Purposeful Entrepreneurship - Partnership Opportunities Revealed by Environmental, Sustainability and Governance Reporting
Mill Creek Residential’s inaugural 2020 report to its stakeholders on its environmental, sustainability and governance (ESG) practices reads:
“At Mill Creek, we view ESG as a tool to reduce risk, enhance returns, and drive superior quality and performance. It is not a separate function, but rather part and parcel of how we do business, integrated into our strategy and processes and managed directly by our executive team.”
For entrepreneurs, the report is a guide to some of the goods and services that Mill Creek needs to implement its strategic goals. Some predict that their needs and reasoning are going to become widespread throughout the industry.
Mill Creek Residential’s Chief Innovation and Information Officer Jeff Kok spoke with Steve Lefkovits of Joshua Tree Media during a 30-minute event at the Multifamily Technology and Entrepreneurship Conference (MTEC). Kok addressed many topics, including how leading companies are adopting and enhancing their ESG reporting to benefit their communities, the company and global good.
There’s a new drive toward ESG in fundraising, Kok says.
“Companies and their capital partners want to understand ESG and how it can benefit their investments and the communities where they develop,” he says. “Greater focus is being put on categories such as climate risk, carbon footprint, zero-waste policies and net-zero buildings, energy performance and certifications. ESG also encompasses efforts toward diversity, equity and inclusion strategies.
“Transparency is such a big part of ESG,” Kok says. “By being transparent, investors will say, ‘We see where you are and where you are going, so we’re ready to invest.’ ”
Preserving the Life of the Community
Having ESG measures in place can elongate the life of the communities and can lead to cost savings, Kok says. It’s something they should pay attention to as part of everything they do.
“For example, we measure cost per square foot for our amenity spaces and vacant homes to show the cost savings that come with having them being operated with smart technology,” he says.
Another example: Mill Creek Residential is proactive in evaluating physical climate risk and meeting with local flood plain reviewers to plan ways to mitigate risk. For example, at Modera Biscayne Bay in South Florida, Mill Creek has developed breakaway walls on the ground-level floor – “so in the rare case the bottom floor floods, our community can continue to operate without missing a beat because all the operating equipment is on the floor above,” he says.
Developers must look for ways to invest in what residents want. “Most resident complaints are based on noise, so we have a renewed focus and investment in sound-proofing,” he says. “Our acoustical program is best in class. We believe less noise translates into greater retention rates.”
Cybersecurity Top of Mind
Kok shared some concern for IoT and smart-home technology’s growing popularity, saying that the more widespread IoT is in an apartment community the greater the need for data security and data privacy.
Speaking of data, “Companies have to ask themselves: Are we collecting more data than we need? What is our philosophy for collecting that data? What is the purpose for collecting data?” he says.
Kok spent 10 years at a Fortune 500 company and in his last role ran global cybersecurity before joining Mill Creek Residential. In this role, he fought full-time against nation-states trying to hack the company’s systems.
“Anything connected to the Internet is at risk,” he says. “I feel like we are on the precipice of IoT growing exponentially in apartment communities. Many apartment operators are not thinking through how cybersecurity must be a fundamental part of their design to mitigate risk.
“And you have to make sure the cybersecurity carries over to your vendors and supply chain. We’ve turned down some good companies as partners because they didn’t meet our cybersecurity standards. Just last week, a local jurisdiction in Florida had someone try to contaminate the public water supply. You need to have cybersecurity as a fundamental in designs, written into your contracts, and monitored in production.”
Kok advises entrepreneurs to build cybersecurity into their products and business plans, “because if they do, they will have an advantage over others,” he says.
Renewable Energy and Bulk-Service Wi-Fi
Mill Creek Residential has over 24,700 homes and another 13,000 in the pipeline.
“I’d say that we’re at the beginning of seeing renewable energy playing a larger role in rental communities,” Kok says. Solar panels, for example, are required in Seattle, but not in other markets. We study the economics and the sustainability of renewable energy like solar panels to determine its effectiveness and return at a particular community. We are starting to see the economics improve.
“Companies such as Amazon and Apple have announced plans to reach zero waste. But how are they going to get there? Kok says there is an opportunity for entrepreneurs in this space to create effective solutions that might help them to manage this for them.
“Apartment developers spend a lot of effort to build a great foundation for their communities. But they also need to build a solid digital foundation, he says, and the base network with solutions like bulk-services Wi-Fi is a big part of that.
“Residents desire to have mobility around their community – they want to take a call or log-on to work in their apartment, but then maybe walk down to the common area without losing that call – going through the stairwell or in the elevator. Developers need a network that can make this happen. Some providers now are letting developers ease into a bulk-services network on an opt-in basis: meaning you can have a bulk Wi-Fi provider alongside a retail broadband provider.”
Finally, Kok says, “With every investment, you need to consider if there’s return on investment, or if it’s the fad of the moment. Without a return on investment, it will be difficult for solutions providers to win the business of owners and operators.”
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