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3 REITs ESG Investors Should Consider

The Motley Fool logo The Motley Fool 10/28/2021 Matthew DiLallo
a stack of pancakes on a track with smoke coming out of it: 3 REITs ESG Investors Should Consider © Provided by The Motley Fool 3 REITs ESG Investors Should Consider

ESG investing -- investments made in environmental, social, and corporate governance -- is becoming an increasingly important focus of investors and corporations. A growing number of companies are setting tangible goals to reduce their environmental impacts, benefit their communities, and improve their governance.

Several real estate investment trusts (REITs) have put a priority on ESG. Among the sector's leaders are Boston Properties (NYSE: BPX), Equinix (NASDAQ: EQIX), and Prologis (NYSE: PLD). Here's a look at why ESG investors might want to consider these REITs.

Standing tall on ESG

Office REIT Boston Properties is an ESG leader. MSCI has given it an overall ESG rating of A, noting that it's a leader in green buildings. Meanwhile, it recently earned a top ESG rating in the 2021 Global Real Estate Sustainability Benchmark. The company achieved the highest scores in several categories, including data monitoring and review, targets, policies, reporting, and leadership.

Boston Properties has certified 27 million square feet of its current in-service portfolio at the highest LEED certification levels of Gold and Platinum. The company has implemented several energy conservation projects and other measures, such as installing solar panels at its office buildings.

These efforts have helped reduce greenhouse gas emissions by 70% while decreasing site energy use intensity by 27% since 2008. These efforts are part of Boston Properties' bold goal of achieving carbon-neutral operations by 2025.

ESG is more than the environment

Data center REIT Equinix is also an ESG leader. That might come as a surprise, given how much water and energy data centers use. However, the company has invested heavily in designing, building, and operating data centers with high energy-efficiency standards. It has also set a long-term goal of using 100% clean and renewable power on its global platform.

While Equinix has taken great strides to reduce its environmental impact, that's only one piece of the ESG story. MSCI regards Equinix as a leader in human capital development and privacy and data security. Because of that, it has an AA rating. At Equinix, diversity, inclusion, and belonging are foundational company values. The REIT aims to recruit and train a diverse workforce and be a place where people feel safe, like they belong, and that they matter.

Equinix also takes extra steps to ensure privacy and data security. The company trains employees on how to spot suspicious activity and conducts ongoing internal audits and penetration testing.

Training its future workforce

Industrial REIT Prologis also has an AA rating from MSCI. It earned that distinction, in part, because it's a leader in human capital development. One of its programs is the Community Workforce Initiative, wherein the company partnered with a nonprofit to train people for jobs in transportation, distribution, and logistics. It set a goal to train 25,000 individuals by 2025.

That's one of several ESG goals Prologis has set. The company also wants to achieve 100% carbon-neutral construction globally and reduce its overall emissions by more than 15% by 2025. As part of that goal, Prologis set targets to install 400 megawatts of solar capacity on its buildings and 100% LED lighting across its global portfolio by 2025.

The industrial REIT also wants its employees to spend 75,000 hours supporting their local communities worldwide and 100% of them complete ethics training each year.

These REITs are making a difference

Boston Properties, Equinix, and Prologis are ESG leaders in the REIT industry. Because of that, investors who want to put a greater emphasis on ESG should take a closer look at these REITs. They're proving that sustainability can create lasting value for shareholders.


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