62: ESG Investing With Amy Erixon

Welcome. This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program, you'll learn about the world of commercial real estate and find out why it is one of the largest investment opportunities in New York and around the world. Now, here is your host, James Nelson.

Welcome to Real Estate Investing Live from New York. This is your host, James Nelson, principal and head of Tri State Investment Sales. Hope you all are doing well and thank you as always for tuning in. And if you didn't check out last week's episode with David Kramer from the Hudson Companies on building better cities. He's got an incredible story and it's really cool because otherwise speakers who we've had have referred to him and vice versa. So we're really building a community here and so happy and excited that you all are a part of it. And I just want to thank you all for your support as always as we get near the end of the year, for subscribing, whether it's itunes, Spotify, wherever you get your podcasts and for your comments and telling your friends. I can't thank you enough. And please, please connect with me on social media. My handle is James Nelson NYC. You can find me on Twitter, Instagram and also LinkedIn and message me on LinkedIn. Would love to connect with you. Tell me your thoughts on the show. Tell me what you're out there looking at. I want to be as helpful as possible as you build your own investment portfolio. So for today's show, we have with us Avis and Young's own Amy Erickson, who heads up our investment management practice out of our Toronto office. And Amy has an incredible background with a specialty in ESG investing. And that's what we're going to be talking about today. How you can make wise investment decisions that have the right environmental, social.

Impact.

And do good while investing. This is one of the hottest sectors out there. All the major institutional investors are. They understand the need to become a part of this movement and it's really something that you're going to want to consider as you move forward with investments large or small. So we're going to have a brief word from our sponsor and we'll get right back with that interview with Amy Erickson. Thank you.

Hi, I'm Mark Rose, global CEO of Avis and Young, the world's fastest growing real estate services firm. And, and we are proud supporters of Voice America. With over 5,000 professionals in 120 offices in 20 countries, Avis and Young delivers local expertise in partnership with global reach. Because we are principally owned, Avis and Young prioritizes client success over shareholder profits through our open architecture. Our firm's experts provide value added client centric investment, sales, leasing, advisory management and financing services to clients across the office, retail, industrial, multifamily and hospitality sectors. Our culture is the bedrock for collaboration that enables each assignment to benefit from the collective intelligence garnered from a company wide database partnership performance. Learn how we deliver different@avisonyoung.com to learn more.

And now it's time for our investor spotlight and I'm thrilled to have with us today Avis and Young's own Amy Erickson, who is principal and president of our global investment management business. Amy founded and heads this practice which is active across all major and select specialty property types in Canada, the U.S. mexico, Germany and UK on behalf of major institutional investors. Prior to joining Avison, she was CEO of Igri, a full service development and investment firm that built the first LEED certified projects across Canada in the mid 2000s. With more than 30 years of industry experience, she has acquired, developed and repositioned portfolios valued in excess of $9 billion and completed a large scale rezoning development projects in numerous North American cities. So Amy just has such tremendous experience and perspective. She serves on numerous boards and councils including ULI, the Carbon Impact Initiative, MIT's Education Council, the list goes on and on. So we are very lucky to have you with us today. Welcome Amy.

Thanks James.

And Amy, if I'm not mistaken, you are zooming in from Toronto, is that correct?

Yeah, that's right where we got six inches of snow this morning.

Unbelievable.

Winter is upon us and it's heading your way.

Yes, yes, yes. Well, wonderful. So tonight tell us a little bit about how you got into the business. Or actually, let's even go back before then. Where did you grow up?

