SPOTLIGHT: THE HEART OF SENIOR LIVING
When Living Your Values Adds Value to Your Business
By Sara Wildberger D
oing well financially while doing good works is a great ideal—but ESG programs and activities help
make it a reality. The acronym stands for Environmental,
Social, and corporate Governance activities. Over the years, investors and companies have noted that companies that work to lower energy use, for example, or put work into inclusive company culture have more in common than their desire to do the right thing. They can make better, steadier op- tions for investors. “There is a growing body of data show-
ing that companies adopting sustainability practices outperform their peers,” says an article in Harvard Business Review, pointing to a Harvard Business School study that showed a one-dollar investment in ESG-fo- cused companies over 20 years returned double what a dollar invested in companies not focusing on these areas did ($28 vs. $14). Business leaders also say ESG focus can
influence other factors that affect the bot- tom line, such as attracting and retaining talent and building brand loyalty.
“A proxy for quality” In the senior living world, real estate invest- ment trusts (REITs) are most likely to have a formal ESG program—for investors’ sake and to be a good corporate citizen. But any company or individual community could benefit from focus on these values. ESG focus is usually investor-driven, but in this competitive market, it can become a differentiator for residents and employees as well, says Marla Thalheimer, senior manag- er at RE Tech Advisors. Formerly director of sustainability at Brookdale Senior Living, she helps owners and operators achieve sus- tainability goals.
46 SENIOR LIVING EXECUTIVE JULY/AUGUST 2019 “Good quality care is always number
one, and it should be. But if all other things are equal, and one community has a strong ESG program, that’s an advantage.” ESG efforts serve as a proxy for quality,
Thalheimer points out. It indicates a com- pany or community that’s optimized for operating expenses and thinking ahead. As more investors make sustainability and
social responsibility part of their portfolio requirements, big financial firms, banks, and REITs alike have strengthened their focus on ESG issues—and most will say that such focus adds value beyond its costs. Companies and analysts also have a few
complaints about the formal ESG rating systems and the agencies that perform them. Common standards and reliability of ratings are still shaking out. But a busi-
BEHIND THE LETTERS
Here’s a representative sample of activities in each category:
• Environmental: Sustainability practices, such as lowering waste and emissions and saving water
• Social responsibility:
Commitments and standards for ethics and diversity; community support such as volunteer programs for employees
• Governance: Policies—and practices—of transparency, good risk management, and open channels for feedback
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