans, particularly the biggest owners, the Oxfords and Ivanhoes and Cadillacs, who jumped on this four or five years ago and are really pushing the envelope because of their scale. They’re able to make a big difference in terms of how people understand that. But those industry consortia are really important and it’s important that we work together. The GBC has had working groups of cross functional professionals tackling various specific issues, and I’ve worked on two of those, one related to harmonizing the recycling rules because food, waste and demolition from Thai’s as you work through your building are two major sources of GHG emissions that should be readily controllable by substituting materials, by getting recycling standards standardized. And we just launched a new consortia about two months ago that’s looking at low carbon materials for ground up construction. So those that it’s bigger than the real estate industry, these consortia include contractors, materials suppliers, architects. We’re working as an eco system to try and get at those answers and then lean into organizations like yours to do the policy advocacy work with the government in order to get the financing to bridge the gap.
Kris Kolenc (REALPAC): Perfect. And like you said, collaboration is key. At REALPAC at our ESG committee, we’re pushing it so hard, we had our first net zero meeting specifically on that topic a few weeks ago, over 60 people attended. We thought maybe it’d be a smaller group. We have a second one coming up. So lots to do there. And like you said, thinking beyond real estate, our world needs to hit these targets, countries need to. And then all industries need to grow in the same direction. So we look forward to continue to work with with our memberships and beyond and beyond Canada as well, just to make sure that we do make a difference here.
Amy Erixon (Avison Young): Well, hats off to your leadership, Kris. I’m one of those 60 people, and I really enjoyed that conversation. And I think that there’s great value that people take away from it. They they are pretty open kimono about sharing tips and tools and resources that helped us get to, you know, a quick understanding of the issues at hand. And your handouts with four pages of links to industry resources are a little bit formidable, but you can’t find what you’re looking for in that bibliography, then you’re not you’re not paying attention.
Kris Kolenc (REALPAC): So, no, that’s true. Thanks so much, Amy. And again, I mean, to our all our members, including yourself, the input has been amazing. And as our CEO, Michael Brooks would always say, we’re all in the same tribe. Sustainability professionals, even if we are competitors, we’re all rowing in the same direction towards the same goal. So the collaboration and openness is really great in that regard. But without Amy, it’s been great having you. Just as an aside, it’s also been great getting to know you over the past four years. I’ve been in the industry and I look forward to finally seeing you again at a conference, hopefully sooner or later in person. So thank you so much for joining us today to did that.
Amy Erixon (Avison Young): Kris, thanks for having me.
Kris Kolenc (REALPAC): So we’ve been speaking with Amy Erixon, Principal and President, Global Investment Management at Avison Young.
Michael Brooks (REALPAC): Well, this is Michael Brooks and that’s it for this week’s episode of REALtalk. Be sure to visit us at realpac.ca/realtalk and subscribe wherever you get your favorite podcasts. If you have an idea for a topic or a guest, please send me an email at email@example.com. And if you like what you hear, give us a 5-star rating. Thank you for listening and tune in next time.