I grew up in the Pacific Northwest in the Rockies, very close to the Canadian border. Small town called Spokane. And how I got in the real estate business was that when I was in kindergarten, they actually built a shopping center next to my kindergarten and, and I would wander out on all my recesses and watch. I was totally mesmerized. And there was the town that I was living in was like many US cities in decline. The population had been dropping for some decades. So this was a really big deal to have something sparkling and new under construction. And the super took me under his wing and showed me the drawings and you know, I just, I was totally mesmerized, decided I wanted to be a real estate developer, and I wanted to shape the cities in which I lived. So as a young child in those days, because I grew up in the 1960s, people thought I was out of my mind. That was just not something that girls did. And I was a Lego girl as opposed to playing with dolls. And it totally captivated me. So ultimately, despite the efforts by my teachers and everyone else to direct me in other routes, I just persisted and got an undergraduate degree in urban planning and a master's in real estate development at mit. So that did not clear the doors for me. I found a job. I started at Prudential Insurance Company as an investment manager in the Boston office. And I learned subsequently that the head of the office didn't tell him he was hiring a female and that I was the only woman in the entire investment group. And that brought a lot of unwanted attention my way once the corporate office discovered that they had a girl on the team. So I would have to say that in most of the organizations where I worked, at least certainly on the front end of my career, I was typically the only woman in the room, often the only woman in an executive role in the entire place. And as a result of that, I tended to volunteer for the troubled projects, the workouts, the takeover projects that had run aground. I opened up new offices. I did things that were in some ways higher risk than my male counterparts in order to ensure that I could keep progressing in those organizations. Because it's hard without mentors and it's hard without role models.

Wow, what an incredible start. And I think you certainly win the award. I mean, we've now we're up to around 60 shows, and I've never heard someone say that they knew they wanted to get into the business in kindergarten. I know for me, even being a senior up at Colgate University, English major, I didn't even know real estate was a thing. You know, I was up looking for a job and was very lucky. But the fact that you gravitated towards this, you know, what an amazing story. And I definitely want to get back into some of those challenging assignments and some of those deals you worked on. But want to ask you, that time you spent at mit, so was this. Did you ever think that you would go into, like, urban planning or architecture, or did you know at that point I want to be an investor?

Well, actually, I started as a biology major and I gravitated into neurophysiology, and I was just taking a huge range of subjects. I mean, the hardest thing about being an MIT student is choosing, like narrowing down what you're going to study because there's just so many amazing departments and so much amazing faculty content there. And I was working on a research project over in the urban planning school. I'd never even heard of urban planning, and I certainly wasn't from a city. And so the whole idea was completely intriguing to me. And ultimately my biology advisor said, are you sure you're in the right department? Because you're taking four courses over in urban planning and then you're taking four institute requirements. And you know, A, it's a heavy schedule, but B, it certainly seems like your interests are both feet in that department. And they let me in that department sort of self design, all of the coursework that that was heading in my direction. So I was able to take construction management in the civil engineering department and finance at the business school. And it was very flexible in that respect. So that I did start realizing that you needed to follow the money if you really wanted to shape the environments in the cities in which you reside. And living in Boston in those days, obviously it was a huge contrast to the Pacific Northwest. And actually I landed in Boston the week they desegregated, segregated the schools. And there were. It was a very difficult period to be there. And I was totally enthralled by the segregation and how they had put in freeways to separate neighborhoods that were racially difficult and just how the fabric of the city was impeding social equity and integration. And it was just so different from the west that it really captured my imagination. And I ended up studying that very deeply. One of the great things about the planning school also is that they run these studios that are interdisciplinary. So you have someone from the economics program or the business school, you've got a civil engineer, you have an architect, you have an urban designer. And we went into the region and we solved real site problems for cities. Like a factory had gone under and the city wanted to. They had five maybe competing community leaders that wanted to do different things with that structure, from senior housing to a community center, a school, a charter school, you name it. And we would actually run the public hearings and we would do the pro formas and the site plans and the renderings and on what the art of what is possible. And so now when you go back to the Boston area, you can actually see that string of projects that were, you know, visualized during our time in school. So it is a natural path. A lot of students that even if they minor in urban planning or it becomes their humanities distribution you see those people littered all throughout the real estate business, from Gerald Hines to Hamid Mogadon. Hamid was a few years older than me, but he was mentoring in electrical engineering and he was in the planning school learning some of this stuff because I think that it's very. It's an extremely popular department for electives. Very, very few majors. But it definitely teases people into the thrill that is the built environment and how to regenerate it, how to invigorate it, and how to think about smart buildings and, well, buildings. And MIT is right in the heart of all of that.

