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The ESG Experience Podcast - Season 1, Episode 3

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  • January 11, 2021
The ESG Experience Podcast - Season 1, Episode 3

Strategies for creating a best-in-class CSR report ft. Kelly Meissner

In this episode of The ESG Experience, hosts Helee Lev and Ryan Nelson are joined by guest speaker Kelly Meissner, Director of Sustainability at Ventas REIT, to discuss the process of conceptualizing, creating, and sharing a corporate social responsibility (CSR) report. Ventas is a prime example of how an organization can create an impactful CSR report, and Kelly shares her experiences and insights she gained during the creation process and discusses best practices and strategies for organizations looking to create a best-in-class CSR report.

Topics covered in this episode include:

  • Best practices & strategies when creating a CSR report
  • Challenges & strategies for how to overcome them
  • The process & outcomes of performing a materiality assessment
  • Setting & tracking ESG goals
  • Strategies for effectively engaging stakeholders
  • Coping with business disruptions caused by the COVID-19 pandemic
  • And more

Read the transcript of this episode below:

Helee Lev: Hello, and welcome to The ESG Experience, the podcast brought to you by Goby, the ESG platform. I’m Helee Lev, Chief Revenue Officer at Goby.

Ryan Nelson: And I’m Ryan Nelson, CEO, and we are your hosts for this podcast.

Helee: Whether you’re an ESG expert or just dipping your toes into the ESG universe to understand how it can help with engaging stakeholders, mitigating risks and attracting investors, this podcast is for you. Together, we’ll navigate the alphabet soup of ESG, discuss ideas, review strategies and share industry news and trends.

In this episode of The ESG Experience, we’re fortunate enough to be joined by the renowned Kelly Meissner, Director of Sustainability for Ventas REIT, an S&P 500 company, yeah.

Ryan: Whoo-hoo!

Helee: That operates at the intersection of two powerful and dynamic industries, healthcare and real estate. As one of the world’s foremost real estate investment trusts, Ventas has followed a successful strategy that endures ultimately awarding Ventas shareholders with extraordinary outperformance. They also happen to be a poster child, if you will, for ESG and sustainability. And we might talk today about causation, correlation or coincidence between the two, but both at the asset and the entity level. So welcome, Kelly. We’re very happy to have you today.

Kelly Meissner: Thank you. Hello, both of you. It’s great to be here and happy 2021.

Ryan: Yeah. Happy new year, everybody.

Helee: That’s right. Happy new year!

Ryan: Yeah.

Helee: Everything changes and gets better with the flip of the calendar, right?

Kelly: Exactly.

Helee: Flip, new world.

Ryan: That’s an interesting...

Kelly: Everybody failed on that.

Helee: So Kelly, I might start by asking you. Long has been the notion that good ESG stewardship is an indicator of a company that might also perform well financially. In your almost 10 years of Ventas, 4 specifically focused on ESG, what’s your take? Is it causation, correlation or coincidence? What do you think in your heart of hearts?

Kelly: Yeah. I mean, in my personal opinion, I don’t think it’s just coincidence. There has been a lot of research and studies done on this and some say there is causation or correlation and some say there is not. But I think, certainly for Ventas, I would say that strong ESG practices, good corporate responsibility has always been important to us as a company since we were founded. And so I don’t think it’s a coincidence that that foundation has led to our outstanding results over the past two decades.

In terms of specific causation versus correlation, it’s probably a combination of both, honestly. And it’s kind of hard to extricate. At the end of the day, I think it’s a combination of ESG principles are important to us, they’re important to our shareholders, they’re important to our stakeholders, they’re important to our employees. So whether it’s causation or correlation, they’re important and they matter and so they’re always going to be something that we’re really focused on.

Ryan: Yeah, that’s great. And like you said, Ventas has been, from the beginning, this is something that has been important to Ventas. And I think that you’ve probably been, and I’m sure you have, fighting that battle of, well not even battle, but just inspiring people throughout your portfolio to do things at the asset level. So you’ve been thinking about the environment and resource management and efficiency and probably health and wellbeing as well and all those sorts of things for a long time. So we kind of refer that as the asset level performance and performance improvement and projects and things that are happening.

