Allied Properties REIT has taken some significant steps in recent months in the Environmental, Social, Governance (ESG) sphere. It created a senior management position for sustainability, got its Green Financing Framework into place, and has been scored on its first ESG report to the Global Real Estate Sustainability Benchmark (GRESB).
Jo Flatt became Allied’s vice president of corporate planning and sustainability in August. She had been hired in January of 2020 to lead strategic and corporate planning initiatives.
“We’re in a really good position to be able to take huge steps forward and in time really move into a leadership position in this industry,” Flatt told SustainableBiz.
Allied received a score of 64 for its inaugural GRESB assessment, which GRESB called a “strong first-year showing.”
Allied is a Toronto-based trust involved in the ownership, management and development of commercial real estate. It operates in seven Canadian cities, with the bulk of its assets in Montreal and Toronto. Its investment properties were valued at about $8.8 billion as of Dec. 31, with total assets of about $9.4 billion.
A large part of Allied’s overall business strategy is to acquire existing properties and make improvements. That fits right into the ESG mandate.
“We buy old historical buildings and we breathe new life into them. We make them more energy efficient, improve the public realm and aesthetics, too,” said Flatt.
Allied ended 2020 on a strong note on the ESG front, announcing Dec. 8 it will contribute $21 million over 16 years toward the revitalization of Massey Hall, one of Toronto’s iconic music venues. The performance hall would be part of a seven-storey tower at Shuter and Victoria called Allied Music Centre.
“It’s a reflection of our enduring commitment to the arts and culture communities in Toronto and urban centres all across the country,” said Flatt.
Keep pushing the ESG envelope
With all these recent initiatives, Flatt said management is keen to continue pushing the ESG envelope.
“Sustainability has been a part of Allied since its beginning, but the expectations have changed a lot,” she explained. “It’s really an incredible time to be working in (this) space because there’s so much momentum and opportunity.”
The ESG reports will allow the company to work in a more transparent manner, and bring a higher level of accountability to the sector. Allied also intends to conduct a materiality assessment this year, Flatt said, which will focus its priorities as a business, examine how ESG fits into that business, and what Allied’s competitors are doing in this space.
“Our first audit in 2020 showed us how we are performing as a business, and we hope to take all those learnings and take some actionable and intentional steps within our business and workforce,” she said.
Flatt said as it expands its efforts into new areas, Allied will continue focusing on energy efficiency and improving water and mechanical systems within its buildings. It also wants to increase access and utilization of data to help guide its decisions.
“Knowing what our buildings are doing and generating and consuming will be a really important part of our future plans,” she said.
Flatt has sustainability background
Flatt is a career sustainability expert who studied at Copenhagen Business School, one of the most prominent socially responsible business programs in the world. She is also a graduate of the University of Toronto with a public policy degree.
Among her previous roles, she worked for Evergreen Canada on its Smart Cities program.
“At Allied, I get to bring all of that experience together and I get to actually implement it inside of an organization that’s really interested and able to have an impact in urban areas,” she said.
She said sustainability is playing a more prominent role within the real-estate industry, hand-in-hand with social responsibility. The best way to have long-term impact is by having your bottom line work in tandem with your ESG goals.
“When you are in a good financial position, you are in a better position to then make a large number of sustainability related investments,” she said.
As Allied and other large REITS focus more on sustainability, Flatt said these targeted efforts have significant ability to drive change in Canadian communities.
“A developer has a huge, tremendous amount of impact in terms of how you experience places and spaces. Now it falls on the developer to want to make those changes going forward,” she said.
Allied’s green financing framework
Certifying its green financing framework means Allied can now issue green bonds, green loans and other green financing vehicles.
“It has been certified by Sustainalytics and is available on our website,” Allied executive vice-president and chief financial officer Cecilia Williams told investors and shareholders on the trust’s year-end financials call Thursday. “Our intention is to have our next bond issuance be our inaugural green bond. This is a reflection of our ongoing commitment and sensitivity to ESG issues.”
That prediction was rapidly borne out, with Allied announcing Friday its first $600-million issue under the green financing framework. The debentures will offer 1.726 per cent annually and mature on Feb. 12, 2026. They are being offered on an agency basis by a syndicate led by Scotia Capital Inc., BMO Nesbitt Burns Inc. and CIBC World Markets Inc.
CEO Michael Emory, commenting on the same investor call, echoed Flatt’s comments that Allied now has a starting point from which to move forward.
“These reports as you know identify strengths and opportunities for improvement at Allied,” Emory noted. “What is most important, in my way of thinking at least, is that they will assist the board and management in establishing rational priorities coming forward and will provide benchmarks for measuring improvement on a go-forward basis.”
— With files from Don Wilcox
EDITOR’S NOTE: This article was updated to include information about the $600-million debenture offering.