Sounds like unbelievable experience and not just theoretical. The fact that these were real projects that you were going to solve and now you can look back and kind of see a difference that you made. That's unbelievable. And I've got to imagine that diverse experience and even some of those biology classes. I'm sure somewhere along the way that that's come in handy. But I'm really, I'm curious to hear about some of these. You said you would take on very difficult and troubled projects, and I'd love for you to expand on that. And then how did you figure it out? Because you also mentioned, you know, being one of the only women in the room and not having mentors. How did you figure out, you know, some of the solutions to some of these early projects that you took on?

Well, actually, that's what attracted me to those projects was that they were very challenging. And it's a matter of teasing out the issues that all have to get addressed. Because I have been working in the US market for a long time, well above 30 years. I've actually seen four bank crashes. And when I graduated, my first six months in the business, I was a mortgage lender and interest rates went from 8% to 23. And all of a sudden, we were the developers on 100% of our projects because, you know, so it's bath by fire, you know, just thrown into the deep end. And I was transferred to Chicago because that's where they had the most construction projects. And I was literally the only person on the staff who even had an academic acquaintance with construction. So it, you know, it was kind of a little bit of the right place at the right time, with at least academic training. And so I would go. We had a hiring freeze, which is part of the reason why. Well, you know, she's all we've got. Ended up being the solution. But I could go out and I could hire seasoned construction people and seasoned architects and people who could really teach me the Business from the ground up. So that's been my go to route for quite some time is, you know, you can always find the resources to help you solve problems and you have to figure out what is the personnel issue, like who isn't getting along and how do you solve that issue? Because a lot of times that's the first hurdle and the money piece is usually a technical problem, not a personality problem. But a lot of the other issues, if those problems fester, you can end up with subs that are bankrupt or tenants that are bankrupt and you be caught flat footed about that. And then of course the third thing is communications, which is I guess a subset of both of those things. I always found that the best way to manage those issues was to over communicate with everybody that's included. If you've got a strike on your operating engineers and you're going to be six months late delivering on a hotel, you better give the hotelier long line of sight heads up about that because they're doing bookings and there's penalties associated with that stuff. But if you communicate effectively and early enough, you can build relationships that last a lifetime.

Could not agree more. And over communicating is so important, especially in a time like this when look, there's going to be problems, there's going to be challenges and just try to ignore it or hope you can kind of fix it before anyone finds out. You got to go right to the issue, full transparency, put it on the table. So I'm sure that has served you well throughout your career. So getting this type of experience where you're playing the role the developer, I'm sure that probably led you to the position at Igri and maybe talk a little bit about that. At this point, were you looking to move full time into being a developer?

Well, you know, you see enough bank crashes in the US and you start to recognize the signs. And this last financial crisis, I wrapped up the single family housing business that I was running for CalPERS in 2000. We started teetering it out in 2004 because it just felt very unsustainable, the pricing and the lending criteria and it just, it was, it was making me nervous. And I wanted to pivot back into the development business because I had this vision about how you could do these super high performance buildings and how to solve the cost side of the ledger. Because of course the conventional wisdom was that if you, if it is high performance, it's going to cost massively more. And I think that that sort of mythology has really closed because the more high performance Buildings that we build, the more technology comes along and improves and the costs come down and the crews get better at doing the building blocks that are necessary to really drive high performance. But I made the decision to move to Canada because I'd seen so many crashes and I'd been working, setting up businesses or running Canadian businesses for at that point, about 30 years. I did it for the first time in the mid-80s when I was a developer in the Washington D.C. market. And I joined an organization that was completely different from any of the companies that I'd previously been with. I was at LaSalle Investment Management at that time running all the high risk businesses, development, hotels, Central Europe, Latin America, kind of a portfolio. And this company was an architecture, engineering and construction company that was privately held and extremely high performance. The engineering group was building all of the airline terminals around the world. And they were doing really high performance engineering work that was big buildings, important commissions, working with governments. They had the right kind of chemistry about that. The architecture firm had a super high end signature architecture group. In fact, they're the architects of record for the Palm island in Dubai. And they were working all over the world on these incredibly highfalutin projects. And they also had an office building full of draftspeople. And the construction group was more of a design build shop. And then they just obviously had third party commissions and it was the smaller end of the business. But my idea was that you could launch an investment management development business that was affiliated with all those technical sides of the business and that you could deliver super high performance buildings for the same price. But you had to have all those design, engineering and construction disciplines under your umbrella. So that I would go and I'd say, look, here's what I want, here's the budget, here's the performance spec, and here we have to be at least at LEED Platinum. And I convinced CalPERS that they would backstop this thing because they were extremely interested in the proof of concept. They agreed with me that it would be first of all that the Canadian markets were less overbuilt and less likely to get overbuilt. So if you're doing a large development exposure, that made a lot more sense. And also that the planning departments might be more flexible about experimentation because it was for good cause. And there's just a lot less climate denialism north of the border some, but it's nothing like it is in the United States. And so my second client was the government of Canada pension plan, the federal government. And I had some other interesting backers who were quite enamored for the government of Canada. We were doing deep retrofits. We had a couple of REITs in some cases. We didn't tell the REITs that we were building buildings that especially industrial buildings that were even net zero ready in, you know, back in 2007, 2008. And we just didn't tell them until after the fact because they would have said, oh, take all that stuff out. But we were winning these commissions and, you know, proved it up across all the property sectors across all of Canada. So we proved it could be done in each of the climate zones as well. So at the end of that episode, I agreed to come over to Avis and Young. All of my favorite people from my Jones Lange days were at Avis and Young already. And I had obviously been working in all the markets for a long period. So initially helped to build the US platform and then launched the investment management business and with the full, I guess, white piece of paper to design it the way you want.

