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Equity One: Landlords being stewards

By William D Alessandro on April 15, 2011 at 3:42pm.

Equity One is a real estate investment trust (Reit) that owns strip-malls in the US. Its first non-financial report provides an opportunity to see how sustainability disclosure is emerging across an entire business sector.

Publicly held Reits like Equity One trade on the market as if they were stocks. Reits are not required to pay corporate income tax in the US if they distribute at least 90% of their income as dividends to investors. (Worth mentioning is the fact that many famous-name companies, like General Electric and Johnson & Johnson, manage to avoid the taxman’s largest nets, too.)

Equity One is not the first Reit in the US to report. Prologis, an industrial landlord, has issued more robust disclosures for four consecutive years. Plum Creek Timber Co., a forest and woodlot manager, has completed four annual environmental reports. But only a handful of other US Reits have done any reporting. For all intents and purposes, Reits are sustainability newbies.

The library of CorporateRegister.com contains 37 Reits in the world that report their triple-bottom-line performance. A number of these reports arrived during the past year. Many of their reports share nearly identical features.

Equity One is headquartered in North Miami Beach, Florida. Chairman Chaim Katzman moved there in 1989 from Tel Aviv and founded the company a few years later. With dual citizenship, Katzman is also chairman of the Israeli Gazit-Globe. That company is one of the largest real estate multinationals to be focused on supermarket-anchored shopping centres. Directly and indirectly through Gazit-Globe, Katzman owns a controlling interest in Equity One. The business daily “Globes” recently reported that he earns the highest salary among executives of public companies in Israel.

As of 31 December 2009, the most recent date for the reporting data, Equity One had a portfolio of 182 properties, including 168 shopping centres. They are clustered around high-growth metropolitan areas, such as Miami, Fort Lauderdale, Boston, and New York.

Gazit-Global produced its sustainability report in June 2010, seven months before Equity One followed suit in 2011. Equity One is making an explicit, concerted effort to align with the Global Reporting Initiative (GRI). Its report is 32 pages, and 8 of them (a full 25%) are taken up by the GRI application level chart and content index.

The company outlines its key areas of commitment: the environment; a code of ethics; health (including dietary) for its 165 employees; and their social contribution, which constitutes volunteer time.

Like other Reit debutants, Equity One reaches back past the most recent 12 months for a baseline — in its case the calendar year 2009. The managers make no excuses. The company’s effort is in the beginning stage: ‘2009 was a year of discovery for the company…Our strongest focus was placed on corporate operations, property operations, construction activities, and development activities.’

Years ago companies held off publishing their first environmental reports until they had collected a hearty amount of data, could display a solid grasp of the subject, and perhaps more importantly, could demonstrate significant performance improvements. This is no longer true. Expect to see newcomers, and not only in the real estate industry, publish placeholder reports like this one — essentially a public statement of their goals and commitments.

The Reits are concentrating their sustainability efforts on making their properties more energy and resource efficient. Efficiency information accounts for the preponderance of the available quantitative data.

In March 2011 the National Association of Real Estate Investment Trusts (Nareit) held their first forum to discuss key drivers of sustainability. The sessions equated sustainability with superior energy use practices. Each year Nareit honours companies with ‘Leader in the Light’ awards. The honours are made in cooperation with the US Environmental Protection Agency’s Energy Star program.

Equity One discusses, albeit briefly, its initiatives to build future new projects up to the standards of the US Green Building Council. The company describes cool roofing practices, and is pressing hard on recycling not only in its own office but also by those who occupy its retail space.

The landlord’s showcase project is a new 194-kilowatt solar array on the roof of a supermarket in Massachusetts. Three more are planned jointly with the tenant, a large grocery chain called Supervalu.
At the moment GRI is within a few months of the launch of a sector supplement for construction and real estate. Several Reits are participating in the international working group, including Alstria, Germany’s first Reit, and Prologis. Equity One is not among the developers, but it is surely on the lookout.

The GRI supplement will cover building and materials labelling, energy and water intensity metrics, and carbon emissions related to buildings. It will also have parts devoted to remediation of contaminated land, health and safety when operating in what GRI calls 'insecure environments', and labour in the subcontractor supply chain.


Equity One sticks to a literal rendition of the GRI guidelines. The result can best be described by the nautical expression 'steady as she goes'. The course of the report is set at the start. The information, such as is available, is unsurprising and decidedly bland. Yet it comes as a refreshing break from the garish narratives in other industries that are supposed to dazzle stakeholders out of their wits.

The GRI content index in Equity One’s sustainability report is the authorised, uncut version. It stretches across five and a half pages. It has dozens of performance indicators referenced to as 'not reported' without explanation why. One simply assumes that, in most instances, the company has not collected the information, being in the infancy of sustainability disclosure.


Equity One says it has internally validated and self-declared all the information published in the report. The GRI application level is C. The company has obtained a GRI check to confirm that the report has the required set and number of disclosures to meet that designation.

CEO Jeff Olson writes in remarks addressed to stakeholders that the decision to develop and benchmark corporate responsibility and environmental stewardship was made ‘despite extreme market volatility and extraordinary pressures.’ Other Reit CEOs say essentially the same thing in the introductions to their reports. The statements sound a little tinny.

Energy is the largest single variable cost in a real estate business, other than employee costs. A more accurate admission would be that sustainability reporting is not beginning despite the financial meltdown in the real estate industry but because of it.

Resource efficiency is a great place to start down the sustainability path. But such a narrow focus cannot last long. Reits impact many social and community issues that will have to been taken on board sooner rather than later.

Further complicating these matters, Reits can be very much unlike one another, given their portfolios (retail vs. industrial properties, for instance) and their location (for example, on the West Bank of the Palestinian territories vs. the inner city of an American metropolis).

Even environmental concerns do not begin and end with resource efficiency. In the case of Equity One, it would not be difficult to come up with list of potentially material issues related to the proliferation of urban strip malls.


1.   You are headed in the right direction. So press on.
2.   Whether or not you report publicly right off the bat, start to examine a wider spectrum of social and environmental aspects relevant to your business.
3.   You mention a number of important programs and policies underway to understand and improve the sustainability performance of the company. Be sure to follow up, preferably with a table or in some other simple format so stakeholders can easily chart your progress.

William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters. He also edits Crosslands Bulletin http://www.crosslandsbulletin.com covering strategic corporate environmental management and sustainability issues.