How we design and build our cities is critical to achieving sustainable development goals (SDGs), and developers must lead by example, Richard Florida told an audience at the Urban Land Institute (ULI)’s 2021 environmental, social and governance (ESG) symposium.
Florida, vice-chair at Toronto-based Dream Impact Trust, discussed the impact of SDGs on the real estate community during the opening panel, which focused on the convergence of the United Nations’ sustainable development goals and ESG. Florida, also a professor at the University of Toronto, Rotman School of Management and School of Cities, focused on how the real estate and development industry is responding and rising to the challenge.
Eugenie Birch, professor of urban research, department of city and regional planning, at the Weitzman School of Design, University of Pennsylvania, was working with the UN on its SDGs when she asked Florida to develop goals for cities.
A sustainable development goal for cities
Florida jumped at the opportunity, noting the Greater Golden Horseshoe region of Toronto and surrounding environs is one of the fastest-growing urban regions in North America and Europe and is therefore critical to advancing the UN SDGs by 2030.
“I think cities are the key to solving not only domestic problems or North American problems, (but also) global problems with poverty, climate change, energy and economic mobility and opportunity,” he said.
Florida presented at a UN Habitat conference before being invited to present at an Integration Summit of the United Nations on the importance of creating SDGs for cities.
At the time it had not been publicly disclosed that there would even be a SDG for cities, but Florida and his team worked tirelessly to create sustainable development goal No. 11 — Make cities and human settlements inclusive, safe, resilient and sustainable.
“In my view, that was one of (my) biggest achievements,” said Florida. “I was just part of the process, but if you ask me what sticks out in my career, that’s one of the big things; getting that goal ensconced as one of the sustainable development goals that the UN has for the world.”
Making a difference at Dream
In February 2021, Florida was appointed vice-chair at Dream Impact Trust. His “great friend and now leader”, Michael Cooper, president and chief responsible officer at Dream, assured Florida the SDG he kept referring to “is meaningful for the real estate community.”
Cooper invited Florida to help develop Dream’s impact framework. During one meeting Florida asked, “What if we make Dream a real estate firm that’s devoted to not just ESG in the abstract or SDGs in the abstract, but SDG 11?”
The team agreed.
“How do I think it benefits Toronto?” asked Florida. “I don’t think the government can do this. I’d love it if the government had the resources to solve the problems of inclusivity, diversity, multiculturalism, affordable housing, resiliency — but it doesn’t. And the capital markets do.”
“So this idea of building public-private partnership is something I’ve devoted my career to, but always at the local level,” he continued. “I never saw the impact of the large-scale capital markets and big real estate development operations and funds in partnership with governments and philanthropic foundations.
“I think there’s going to have to be this new kind of public-private partnership around these sustainable development goals that are going to — if we can — begin to make a dent in these big, big global problems.”
Real estate industry seen as “black hats”
Prior to joining Dream, Florida helped build the Urban Lab at the Schack Institute of Real Estate at New York University, which Florida says is “arguably the largest real estate program in the world.”
“What I began to see as we went through the 2010s up to the COVID pandemic is that, for better or worse, the real estate community was being viewed as the enemy,” he said.
This was because communities were observing large “steeples” being built for the “global rich”, according to Florida. “These beautiful condominiums were for the 0.001 per cent — the super rich,” he said. As a result, the public began viewing the real estate community as “the agents of gentrification”.
In response, Florida began to write about how the real estate community needed to “step up”. Although he did not see the industry as black hats, he warned that others did, advising it’s in the industry’s best interest to embrace inclusivity and sustainability.
“It’s in your interest to build a stronger city where working- and middle-class people have a chance; where they’re not priced out; where they don’t feel angry,” he said. “These social goals are critical if we’re going to survive over the long run.
“If we just generate great returns, but do that in a way that’s not socially useful or socially and economically impactful, 1) we’re not going to do something that’s meaningful or purposeful, and 2) we’re going to generate a lot of political heat.
“I think that one of the great things is that our federal government, in Canada, really believes in this, and our local and provincial governments are beginning to believe in it. We have the opportunity to do projects that can move the needle, not only for Toronto, but the world.
“Look at what we’re trying to do with Zibi (in Ottawa), our indigenous hub in the west Donlands and this ongoing conversation around Quayside (both in Toronto) that’s going to make something — whoever does it — phenomenal.
“It’s pretty amazing to think that we could pilot these projects.”
Toronto is a tech hub ahead of the market
Florida mentioned that everyone talks about Toronto as a tech hub.
“And it’s going to be a tech hub,” he said. “If you look at what distinguishes Toronto, it’s our banking industry and our real estate industry. We’ve got $12 billion of assets under management at Dream; we have almost a billion dollars in assets in our two impact vehicles — a private one and a public one. We want to grow those to over $2.5 billion.
“And I think what’s happened in Regent Park is that the world is realizing Toronto’s a pretty interesting, progressive place. I’m an American, and I’m in the States all the time; I see what’s happening in New York; I see what’s happening in San Francisco; I see what’s happening in Miami.
“They’re not doing this kind of thing. We are really out in front of this market.”
Florida asserted something in Toronto’s DNA makes it care about creating a great global city that is innovative and has great industries, but also cares about people and has a sense of community.
“This is why the ULI is the biggest chapter in the world,” he said. “We are a place that builds cities and communities. And I think what’s it’s reflecting is that we are ahead of the market.
Measuring action and success
When asked how to measure action and success, Florida outlined the following points:
–Affordable housing: Florida and his team built an accounting framework which includes affordable housing. The team will create a certain number of affordable housing units and measure them on an ongoing basis;
– Inclusivity: the team created, and will measure, a vertical to make communities more inclusive;
– Program and outreach: the team will work toward sustainability, climate action and carbon reduction, and will measure the results on an ongoing basis.
They plan to report these results along with financial metrics.
Florida concluded by discussing what he believes to be the next step, which is to create multi-sectoral partnerships.
“It’s kind of interesting, as a professor, to see a big-picture framework like an SDG turn into an accounting framework,” he said. “I think the next step, of course, is to teach that framework in a much more hands-on way.
“In business schools we teach a lot of finance. There isn’t as much emphasis on real estate, but I think people are really interested in real estate. Young people want to get MBAs and do this stuff.
“Teaching how to build these accounting frameworks in a more robust way is a big opportunity, and I think we’ll get there. We’ve got to build community. We have to build a bigger community of real estate impact.”
About ULI, Dream Impact Trust
ULI is the oldest and largest network of cross-disciplinary real estate and land use experts in the world. It is also a non-profit research and education organization.
Dream Impact Trust targets projects that create positive and lasting impacts on communities and the environment, while achieving market returns.