Amazing, amazing. You said so many interesting things here, starting with that shop you were a part of was truly vertically integrated. I mean, usually when you speak to a developer who says they're vertically integrated, maybe they do their architecture and shop and they design, build, but to have the engineering and basically handle everything under one roof, what an amazing concept. And to do it in a sustainable manner. And it also made me think about how far we've come. I know we still have a long way to go in the department of sustainability and we're going to definitely get to that later on ESG. But interesting that even 10 years ago you were talking about net zero buildings and I'm sure these big REITs were thinking, oh, this just sounds like an added cost. But you knew not only was this the right thing to do, but I would imagine if you could build it for the right cost, that certainly there's long term benefit. And I would imagine those buildings today, if you looked at the energy cost savings and what you accomplished, that investment has been returned many times over.

Yeah, for sure. And when I say net zero ready, I'm talking about, you know, it's wired so that you can cover the roof in solar panels. And the price of solar panels has come down like 80% since that time. And so you're right. I mean, we weren't installing the solar panels at that time because we were waiting for subsidy programs and, you know, some kind of bridge to the future. Plus we couldn't sell into the grid in those days. Since then, there's just been a ton of technology progress on these types of high performance materials on renewable energy, on grid integration. In fact, the government of Canada announced last week that they're going to put 2.5 billion into grid integration. And just a note on that because I thought that the way that they're doing it is super smart. Just like the US where the whole grid system is very balkanized. You have all kinds of different producers and then companies that are in the distribution business, but only regionally or within one state. It's exactly the same in Canada. It's all provincially controlled and there's a lot of politics between the provinces. Quebec has the cheapest power in all of North America and it's hydroelectric. It's similar to Washington State where I grew up. And yet they export more power to New England than they consume internally. And we have the most expensive power in Ontario in all of North America, including you guys in New York. And of course the province doesn't want to buy it from Quebec and lower our power bills. Well, it's ridiculous. And the grids have been developed separately and Ontario is integrated to the Midwest grid. So we had, when we had those blackouts, whenever that was 2009 maybe, do you remember that was king out of Ohio on Toronto went into darkness and there was nothing they could do about it because the grid wasn't integrated with Quebec. So what the government's doing is they're going to do, they're going to pay for the grid integration and they're going to do it two states at a time. So they're going to integrate British Columbia with Alberta because BC has all this great hydroelectric and Alberta obviously has a very carbon heavy grid. They're going to integrate Manitoba and Saskatchewan. Manitoba has a totally green grid. Saskatchewan hideous. Ontario's hideous. Quebec has all this cheap power. And then they're going to leave it to the provinces to do the right thing, but the integration will be. And they're not trying to do the whole country. This is an unbelievably huge place geographically and they're only doing it with these adjoining ones. So they're surgically making the investments where it's going to count. And I just thought that was very politically astute.

