August 15, 2022
Modlo, the logistics real estate operating platform of GLP Capital Partners (GCP), operates a growing national portfolio of logistics real estate and supports some of the United States’ most complex businesses. We recently spoke with Pete Kane, GCP’s chief financial officer, who has overseen the launch of the company’s Environmental, Social and Governance (ESG) initiatives. Learn more about Modlo’s experience establishing their ESG program, the importance of GRESB reporting and how the company is tackling best practices for data collection and reporting.
Establishing priorities when launching an ESG program
“We are relentlessly focused on improving our business performance while also contributing to the communities where we live and work,” Kane said. “Part of that focus has been how we do so through ESG processes, measures and best practices. Since the company’s inception, we mostly did so informally through exploring solar energy options, encouraging participation in a companywide ‘day of giving’ and the installation of smart meters at some of the industrial properties in our operating portfolio. Then in 2019, we determined it was time to establish an official ESG program.”
With properties around the United States and customers focused on first and foremost running their businesses, Kane said they recognized the reality of how complicated it can be to collect and manage ESG metrics.
“Customers are understandably primarily concerned with their day-to-day operations, and it can be challenging to get timely responses,” Kane said. “For our third-party property managers, providing information related to electricity and water usage, tenant relations, and community outreach isn’t turnkey. While many customers are committed to participating in these ESG-related efforts and feel it is the right thing to do, we always want to simplify the collection and exchange of information.”
Recognizing it was critical to simplify the process to maximize customer engagement, the team at Modlo contacted UL Solutions. Kane noted that Modlo Head of Construction Mike Leberman and a few other colleagues were familiar with ESG and GRESB advisory services from UL Solutions.
“We contacted UL Solutions because our familiarity and industry research told us that the company had a ‘playbook’ of sorts to help us to engage with our customers,” Kane said.
He also noted that the working relationship with UL Solutions now goes beyond data collection and GRESB. Each of Modlo’s new construction projects seeks green building certification, such as Leadership in Energy and Environmental Design (LEED) or Building Research Establishment Environmental Assessment Method (BREEAM). UL Solutions provides advisory services to Modlo on those certifications — from construction to applications.
The importance of ESG and how GRESB drives best practices
“ESG is an integral part of our approach to sustainability and is core to our overall business strategy, philosophy and daily operations,” Kane said. The Modlo team uses the GRESB framework to identify ESG best practices and broaden its perspective on how to capture and create value through sustainability.
Modlo is still relatively new to GRESB reporting1, having formalized ESG principles in 2020. However, the company already sees benefits in 2021, the first full year operating within the sustainability plan. From cost savings and governance consistency to diversity and inclusion, GRESB is helping Modlo broaden its goals and mindset beyond real estate and data collection.
Kane stated that GRESB reporting helps the company ensure their ESG plans are comprehensive and truly incorporated into every aspect of the business, which is their goal. Kane also said the process would help provide transparent data to investors and employees, which is essential to Modlo.
“GRESB is one way we challenge ourselves to measure progress,” Kane said. “We continuously try to enhance our sustainability mission through enhanced data reporting. It’s also a transparent way to provide insights to our investors and the communities in which we operate.”
Working on GRESB reporting has also helped Modlo recognize that ESG is a continual process. Key performance indicators, metrics and targets will constantly evolve, and GRESB motivates continuous improvement by helping the business understand these shifting metrics.
“ESG is in constant evolution,” said Patrick Gonzalez, head of ESG at GCP, who was also able to join our conversation. Gonzalez started with GCP in early 2022, when the fast-growing company realized it needed a dedicated resource focused solely on the ESG program to help bring everything together and allow for further initiatives. “GRESB is very helpful with keeping us on our toes regarding emerging ESG best practices, frameworks and stakeholder expectations within the real estate sector.”
The role of UL Solutions in ESG and GRESB reporting
Modlo’s most significant opportunity in establishing an ESG program has been streamlining data collection. “UL Solutions helps us navigate the data collection process. They provide us with the resources to be able to do this, including LEED certifications, Energy Star® reporting and compliance,” Kane said.
According to Kane, with support from UL Solutions, Modlo has improved the data coverage of key environmental performance metrics of the buildings across their portfolio. “We’ve made a lot of progress in tracking data and using it insightfully,” said Kane. On suggestion from UL Solutions, Modlo moved to smart meters at some properties, which will help them gather additional data while minimizing customers’ time commitment within the data collection process.
Key considerations for ESG and GRESB reporting
“It’s important for any organization to start the ESG journey with a plan and a policy,” Kane said. “You need to have support to be comprehensive in your ESG approach. We do not have the resources to accomplish everything, and many companies will not. We now know the additional help is critical to reaching our goals.”
Regarding GRESB, Kane recommends having the gap analysis completed before starting the program. He credits this analysis with Modlo’s ability to recalibrate the strategy to focus more on areas of improvement. For example, Kane noted that the company established goals to improve its diversity, equity and inclusion efforts. They created a Women’s+ Initiative to bring employees together to challenge gender barriers within the industry, explore personal development opportunities and provide a support network for employees to help one another reach their full potential. This initiative was launched in early 2022. The company also created the GCP Foundation, and its charitable initiatives led to nearly $500,000 (USD) in donations in 2021.
Both Kane and Gonzalez recommend that companies expect frequent ESG framework and goal changes. Gonzalez said that GRESB reporting helps companies stay on top of what is changing each year. With an increasing focus on renewable, clean energy, Modlo identified solar power retrofit opportunities within its portfolio. They have begun data collection, bidding and contract negotiations for this project.
“GRESB and some of these frameworks help us focus our energy and get to what we feel is the gold standard,” Kane said. “The changes to those frameworks and goals are part of the ESG journey.”
GCP released it’s 2021 ESG report in April of this year. You can download the full report on the company’s website.
Contact UL Solutions for more information about how our ESG and GRESB Advisory Solutions can help your commercial real estate business meet its sustainability goals.