ESG: Where Are We Now?


Environmental, social and governance factors hold greater sway in the multifamily housing industry.

The rise of environmental, social and governance (ESG) factors has accelerated in the worlds of finance, politics and the multifamily housing industry. It has accumulated new designations and labels along the way including green finance, social impact investing and mission-driven finance.

The roots of the concept stretch back to the 1980s as academia became interested in “social capital,” the notion that added value could be attached to a company that was doing good deeds. The concept appealed to investors looking for places where they could earn a decent return while also helping humanity.

The U.S. Government Sponsored Enterprises officially invested in ESG in 2016 when Freddie Mac Multifamily launched its Green Advantage Program. The program has proved successful and now touts its advantage over non-green programs by claiming almost $28 million in reported annual savings, which equates to roughly $48,900 per loan, and $191 per unit on projects that qualify for the program.

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In addition to the availability of green financing, owners and operators are seeing ESG creep into their world in a variety of other ways, including resident interest. “It is very much top of mind for our residents,” said Kelly Vickers, VP, ESG for Boca Raton, Fla.-based Mill Creek Residential. “We see it showing up as demand for a sense of community, walkability, active design, wellness- inspired amenities, energy and water efficiency and EV charging stations.”

The insurance industry also has a vested interest, especially from a sustainability perspective.

“Our insurers are definitely interested in ESG and want to know how committed we are as an organization,” said John Filipowicz, VP, Compliance and Risk Management, Mill Creek Residential. “Our commitment shows and has enabled our risk team to be transparent with our brokers and carriers, which promotes teamwork, open communication and positive outcomes.”

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