Well, it's, I mean, like I said, it's really front and center today. And, and you've certainly been a pioneer in the space. So we'd love to talk about what you've created at Avis and Young for the investment management platform for some of our listeners. And we get a lot of college students who are thinking about getting into the business. Maybe you could just start by defining what investment management is, what the premise is, and then maybe talk about how you've built out Avis and Young's platform.

Sure. The most important thing when you're doing a startup is to define your space for sure. And I view the investment management business as a trusted advisor to the pools of money. And the pools of money that I most readily gravitate to are these public pension plans. I mentioned CalPERS. I worked hand in glove with CalPERS for 25 years in lots of different areas. Took them out of the US into Canada, into Mexico, into some unusual property types. We did the single family program. We just had lots and lots and lots of interesting things that we did and developed a reputation for innovation and for high performance because a lot of times those niche sectors can strongly outperform the sort of the center aisle of the marketplace. I launched the first medical office fund in boy 1997 maybe and the first 10 year return band was north of 30 because it wasn't considered an institutional sector. And we were buying these things at 10 caps. And so a lot of times it's recognizing the trends in consumer behavior, in how businesses are organized. Right now we're seeing that happening in the life sciences space sector. Some of that is technology driven. And you know, I lean into my MIT training a lot in terms of analyzing the economy and recognizing potential hotspots before they're broadly recognized or understood. So we are leaning into life sciences presently. And a lot of times these spaces where you're going to get that outperformance also are technically challenging and sometimes financially expensive. But I find that correlated with those attributes is long duration of tenancy. Because if the tenants making deep investments in their space as well, you're kind of in a partnership structure about making sure that those durable investments that you're making, you know, aren't going to be technically obsolete in five or 10 years and need to be replaced. So it becomes more of a partnership and it becomes easy to roll out programmatically. So in moving over to Avison, one of the things that I am personally known for in Canada is my cross border activity and background. There's not that many Americans, in fact you can probably count them on one hand that are working in the Canadian investment management industry. And so I could quickly carve out a niche for myself with the mid tier pensions opening up the US market for them directly. Because one of the issues with investment managers in the States is that they are prone to style drift and they don't speak Canadian, if you will. I mean, I can explain to them, you know, this market is kind of like Montreal. This other market has attributes that are more similar to what you experience in your own portfolio in Toronto. And you know, if you're going into the US market, you can fill gaps in your Canadian portfolio because there's lots and lots and lots of say, apartment product that gets developed every year. That's new, it's fresh, it's the greatest, latest and greatest thing. Plus it trades frequently because of the 1031 exchange laws in the States. So that was sort of the niche I carved out. And I'm working in close proximity to the Canadian investors to help them understand how cross border investing can reduce risk and get them some alpha in terms of the return profile from their real estate assets. So that's really what I carved out. And we have a general business because we need to be able to be fluent and nimble as clients come in and they present a different portfolio problem for us to solve. We are leaning in more to development right now at this point in the cycle. Love these downturns because the pricing was getting very tight at the end of this last cycle and now we are seeing a little more breathing room and there's plenty of liquidity in the market. This is not a financial led crash, it's a pandemic, obviously. And it's been a very uneven distribution of pain this round. So that also gives you the opportunity to be more strategic and nimble. And a lot of my Canadian competitors are just too large to turn on a dime. And, you know, now they've got a portfolio that has lots of spot problems, especially in the retail segment. But you know, some markets are really struggling a lot more than others as well and we're able to be nimble and play around that. Plus I haven't liked retail for the longest time, so we're not burdened with any of that legacy problem at this point in time.

