Ventas: Working Toward Net Zero, Property by Property

Sustainability is paramount across various industries, including real estate. This sector is increasingly recognising the importance of eco-friendly practices, as highlighted by Ventas’s VP Corporate ESG & Sustainability Kelly Meissner.
A leading real estate investment trust specialising in the ownership and management of research, medicine and healthcare facilities, Ventas champions the development of sustainable buildings ensures that enhancing environmental performance goes hand-in-hand with resident wellbeing.
With a diverse portfolio spanning senior housing and healthcare facilities across geographies, Ventas is committed to achieving net zero operational carbon emissions by 2040.
Here, Kelly explains how this ambitious goal not only reflects a dedication to reducing environmental impact but also aligns with long-term shareholder value, setting a benchmark for the industry.
Q. Who is Ventas?
We are a real estate investment trust that acquires and manages healthcare and senior housing properties. We own and operate properties in the US, Canada and the UK, including senior housing communities, outpatient medical buildings, research centres and healthcare facilities.
Our mission is to create environments that help people live longer, healthier and happier lives.
Q. Why commit to net zero by 2040?
We made this commitment in March 2022, exceeding our previous goal to decrease absolute carbon emissions by 30% by 2030. Our investors focus on decarbonisation, its risks and implications for long-term shareholder value.
We aimed to increase our ambition beyond our Paris Agreement-aligned goals. We wanted to understand how our portfolio could achieve net-zero cost-effectively. Our modelling indicated we could reach operational net zero by 2040. We had robust data for our Scope 1 and 2 emissions, built over years and based on over 90% actual data.
Our analysis showed that achieving net zero operational carbon emissions would result in lower energy and maintenance costs.
It would also create more resilient assets, improve air quality and occupant comfort and enhance tenant and resident attraction and retention.
Q. How did you develop a decarbonisation plan?
We had about 800 properties under our operational control when we began. Traditional methods would take years and significant cost to conduct individual, deep-dive decarbonisation analyses on so many properties.
These properties are managed by around 50 operators. We needed an innovative, data-driven approach to develop property-specific net-zero pathways for all our assets. Time was crucial, as we invest significant capital annually in our portfolio on heating, ventilation and air conditioning systems.
We also invest in water heaters, roofs and other energy-consuming equipment in our buildings. Every year that we don't decarbonise during routine replacements, we miss an opportunity and increase our regulatory risk. Local and state mandatory building performance standards are proliferating.
We knew we needed to decarbonise our buildings through electrification and energy efficiency. All electricity needed to come from 100% renewable energy sources. Our challenge was translating this to the building and equipment level for our operators to execute.
Q. What approach did you take?
We used a technologically enabled approach, employing a tool to create detailed, unique plans for each of our 800 buildings. The tool uses data sources including satellite imaging, solar radiation information, soil conditions, weather and energy models of about a million buildings. We provided our building data to layer on top of that. For some buildings, we had conducted energy audits and had extensive data. For most, we only provided the size, type and recent utility bills.
The tool applied a machine learning algorithm to produce a unique energy audit for each building. It then created a detailed description of how each building could achieve our goals.
This included each step, its cost and the energy it would save. In a short time, we had detailed roadmaps for each building, easily aggregated into a portfolio-level view.
The machine learning aspect allowed us to test many different roadmaps for each property and the portfolio. This helped us achieve the optimal financial outcome.
Q. How long did it take to get initial plans?
It took fewer than eight weeks for this advanced analytical approach to deliver 800 property-specific roadmaps in spring 2023. After receiving the roadmaps, we had to socialise the work at executive and operator levels.
We held webinars with operators to explain the roadmap development process. We shared sample roadmaps, solicited feedback and discussed how they would inform future capital planning. This involves significant change management with our operators and property managers.
We've benefited from engaging them from the early stages. We will have ongoing collaboration with them throughout the roadmap execution.
Q. What sustainability factors were most important to your executive team?
Our executive team understood the potential benefits of the net zero commitment. As a publicly traded company, we focus on delivering value for our shareholders. This is the lens through which all initiatives are viewed and assessed.
Our executive team needed to hear the detailed business case for our suggested approach. They wanted to understand the costs associated with alternative and recommended approaches. They asked what we were getting for those incremental dollars and how shareholders would benefit.
The roadmaps provided both costs and benefits of each action. This allowed us to demonstrate the long-term value generated by our holistic and coordinated approach.
Q. What are the change management challenges?
This process requires engagement across our entire operations. My team collaborates with our operating partners, executives, asset management teams, financial planning and analysis teams, accounting teams and building engineering teams.
Everyone is educated on these roadmaps, their importance and how they're incorporated into our day-to-day operations. Implementation requires evaluating everything from different stakeholders' perspectives. We must communicate, recommunicate and communicate again what we're trying to accomplish and why. It will be an ongoing process.
Now that we have the decarbonisation roadmaps, everyone from our local building operators to our internal team is aligned on the plan. It's integrated into our capital planning and informs our approach to roof and equipment replacements. We can now focus on execution.
To read the full article in the magazine, click HERE.
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