In recent years, Environmental, Social and Governance (ESG) practices have taken more priority than ever. The social and environmental impacts of COVID-19, coupled with a growing understanding of social inequities, are driving multifamily operators to take a fresh look at their investment strategies.
We can see the growth of ESG in the numbers:
- In a 2021 Global Investor Intentions Survey, 60% of respondents said they already integrated ESG into their businesses, with those from regions including the Americas reporting a stronger focus than in previous years
- In 2020, housing giant Freddie Mac put $3.3 billion toward “Green” workforce housing, $877 million into “Social” affordable housing, and $971 million into “Sustainability” affordable housing
- Across all sectors, ESG investing grew by more than 38% between 2016 and 2018
Meanwhile, Cushman & Wakefield, Yardi, and other major firms are developing scoring models for ESG rankings in real estate.
And as the trend grows, the idea that ESG initiatives cost time and money with little to no return is proving to be a misconception. Financial amenities like Lease Guarantee, TheGuarantors’ rent coverage product, work toward your social, or “S,” goal, at zero cost to you, the operator.
ESG: A brief refresher
Multifamily operators incorporate ESG into every aspect of their business models, from construction to leasing and operations:
- Environmental: Eco-friendly construction materials and amenities like energy-efficient appliances, smart home features, and electric car charging stations
- Social: Financial amenities that make renting more financially accessible
- Governance: Fair and ethical business practices such as equity, inclusion and diversity in hiring and management
In doing so, they simultaneously open the door to new markets. One recent study found that 83% of Millennials choose brands based on their values, while another reported that amenities are a deciding factor on where to live for 87% of multifamily residents.
Meeting the ‘S’ in ESG
When it comes to the Social aspect of ESG, the emphasis is really on making renting more financially viable for a larger population.
We estimate that 5 million American households struggled to qualify for rental housing last year. And with the median U.S. rent reaching $2,002 in May, a record high and a 15% increase year-over-year, Americans have less extra cash to pay for added expenses, like security deposits and emergency expenses.
Lease Guarantee helps these folks secure housing and protects you, the operator, from risk at the same time. Through our advanced risk management technology, we turn more rental denials into approvals.
Whether you’re working toward an official score or are simply prioritizing your ESG, Lease Guarantee can help you meet your “S” goal by increasing your rental accessibility, at no cost to you.