It makes a ton of sense and I have to give a shout out to Canada as well. I mean, I know when we talk about foreign investment in the US for years it was China and yes, they were massive investors in the US for a period of time. But then it's, you know, it's the Germans and then it's the now it's the South Koreans and it's always kind of the, you know, the next greatest foreign investor. Meanwhile, the Canadians have been such consistent investors over the years and if you look back over the last 10 years for institutional investment global investment in the U.S. canada is always a top three, but it's very consistent. And I think that that's definitely consistent also with what you've been saying. So I have a question about, you know, when you go and you're looking for a thesis, and I love what you had to say about, you know, finding those opportunities. You know, it's kind of what Wayne Gretzky talked about, you know, skating where the puck is going to be. Do you come up with that thesis first and then you go out to form marry it with the right pension fund? Or is, you know, is a pension fund coming to you saying, hey, we need to get money into life sciences. Can you do it and find it? So what, you know, what comes first?

Yeah, really there's two channels. One is people who are looking for a manager who can help them because they're just getting general advice from their consultants and their existing manager benchmark. And so usually with those clients, I try to understand what they're trying to achieve with their portfolio that they feel is underperforming. You know, is it the cash coming out of it? Are you looking for more appreciation because you're underfunded against your asset liability expectations? Are you redirecting money between bonds and real estate? So you're looking for real estate that will behave like bonds, but has a higher return profile so that that kind of a customer, you really need to get into their heads and understand what they're trying to achieve. And then you can tailor an investment program that is going to produce those financial attributes. And then where you really get to add the value is by identifying within that plan, where do you take the money? Are you better off taking that money to New York City, or are you better off taking that money to Phoenix, Arizona? And if someone's looking for stability, I mean, maybe not during a pandemic, but under normal times, the New York market has such a mass that it is the battleship Titanic and it just, you know, hums along. Whereas Atlanta, Dallas, Phoenix, those are markets that you need to buy on dips and then you can run the cycle, but you need to have sale discipline as well. But for someone who's looking for more growth in their portfolio, picking what sectors and what regions to go to and the timing is how you create meaningful alpha. And I'm pleased to say we've been beating our Canadian benchmarks by more than 2x since we started at Avis, and.

You already had me at 30% returns.

For your medical office.

Fun. But wow, that's amazing to hear. So let's talk about ESG investing. And once again, you've been at the forefront of this for a long time. So first, if you could define it for our audience and then I think you expand it beyond ESG to include wellness. But yeah, please give us the definition.

