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Put Your Money Where Your Values Are

3 min read

As I write this column for our Environmental, Social and Governance (ESG) themed issue, it is a rainy April day, in a month all about increasing awareness of and for our environment. A month whose adage “April showers bring May flowers” is synonymous with better times ahead. It is a reminder that investing in what we care about bears its own rewards.

The practice of ESG began in the 1960s as socially responsible investing, and is sometimes referred to as sustainable investing, responsible investing or impact investing. ESG’s introduction in the ‘60s began with investors excluding stocks or entire industries from their portfolios that did not align with their values, such as the tobacco industry and the South African Apartheid Regime. Since then, the idea that values should figure into investments has only continued to grow. In 2021, analysis shows that ESG investing was prolific amidst concerns for climate change and other societal issues. A trend that proves investing in values makes sense financially.

This is further evidenced by a growing realization that real estate can have a significant social impact—increased diversity, improvement of living conditions, reduced carbon footprint—whether through rehabilitation of public spaces, affordable housing, social housing and care centers, or environmentally with green and energy efficient buildings. ESG analysis allows companies to build trust and investors to feel confident in their investments.

This issue contains several articles highlighting how developers can and should leverage ESG capital, as well as efforts to better define and articulate ESG as it pertains to multifamily affordable rental housing.

Guest columnist Bob Simpson, founder of Simpson Impact Strategies, LLC, writes about impact investing incorporation in Unlocking the Door to Global Impact Capital (p. 10). In his article, Simpson presents a simple guide for the path forward with insights on developing impact framework and how it can be applied to an organization’s decision-making process in a meaningful, financially sustainable and measurable way.

Wondering why investors look to an ESG score to determine desirability? Scott Beyer’s Housing USA (p. 8) explains how ESG-driven assets under management in the U.S. increased by $5 trillion between 2018 and 2020. Solidifying its place as a component of the finance world. But the investment doesn’t simply stop with affordable housing. Beyer explains—with examples from Monarch Private Capital, Walker & Dunlop, Fairstead, Blackstone and others—that by investing in affordable housing you end up investing in the livelihood and well-being of the communities themselves.

While there is no single model for an ESG program, CohnReznick’s ESG Spotlight (p. 26) is all about ESG-ing. Learning to turn that noun into a verb starts and centers around prioritizing and continuously building trust. Programs will impact everyone from tenants, employees and investors to whole communities, developers and operators. Therefore, it is critical to provide transparency into priorities, processes and outcomes. “ESG can be an impactful way to boost business performance, burnish reputations and improve employee satisfaction, safety and productivity.”

So, moment of truth. Are you putting your money where your values are?


Jessica Hoefer

Tax Credit Advisor welcomes reader comments. Contact the editor-in-chief at [email protected].