How a Global Developer Makes ESG Impact
We are living during a period of great social, economic and environmental upheaval. Buildings substantially contribute to global warming; inequitable development reinforces social injustices; and corporate corruption often influences decision-making in communities around the world.
It is in times like these that developers and designers must join forces to overcome such challenges. HKS recently invited Hines’ Vice President of Global ESG, Adam Slakman to participate in our annual ESG in Design Celebration and share how his global investment and development firm is embracing environmental, social and governance strategies in its operations.
Slakman oversees ESG strategy across Hines’ investment portfolio, which includes more than 650 management properties and 198 in-progress developments in 28 countries around the world. Currently, Slakman is leading the implementation of a new ESG framework to prepare the firm’s next generation of leadership with holistic targets for reducing embodied carbon and carbon emissions as well as key social and governance pursuits including affordable housing development and diverse industry partnerships.
In a conversation with HKS Global Director of Place Kirk Teske and HKS Chief Sustainability Officer Rand Ekman, Slakman shared what he believes the future of our industries will look like as they strive to become more environmentally and socially conscious. Here are some highlights from the discussion:
Adam Slakman: When it comes to ESG and sustainability, Hines is very much open book. First, that positions us to continue to be a leader in the industry and second, we’ve all got to come up together. It’s an industry-wide and global initiative. But technology isn’t what’s going to get us there. It’s about behavior, incentives and how we can push our own people and the entire supply chain including architects and contractors to support where we want to go.
Kirk Teske: I’m fascinated by the drivers in the industry — the things that are driving the need for decarbonization and other ESG attributes. Can you share more about how financial institutions are driving change and how what they are doing affects what we do as designers?
Slakman: A lot of the investors we have are pension funds or sovereign wealth funds. As countries, states, and regions have committed to Paris 2050, they don’t quite know how they’re going to reach those goals. But they have much more control over real estate than they do over parts of their investment portfolio. They can make a bigger impact on their real estate portfolio, and they come to us to help them reach their commitments. The only way we can make this happen is to partner with groups like HKS on new developments and major renovations. Decarbonizing the built environment is one of the few topics that everyone along the investor spectrum has coalesced around. Other ESG focus areas are important to Hines, but we haven’t heard investors talk about them as much as decarbonization, which is where they’ve all come together.
Rand Ekman: On the design and professional services side, we’re tuning our attention to what the client is looking for and folks delivering real estate solutions are sometimes more familiar with ESG goals than others. Firms like Hines continue to lead and be very thoughtful about how you position your product in the marketplace. What is the mechanism by which you communicate these expectations and goals in the delivery of a project? How does it play out in a contract and in the design and construction process?
Slakman: We’re still early in our journey and are setting ambitious targets. We recently modeled our entire global investment portfolio for decarbonization. It’s the most complicated undertaking we’ve ever done. We’ve updated our contractor contracts to reflect environmental product declarations, which is what we need to track embodied carbon, and that’s a requirement now for structural components. We’ve integrated certain requirements into our annual plan that local teams have to respond to and we are challenging them ask questions of their suppliers. But we are one player. If only the top two or three firms in every industry are doing this, we’re not going to make an impact.
Ekman: What is your sense of the movement in the market in general?
Slakman: We want to lead the industry to get to decarbonization by 2050; it’s going to be a societal issue if we don’t. There are going to be long-term climate impacts that are and damaging for society and if that happens, that also damages our business. I think the entire market will move with us, at least on the decarbonization front. From a social impact perspective, the market also wants to see more community impact in a positive way. That’s where design can play a big role.
Teske: We’re really encouraging our staff to recognize that we want to be at the forefront of this transformation in the market. The three pillars of our strategic plan are lead with knowledge, advise for influence, and do outcome driven design work. So, I see what we’re both trying to do is aligned. In the day-to-day project work, I have to believe Hines would appreciate our talent coming in with good sound knowledge of ESG strategies and working with you to set goals and outcomes of the projects. Is that something you would value?
Slakman: The short answer is yes. The longer answer is that we have a job internally to convince everyone that electrification is the only way we should ever build and operate a building again. As designers, you can push our local teams on that as well. Those are designs we should be choosing. When there are opportunities with Hines and HKS, challenge us and have conversations with us.
Teske: I appreciate your notes and ideas about how the market, tenants, investors and legislators are all looking to the real estate industries to execute on their ambitions. I like that we’re seeing more drivers to push for this change and it’s all the more reason that we as a design firm need to be seeking to be the very best partners and encouraging clients to embrace this mindset.
Slakman: I think we’re aligned in the sense that we have to do this together. We hope we can lead the industry and we can’t do it without our partners.
Ekman: There is so much truth in that. When we’re working on important topics like what we’re talking about today, sometimes the answers aren’t obvious. The need for creativity and innovative thinking is pretty high, especially when we want to be in the role of telling people, “Here is what can be done, and we’ve done it.” That’s great work to do — it’s what you want to wake up and spend your time doing.