Yeah, I think the whole concept has been evolving over time as well, James. I mean, it's. When we started, actually, the US was the leader in this. In the early days, the USGBC developed the whole lead building rating system. BOMA was fast on its tracks for their rating systems. And it's. I'm not gonna go down that path. I was gonna talk about some time I spent when I was in university where we were developing Energy Star. I actually worked a summer in the White House on that. But the Energy Star system was the first of its kind in the world where you track greenhouse gases. Jimmy Carter recognized that this was. That global warming was a long term problem and wanted to put a tool in the hands of private owners, public owners, anybody who wanted to get access to that information so that they could manage their footprint. And it was free and it's still the largest database in the world. The pension system started doing what they would call responsible investing in the 80s, and for the most part they were doing it by portfolio exclusion. So saying, we won't invest in South Africa until they overturn apartheid. We won't invest in XYZ Chemical company because they had a Three Mile island or some kind of an incident that even if it wasn't mismanagement that resulted in toxic chemicals getting dropped into the water supply or something like that, so they would exclude those companies from their portfolios. And that was an extremely blunt tool, indirect way to deal with this. In the early 90s, CalPERS was really the first institutional investor who started requiring ESG reporting as a component of the manager's normal monthly and quarterly communications with them. And they were interested in other things. They were interested in how you were investing in energy management systems and trying to reduce the carbon footprint and cost structure of your investments. But they were more acutely interested in social equity. And they had us reporting in on the percentage of minority and women owned vendors that we were doing business with. We had to maintain databases. We needed to hit certain quotas, if you will, in terms of spreading the business around. They also required that we needed to use all unionized labor in states where that is legal to mandate and report on all these things because they were more of a social activist investor. And they were trying to. When I was talking earlier about the solar technology, they were actually trying to do that. Skunk works with respect to the real estate industry to accelerate the trajectory of women, minorities, disabled veterans and other people who were just having a hard time mainstreaming in the real estate community, which was one of the more, and still is one of the more resistant industries to full inclusion the workforce. So that subsequently evolved into sort of this. We're kind of in 3.0 now where there's been a lot of technological development that is making high performance buildings a lot more of a reality. It's becoming table stakes, at least in Canada, that, you know, if you're not LEED platinum, you're really, you're not going to get any traction through your tenant communities. Just it's absolutely the minimum cost of entry. And we actually have a couple of net zero office towers under construction in Canada right now. It's hard to do in Ontario. It's a lot easier to do in British Columbia. British Columbia probably has 50 buildings that have been delivered net zero already. And that S piece also has had a real turbocharged this year. I mean, there's nothing like being in a pandemic to focus people's attention on the attributes of how a building contributes to our health and the spread of disease and creating an environment of safety. Interestingly, it's really attracted the attention of planning offices about resiliency and about sort of a community sense of inclusion and participation because overnight cities like New York had to figure out some kind of way of getting the homeless population off the streets for everybody's health and safety. San Francisco did some radical things. Here in Toronto, we did as well. It has really created a kickstart of innovation across this whole space. And I think that we are seeing people taking diversity and inclusion much more seriously. I read yesterday that the NASDAQ is talking about delisting companies that don't have an integrated board of directors. They need to have representation of the population. Now that's getting teeth, right? That's getting teeth. And we're starting to see a harmonization of the reporting protocols and best practices to get us to push us past the greenwashing effect into real hard data and metrics and targets and seeing how people are achieving those year over year. These are really important developments in terms of the robustness of the ESG movement. And I think we're going to start seeing some rating systems that are, that actually rate managers. We are Grasp Reporter, which is the global real estate sustainability benchmark, happen for seven years. That has deep penetration in the Canadian market, in the European sector, Australia, New Zealand, even like Japan, Korea, just not so much in the US market. And of late, Mark Carney chaired a committee for the Financial Stability Board called the Task Force on Climate Related Financial Disclosures, TCFD for short. And that they developed a protocol for how to financially account for climate related financial risks in your financial statements called the tcfd. So that protocol has already been adopted in the EU and the uk. Canada is forcing anyone who got any kind of government assistance during the pandemic, whether that was furlough assistance, rent relief, all the different things that they put in place, they're requiring that all those companies either become TCFD reporters and compliant or give the money back to the government and they're going to enforce it. You've got two years to get up and running on that. Now Mark Carney, who was the chief of the bank of Canada and then went to run the bank of England, has left the Financial Stability Board and he's joined the UN and he's chairing the climate finance sleeve with Michael Bloomberg. Michael Bloomberg also worked on tcfd. So I think that we're now getting to, you know, Maybe this is 3.0 ESG, 3.0, where you have the international community agreeing on what needs to be measured and what targets you're going to hold. Managers, owners, you know, the whole world to, and eventually the US will get onside with these protocols and then you'll see just a lot more adoption. I mean right now it's really being done at the city level more than anything. I mean, New York City is a leader in this area. Washington D.C. is certainly San Francisco is even Austin, Texas, but it's very spotty in the U.S. and so the manager community is just not as literate around this subject as they need to be. But the, the important thing to take away from all of that narrative is that we have a really front and center contribution to make here in the real estate industry. The transportation business has had their emissions being regulated for 40 years now and we haven't had our emissions regulated at all, except in those rare instances like New York City that I mentioned a minute ago. And buildings in urbanized areas now account for 40 to 50% of all greenhouse gas emissions. So you cannot get to the finish line without the whole building sector getting on board and radically changing in Europe where this year we're seeing incredible measures coming into effect where you have to, where they've set a net zero target or GHG emissions reduction target for 23, 30, for 2050 and every building has to report on their progress against those targets on an annualized basis. And, you know, those are markets where you don't have a lot of trading of buildings, that the ownership is very, very stable, in part because the transfer taxes are, you know, 7 to 10%. So it's very. That's a big deterrent to trading properties. But my European colleagues and members of my team believe that there'll be a lot more velocity of building turnover in Europe. You see this in your business, James, about the smaller owners who just, they don't have the capital, they don't have the expertise, they're going to need a lot of help. And at some point they're just going to say, here, I'll sell it. Because it's, it is, it's, it's expensive to. Especially if you have a building that was constructed relatively recently and you're replacing equipment that was just poorly selected in the first place. If your building's 25, 30 years old and the systems are at the end of their useful life, you're going to make the adjustments anyway. So you may as well buy best in class and put the sensors up and smart meters and the other components so that you can manage it more cost effectively effectively while you're at it. So I think we're going to see, we're going into a period where renovation is going to be one of the fastest growing segments of our industry. And the greening aspects, you know, as an owner in your stock portfolio, really what can you do? You can vote your proxy, you can sell the stock, but you can't really affect change. You can use the bully pulpit if you're at the size of CalPERS and try and get the management to add women to the board, but they may or may not do it. And really your only recourse is to get them out of your portfolio. But if you own a portfolio of real estate buildings like Brookfield does, they can really affect. They can move the needle on climate change, and they are. And they can move the needle on community experience. And they are. They're building beautiful places with huge courtyards with public art, with programming to engage the community. In New York, you're seeing the Canadians in a big way. Oxford's, you know, half the money at Hudson Yards. And Brookfield has just completely, you know, reimagined Lower Manhattan. And there's many, many others. They just happen to be very visible in terms of the development pipeline. And they're thinking about the creation of places they've got the scale to do it in. You know, a 10 block area or 20 block area in the case of those two giants. But I really think it's the most exciting time of my period and my trajectory in the real estate business because we're really making that pivot to, to solving cultural and environmental problems and really markedly improving the environment for our owners and our tenants. And it feels like it's just a lot more direct drive in terms of outcomes than it's ever been. So it's never been a more exciting time to go into the real estate business.

