The ESG conversation in commercial real estate often focuses heavily on the "E" for Environmental, leaving the "S" for Social and "G" for Governance as afterthoughts.
While sustainability and community engagement are vital, forward-thinking companies understand that a robust Governance strategy is critical. Strong governance signals a commitment to ethics, leading to:
- Higher investor confidence
- Better tenant relationships
- Improved operational efficiency
Industry-leading owners now view Governance as a cornerstone of their ESG programs. At the VTS Accelerate 2024 conference, Shannon Loew (VP of Corporate Real Estate at Amazon) emphasized that governance is about building confidence with stakeholders, not just compliance.
In this blog, we explore how owners can leverage technology, specifically VTS Activate, to bolster Governance goals with realistic initiatives that deliver measurable returns.
Regulatory Pressures and Stakeholder Expectations
Regulatory expectations regarding Governance have intensified globally.
- United States: The SEC has introduced stricter disclosure requirements focused on risk management and ethical conduct.
- Europe: The EU Corporate Sustainability Reporting Directive mandates detailed disclosures on governance practices.
Investors are following suit. According to a PWC survey, “nearly 80% said ESG was an important factor in their investment decision-making.” Transparency and accountability are now directly linked to a company's valuation. By addressing these expectations, property teams mitigate risks and build stronger relationships with tenants and investors.
Implementing Effective Governance Practices Internally
Does improved governance drive financial results? A study by the National Bureau of Economic Research found that the market reacts to the passage of governance-related shareholder proposals with positive abnormal returns of around 1.3 percent on the day of the vote.
1. Establishing Clear Policies and Procedures
A fundamental step is developing a comprehensive governance manual.
- Consistency: Outlining policies, roles, and responsibilities ensures integrity across operations.
- Cross-functional Review: Regularly updating these policies with a diverse team keeps them aligned with industry best practices.
- Training: Distributing the manual company-wide ensures all employees understand and adhere to these guidelines.
2. Leveraging Technology for Compliance and Reporting
Technology is crucial for expanding the visibility of governance initiatives. By utilizing commercial real estate lease management software and communication platforms, organizations can share ethical guidelines directly with tenants.
Using VTS Activate allows property teams to:
- Create centralized communication hubs for governance information.
- Use interactive features to keep stakeholders engaged with ethical commitments.
- Reinforce a reputation for integrity through open communication.
3. Promoting an Ethical Culture
Internal accountability is just as important as external transparency.
Recognition: Reward ethical behavior to reinforce integrity within the company culture.
Ethics Training: Implement workshops and e-learning modules to value ethical practices.
Anonymous Reporting: Establish systems where employees can voice concerns without fear of retaliation.
Enhancing Transparency with External Stakeholders
Governance encompasses relationships with tenants, investors, and the broader community.
Transparent Communication with Tenants
Using tenant engagement tools like VTS Activate creates a centralized hub for updates and announcements. Scheduling regular e-newsletters and acting on feedback from tenant surveys builds lasting trust and satisfaction.
Collaborating with Industry Associations
Adhering to recognized standards like GRESB or LEED (which include governance components) signals a commitment to continuous improvement. Displaying these credentials prominently demonstrates dedication to high standards.
Prioritizing Data Security and Privacy
Data security is a critical governance component. In an era of frequent breaches, property teams must:
Provide regular cybersecurity training for all employees to build confidence among stakeholders.
Conduct comprehensive data security audits.
Implement advanced encryption and secure access controls.
VTS Customer Example: Royal Centre, Warrington PCI
At Royal Centre in Vancouver, governance transparency is front and center. The property management team uses VTS Activate to provide tenants and visitors with open access to:
- Compliance documentation
- Ethical guidelines
- Building policies
This direct line of communication demonstrates the property’s commitment to accountability. By leveraging technology to encourage dialogue, Royal Centre sets a benchmark for transparency in the industry.
Take the Next Step in Your ESG Journey
To learn more about the Social component of ESG in CRE, check out our second blog: The “S” in ESG: Social Initiatives to Maximize Tenant and Community Engagement.
For more information about VTS Activate and how it can help you unlock an alpha-driven asset strategy, visit our product page or book a demo.
Conclusion: The Strategic Future of CRE Governance
Implementing robust governance is no longer a "nice-to-have" elective; it is a fundamental requirement for the modern asset lifecycle. By leveraging an integrated commercial real estate marketing platform alongside your ESG goals, you can effectively broadcast your commitment to transparency, attracting higher-tier institutional investors and premium tenants alike.
Technology as the Governance Enabler
To move from policy to performance, firms are increasingly turning to a unified tech stack. The right best commercial real estate CRM serves as the single source of truth for stakeholder interactions, while advanced commercial real estate lease management software ensures that every contractual obligation and ethical standard is tracked with precision.
As we look toward 2026, the integration of AI leasing software commercial real estate will further automate compliance checks and risk assessments, removing the "administrative burden" Shannon Loew noted at Accelerate. When these tools are paired with a dedicated commercial tenant engagement app like VTS Activate, governance becomes a visible, interactive part of the tenant experience, fostering the trust and accountability that defines market leaders.
Ultimately, those who lead with governance today are building the enduring competitive moats of tomorrow.
FAQs
How does technology support the governance aspect of ESG in real estate?
Technology enhances governance by automating compliance, ensuring data accuracy, and creating auditable digital trails. For instance, commercial real estate lease management software centralizes contract data to ensure all regulatory and internal standards are met without human error. Additionally, using the best commercial real estate CRM ensures that all stakeholder interactions are documented and transparent, which is a core requirement of strong corporate governance.
Why is data transparency critical for commercial real estate governance?
Transparency builds trust with investors, regulators, and tenants by providing verifiable proof of a company's operations and ethics. It prevents data silos that can hide inefficiencies or non-compliance. By using a unified commercial real estate marketing platform, companies can ensure that the ESG initiatives they advertise align with their actual operational data, eliminating the risk of "greenwashing" and ensuring accountability across the portfolio.
What tools help reduce operational risk in CRE leasing and management?
Operational risk is best reduced by tools that standardize processes and remove bias. AI leasing software commercial real estate minimizes fair housing risks by automating tenant screening based on objective criteria. A commercial tenant engagement app reduces liability by creating a direct, documented channel for maintenance requests and safety alerts. Finally, robust commercial real estate lease management software tracks critical dates and clauses, preventing costly missed renewals or compliance breaches.