So that’s a challenge to be able to roll that out effectively and make it part of your culture. I assume that Ventas has done that successfully and then there’s kind of another portion which is maybe as important. I don’t know, but communicating, reporting, demonstrating, telling your story, all of that sort of thing which how long is Ventas, you think, we say you’re a poster child of that now and doing that extremely well. And actually, I encourage anybody who doesn’t quite know what a very nice CSR report is, to check out the Ventas website and look at their “Corporate Responsibility” tab on the website because it’s a really nice, beautiful read actually. Like deep and thorough, lots of pictures, and it’s nice visuals. It's nice to read. So anyway, so the second half of the battle, reporting and telling that story. How did you get so good at that?

Kelly: Yeah. I mean I always say with ESG, unless you tell it, it doesn’t really matter that you did it. Same with financial results. If no one knows what you did, then it doesn’t really exist, in a way. So disclosure is super important with all aspects of ESG. And even before we did our first Corporate Sustainability Report three years ago, we published our first report in 2018, we had been disclosing a lot of our ESG work and data on our website. We had been responding to GRESB and CDP for a long time and we were posting our responses to both of those on our website. And we had other information on our website as well. Just keeping a really robust website.

So I think doing a first Corporate Sustainability Report can seem like a really daunting task. And I always say that a good place to start is just getting what you’re already doing on your website. Just getting that information out there, it does a few things. One, I think getting leadership buy-in to disclose this information and get people thinking about it is important. And two, investors and there are all these ESG data scrapers out there that are evaluating your company, particularly if you’re public. Not so much maybe if you’re private, but certainly our investors care. They're looking for this stuff. And even if I’m doing diligence on a vendor or an operating partner or something, I'm going to their website to see what do they say about themselves. And what they’re disclosing tells me a lot about the company. So disclosure, whether it’s in the form of a formal CSR report or other type of report, just getting the information out there is super important.

Ryan: Yeah. And I think we kind of tell people to brag too if that’s just the easiest way to think of it. It’s really okay. I think the ESG professionals in real estate are humble, but also the coopetition or whatever you want to call it is incredible. It truly is. I don’t need to hang on to my secrets. Everyone is extremely competitive, no doubt. And a lot of these programs drive competition, but everyone’s willing to get in a room and share best practices like you’re just sharing some best practices on how to do reports.

Kelly: Yeah.

Ryan: It really is okay to brag, to tell your story.

Kelly: Yeah.

Ryan: It’s helpful to everyone.

Kelly: Yeah.

Ryan: So I think that’s great. So you mentioned some best practices. Was it always a breeze? Were there lessons learned that you might add along the way or you can help people skip some steps where they’re ultimately going to struggle when they get started?

Kelly: Yeah. I don’t know about skipping steps. I mean the first report, if you’re doing a sustainability report, I mean the first report is the hardest, right? You’re starting from scratch obviously. You could look at everybody else’s reports so we did that. We looked at our peers, both within the industry. We're a REIT, a publicly traded REIT so we looked at other REITs as well as other non-REITs both in terms of what were they disclosing and also how were they showing it. We looked at just the layout and the look and feel of the report to just get the sense of what was out there, but then obviously wanted to make it our own. So I think just sort of that benchmarking and looking what other folks were doing.

We did want to follow GRI which is kind of the gold standard for CSR sustainability reporting. And so our first report, and we also did use a third-party consultant to help us with our first report and that was super helpful to kind of show us the ropes a little bit. It helped us get through it. And it was really a very collaborative process between myself and ESG, our marketing and communications department, we had the consultants and then working across the business to tell a story of what did we do on E, S and G and working with our operators and kind of bringing it all together in this report. So it was really bringing together a lot of different people to create this.

And then again, going back to GRI, that was sort of the gold standard. And we saw that that’s what a lot of our peers were doing, and we thought that made sense and it gave us a good framework to go off of. So again, you’re not just like totally starting from scratch, you have a framework to go off of. And the first year GRI has kind of two levels in accordance with the report. This is a little technical, but in accordance with reports means you reported on everything that’s material to your company. You’ve done a materiality assessment which we’ll talk about in a bit. So that’s kind of like the highest level and we knew that we weren’t going to be able to get to that our first go-around, so we just wanted to do something that was aligned with GRI.

