Real estate developers, construction companies, architects — while we may not consider them social impact organizations, they greatly influence the impact their projects will have on the communities around them. Whether they are driven by internal factors, such as the vision and values of their senior leaders, or motivated by market forces, such as changing customer desires, developers are not immune to societal shifts towards social purpose real estate (SPRE).
Welcome back to Future of Good’s series on SPRE. If you’re just joining us, we invite you to read our introduction and first article, which look at examples of social impact organizations acquiring or leveraging real estate through unconventional partnerships with real estate developers.
This article moves beyond a definition of SPRE as real estate that is owned, operated, or managed by social impact organizations. Regardless of what the property is meant for and who will move in, social good can be created from how real estate is designed, developed, and constructed.
Environmental Sustainability and LEED certification
The move towards SPRE began by acknowledging the outsized role that the built environment plays in carbon emissions, waste generation, and resource usage. A 2017 United Nations report states that “buildings and construction together account for 36% of global final energy use and 39% of energy-related carbon dioxide emissions.” According to the Canada Green Building Council (CaGBC), “buildings generate up to 35 percent of all greenhouse gases, 35 percent of landfill waste comes from construction and demolition activities, and up to 70 percent of municipal water is consumed in and around buildings.”
The CaGBC adapted the Leadership in Energy and Environmental Design® program (commonly known by its acronym, LEED) from their US counterparts in 2004. In 2005, 31 buildings were LEED-certified; by 2018, that number had jumped to 4,025 buildings nationwide. This increase demonstrates how LEED certification has been widely accepted as worth the time, effort, and cost associated with attaining it. LEED has become a marketable “brand” that is recognized and valued by residential buyers and commercial tenants.
However, LEED has attracted plenty of criticism. Critics disapprove of everything from its methodology of assigning easy points to low-cost actions, such as posting educational signs or giving priority parking to fuel-efficient cars, to the disappointing real-world energy savings when tenants move into a building, which differ significantly from the theoretical calculations used to certify buildings before they are occupied.
LEED has also been criticized for focusing too narrowly on individual buildings through a technical lens, which discounts how buildings and development impact their neighbourhoods and communities in ways that go beyond energy efficiency.
Broader Social Impact
In addition to minimizing their environmental or carbon footprints, designers and developers can increase the social impact of their projects in myriad ways. For a long time, the preservation and adaptive reuse of heritage buildings has been known to make development more sustainable and better for communities, as has ensuring that new designs are inclusive and accessible for all.
Other practices are newer. A growing body of research outlines the benefits of designing spaces and places for social inclusion and interaction, with a focus on families with young children and seniors at risk of isolation.
Some developers have become certified as B Corps to measure and articulate their commitment to embedding social impact into their business practices. Others have partnered with groups ranging from arts and culture organizations to post-secondary institutions to create civic assets — for example, the rebirth of a long-vacant landmark — that they could not have built on their own.
Developers are also under pressure from social impact organizations and legislation to ensure that the economic value and wealth their projects generate is shared with communities through Community Benefits Agreements. These are contracts signed by real estate developers (or builders and owners of major infrastructure projects, which in many cases is the government) that spell out intentional and measurable ways for local residents and communities to participate and benefit. Examples could include employment and training opportunities, the creation of a public amenity, or specific supports to prevent the displacement of local residents and small businesses.
Holistic Outlook on Impact
When pursuing social impact in the real estate industry, it can be hard for social impact organizations and developers to understand, track, and advocate for what can be fragmented and uncoordinated actions. A universal framework that is simple to understand, straightforward to implement, and comprehensive in its scope is needed.
The One Planet Living® framework is one possible answer. Created in 2003 by Bioregional, a UK environmental charity, and WWF, One Planet Living is not meant to be a replacement or competitor, but a complement to existing certification or accreditation systems like LEED. It is a simple framework of 10 guiding principles that recognize and highlight the holistic nature of living in harmony with our environment and each other. It takes into account health, happiness, equity, culture, and our relationship with the land and water, as well as traditional considerations such as supply chain, transportation, waste, and carbon footprint.
Compared to LEED, it is more flexible and less prescriptive, which facilitates closer collaboration and engagement with project stakeholders beyond the usual circle of architects, builders, and others involved in the technical design. Rather than rating a specific building, it considers the interconnected and interdependent nature of a particular real estate project and its impact on the broader community.
Today, far fewer developers have adopted One Planet Living’s model than have pursued LEED certification. This may be due in part to the very flexibility — and thereby lack of robust pathways to success — that makes this new model so innovative. However, sustainable developer Windmill Developments and its sister company Urban Equation are working to change that. As proponents of environmental stewardship and community engagement, the two companies are natural partners to help the One Planet Living framework gain greater traction with Canadian development partners, consulting clients, and municipal governments.
Two Windmill Developments staff are “One Planet Integrators,” responsible for embedding and implementing the 10 One Planet Living guiding principles into Windmill’s projects and those of Urban Equation’s clients. Their One Planet Living action plan for the high-profile Zibi development on the Ottawa River, for example, is critical to realizing that project’s ambition to be one of the world’s most sustainable communities.
One Planet Living’s inclusion in Windmill’s proposal was well received by Guelph, Ontario when the city was looking for a partner to redevelop a downtown parking lot into a vibrant, mixed-use neighbourhood with a new public library. One of Windmill’s contributions to the project will be to incorporate the One Planet Living principles into the project’s Sustainable Neighbourhood Development Plan.
The One Planet Living framework can also be used to engage more stakeholders, from neighbourhood groups and residents’ associations to local businesses and the municipal government. While people who are not involved in architectural design or construction may not see a role for themselves in the LEED process, it is easy for them to see how they fit into development guided by One Planet Living principles. They can understand how a non-profit community garden promotes the principle of local and sustainable food, how a seniors’ centre that organizes Tai Chi in the park promotes health and happiness, or how a neighbourhood cafe that pays newcomer employees a living wage promotes equity and boosts the local economy.
The One Planet Living framework has evolved into a continuum that also includes certification and endorsement, led by a third-party peer group that assesses and verifies that a project’s OPL action plan is properly implemented and achieving its desired results. As One Planet Living gains momentum in Canada, it is conceivable that it too will become a marker of intentional, meaningful, and measurable social impact, sought after by those who develop, finance, and purchase real estate.
In the next article of our series on SPRE, we follow the money and turn our attention to the influential but often invisible role that real estate investors play in our communities — and what needs to change for the social impact sector order to truly realize its holy grail of serving people, planet, and profit.
This topic is sponsored by Windmill Development Group, a real estate company with a triple bottom line approach that aims for zero ecological footprint, and its sister company, Urban Equation, a consulting company that advises those in the real estate industry on innovative practices for sustainable development. Future of Good retains full editorial control, as in every other article it publishes.