Ridhima Nayyar recalls being a young civil engineer in Mumbai and once attending a job site with some 700 male workers. Nayyar was one of the only women.

Her father told her at the time to just come home if she felt uncomfortable in that situation. She chose to stay.

Now an assistant vice-president who leads RioCan REIT’s sustainability program, Nayyar says she’s glad she stuck with her career despite the lack of women in leadership that continues to challenge the industry here in Canada. 

"We've come a long way,” Nayyar said, reflecting on her career thus far. I feel very comfortable voicing my opinion. I feel that I belong. I’m valued and respected."

Nayyar shared her experience in Vancouver on June 2 at the closing panel of the Building Lasting Change conference held by the Canadian Green Building Council (CAGBC). The panel focused on the ESG Industry Report 2023 produced by REALPAC.

Adapting to climate risks by achieving lower carbon emissions, and having more women and diverse individuals in leadership positions emerged as the two leading ESG priorities for companies in Canada’s commercial real estate industry, according to the report. 

Zero carbon adoption requires guidance and support

The pathway to zero carbon in Canadian commercial property is starting to emerge, but the industry needs more guidance, support and accurate reporting to develop and mobilize better planning, technology and financial analysis, the report said. 

At current rates, climate change will result in a temperature increase of 1.5 C between 2030 and 2052, increasing the frequency and intensity of extreme weather events that harms the commercial property market — and every other aspect of life.

The risks of not embracing zero carbon are many. Among them are increased flooding, extreme heat and wildfires, as well as all the elevated capital, repairs and insurance costs associated with property destruction and general economic uncertainty caused by extreme weather.

More disruptions are expected in transportation and supply chains.

Just recall the unprecedented atmospheric river in British Columbia in November 2021. That event put the Sumas Prairie region underwater and caused flooding and mudslides that destroyed sections of every critical highway linking the Lower Mainland and the interior, essentially severing Metro Vancouver from the rest of the country for many days. Five people died in the disaster and thousands were chased from their homes.

Progress is emerging in the CRE industry

Thirty-seven per cent of REALPAC members have now set a net zero carbon target, and 75 per cent of members have integrated climate risks into investment decisions, according to the report presented during the closing plenary panel.

Targets are great, but property owners still face real-life challenges that are contributing to a slow transition to zero-carbon portfolios, panelist Julia St. Michael, director of ESG at CAPREIT, said. 

"We're dealing with rent controls, we are dealing with investor pressures, we are dealing with not being able to pass through costs to tenants or residents," St. Michael said. "There's a lot of challenges with what we're doing, but definitely, we haven't been doing nothing." 

St. Michael said the transition to zero carbon is happening at CAPREIT in select buildings. "In 2018, our sustainability and conservation team actually started to decarbonize buildings with some generous incentives . . . and we found great success. So, about 18 to 20 buildings have been decarbonized."

CAPREIT is now working to scale its process and has 27 buildings in the decarbonization pipeline. It has doubled its annual budget for energy efficiency and decarbonization.

‘We can’t market our way to zero carbon’

“You're never going to be able to market your way towards zero carbon," senior director of Sustainability with Choice Properties Ariel Feldman said, referring to greenwashing. “You're never going to be able to market your way out of climate change.”

Feldman said the REALPAC report shows there are exciting aspirational goals, but they need to be backed up by science-based action.

"We're committed to reducing our emissions by 90 per cent from the 2018 baseline," Feldman said. "That means that we have to actually reduce (carbon emissions). We have to get off of natural gas, we have to . . . electrify our buildings, we have to make them more efficient (with) renewable energy — or install it on site."

Those are real targets, but the path to achieve them remains unclear, Feldman said. Achieving national scale across the industry is essential. "We need everybody to contribute to that."

Social diversity making progress, but more work needed

The importance of diversity, equity and inclusion (DEI) continues to grow in the CRE industry, the conference heard. Progress will require specific goals, policies and reporting, just like the path to zero carbon.

Currently, about 30 per cent of senior level professionals in the national CRE industry are women and 19 per cent of senior professionals are people of colour, according to the REALPAC report.

Panelist Ailey Roberts, principal, sustainable investing with BentallGreenOak, said her team has taken a targets-based approach to improving diversity. 

That includes a three-year plan to emerge as a trendsetter in the industry. "We have set public targets (of) hiring two-thirds of all new employees . . . from underrepresented groups, including women," Roberts said.

BentallGreenOak is making progress and is being held accountable by investors who assess and review the portfolio, and the people managing their assets.

BGO will soon start applying scores to growth assessments around diversity, equity and inclusion. "We are seeing this become material in our disclosures and reporting and, you know, we need to really translate that into real action in the organization."

Shadow boards represent a good step

REALPAC data showed that 83 per cent of Canadian property organizations reported having a DEI policy or DEI initiatives. Respondent data indicated that 40 per cent of promotions to management levels in 2021 were to women, compared to 25 per cent the year prior. 

The percentage of people of colour promoted to executive positions increased from 14 per cent to 16 per cent, and from 16 per cent to 19 per cent in the senior management level, from 2021 to 2022. 

Despite the modest progress, more needs to be done, Nayyar said.

One solution is to develop shadow boards composed of members other than white male leaders to help guide, inform and influence the board and the organization. “(The shadow board) does not get the designation of a board, but at the same time can it inform . . . the senior leaders (about) the . . . things that you may want to consider,” Nayyar said.

This can give voice and power to team members who don't normally help to make key decisions while also generating ideas and actions that will ultimately boost profitably and drive forward the business and industry.