That is wonderful to hear. And with everything you're saying, let's just hope this becomes much more than just a movement, but the norm. And when you have some of the largest investors and asset managers out there who are really putting their money where their mouth is, so to speak, I think that certainly gives us hope. And for our listeners who have not heard Rick Clark's podcast, please go back and give a listen because he certainly talked about building that sense of place, as Amy said, in a responsible manner. So, Amy, this has been incredible. Unfortunately, we only have a couple minutes left, so would love to get your advice to aspiring investors who are looking to get into your space. Because again, these are big, massive projects. And if you're going to really be able to make an impact, you know, joining an organization, becoming a part, you know, working with an investment manager where you can have a much larger impact, how would you recommend that someone goes about getting into your space?

Well, I think that the easiest way is to spend some time learning about the publicly traded REITs, because each management has a strategy and they have a style, and there's a couple of them. I would point to prologis and Boston Properties, who are real leaders in terms of sustainability, and they're also leaders in terms of building integrated technology, particularly prologis. Prologis is on a path to try and figure out before their tenants know where their tenants need to be. Their Data Lake ecosystem is actually getting to the point of being a little bit scary. But Hamid has long been a leader in sustainability and he is using every tool in his arsenal to build a portfolio that is not just bulletproof, but is world changing. And I think Boston Properties has those same attributes. There are lots of public REITs that are not taking this as seriously and are not just are not where those two companies are. In particular, if you want to do it on the private side, depending on your scale, it's very hard to build a diversified portfolio unless you're pretty large. And so there are vehicles that are available there's more coming. I think you probably will have a podcast at some point this year about the use of blockchain in terms of getting tokenized investment into the hands of retail investors. And I think that that's going to also really hinge the success of that strategy is going to hinge on understanding the portfolio manager, the companies, the operators, so that you get make sure that you're in safe hands. Because when you're doing an indirect investment of that sort, that's the most important investment criteria. Not just that the people have a reputation, but they know what they're doing and they are paying attention to these trends. So those are my early thoughts. I'm assuming that's the audience you were speaking to.

That's wonderful advice just about how to get into the game and again, really associating with some of these best in class REITs operators who are dedicated to this space and really taking these necessary steps. So Amy, thank you again for joining us. You're such a wealth of knowledge and this has been incredibly helpful and I know our audience will get a lot out of this.

Well, James, thanks for having me.

Wonderful. This is your host, James Nelson of Real Estate Investing Live from New York. We'll have a brief word from our sponsor and we'll be back. Thank you.

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