ESG explainer: The value of financial sustainability in multifamily real estate
ESG, or environmental, social, and governance criteria, are a set of standards for companies to follow to operate sustainably and responsibly.
In multifamily real estate, sustainability initiatives have grown in popularity—from improvements in smart technology, like appliances and lighting, to financial services, like bank statement underwriting and flexible payment programs for rent.
The current trend toward social responsibility in housing is on the rise, and will continue to grow in importance to both environmental-and-social--friendly renters and multifamily investors who see value in favoring business with ESG initiatives in place.
The importance of social inclusion
The “social” criteria in ESG, which refers to the impact a company makes socially on the community at large—think: equality, diversity, and practices that advocate for social good outside of the immediate business—is a simple first step to implement.
Offering Jetty Rent at your property, for example, is a socially responsible way to give your residents the financial flexibility they need to avoid late or missed rent fees, further boosting underrepresented communities.
Another way to incorporate inclusion is the practice of bank statement underwriting, where a prospective resident’s rental application assesses the applicant's bank statement and current financial situation rather than past credit history and standing.
ESG practices and profitability
The correlation between ESG and profitability is becoming increasingly clear. Businesses with renter-friendly ESG practices in place have seen an 88% increase in operational performance.¹
On the property level, implementing (and hitting) ESG initiatives means higher resident retention and tenant satisfaction. For residents, this can mean moving into an apartment otherwise out of reach due to financial constraints with bank statement underwriting, or on-time rent payments that would otherwise be considered late with Jetty Rent.
With 1 out of 3 millennial investors prioritizing investments that take ESG factors into account, putting in the work to prioritize sustainability in multifamily could mean more money, and in turn more growth at the property level.²
- “Is sustainability profitable?,” Investors Corner (https://bit.ly/3HkcZWA)
- “Millennials spurred growth in sustainable investing for years. Now, all generations are interested in ESG options,” CNBC (https://cnb.cx/395ddEO)