So we were okay not kind of shooting for the moon, so to speak, on the first go-around. We wanted to have a good report that was aligned with GRI, but not necessarily in accordance with and so that’s what we did. And we were really happy with the results and that created a good foundation for us to, the following year, do it full in accordance with the report. We had completed a materiality assessment and then it sort of evolved from there.

Ryan: Yeah. That reminds me, that’s one of the things of advice I give people all the time. I learned it and I’m a little bit of a sailor and there was always this thing of people always saving up for a boat. And they have this vision of the sailboat that they want, but the sailing community says, “Get a boat immediately. Not the one that you want someday. Go do it now.”

Kelly: Yeah.

Ryan: So don’t push off the report because you’re not sure that you can quite meet the framework standards or whatever. Do something and then do something else the next year, whatever.

Kelly: Yeah.

Ryan: I thought this was pretty interesting.

Kelly: Yeah. No, I totally agree with that. Just get started.

Helee: So you guys have completed your third report now and we keep referring to you as a poster child and this is one of the best-looking reports out there. And even when I’m talking to other people, I use it as an example. So as you look to the next year, right? Because everyone and everything always has to be up and to the right, what are you thinking about changing process-wise? And are you guys happy with the format of the report? Is it really more about changing the things that you’re actually doing, the things you’re reporting about? Or are there actual aspects of the report itself you want to change? And what should we be looking for kind of year over year? Even at an aspirational level, what are you hopeful for to see as you go into the fourth year of this and keep trying to raise that bar for those who are never pleased with a plateau or a status quo?

Kelly: Yes, we never rest. Yeah. So we actually made quite a few changes in our 2020 report that we just published in October that we’ve been looking at here. And we created this approach that we call “Principles and Practice” which we had this similar content in prior reports, but we didn’t sort of call it that and I really like how we moved to that approach. We actually took a lot of the data in our first two reports. We had all of our environmental data in the report. We've moved that just to stand alone on the website because it’s important, but it’s a specific audience that’s going to care about the detailed data tables of your energy, water and waste data. And so you have different audiences for this report, right? So it’s both investors and potential investors and operating partners. There are all sorts of people that look at it so we wanted to make sure that it spoke to all those audiences and that we pulled out things that we could put on our website for people that were looking for very specific things, but didn’t necessarily need to be in the actual report. But it’s still disclosed publicly and so that’s fine.

So I think transitioning to those “Principles and Practice,” we did that for the first time in last year’s report. And I think we’ll continue that for now because I think that was a really good transition to highlight here are the things that are important to us and here are the things that are sort of like case studies on here are the things that we did as a company this year that we want to highlight and show you like why we care about it and what we did. So I really liked that approach that we took. We also brought it more in-house. So we had a little bit more control over the process and the timing. And again, this was our third go-around so we had a good sense of what we wanted to do. It does get easier after the first couple of times so that’s good news.

Helee: Yeah, I can imagine the first time is intimidating and aberrant and then you’re just kind of improving upon. At least you’ve drawn the line in the sand or gotten started. So one thing I read today that I thought was interesting, it’s a part of a webinar, but it was like, “Greenwashing is not going to survive 2020” or “Greenwashing in ESG, like that’s it.” Investors are getting more savvy about it. They're looking for programs that have real teeth. So I guess my next question for you is kind of two-part. Do you agree with that? Do you feel that the investors are getting more savvy and they’re not settling for just check the box “Greenwashing” on the website? And is that, in part, why if you look at the CEO letter that came out this year from Ventas, the CEO explained that you guys had doubled down on ESG, that you guys have an enhanced ESG committee and have added a number of key leaders across the organization to the committee. Would you say that that is just something that you guys opted to do as leaders in the space? Or is that in response to perhaps investors getting more savvy about greenwashing and half-assing ESG programs, for lack of a better term? Although I do believe half-assing is a technical term.

Kelly: In my book, it is. I think on the greenwashing front, they’re saying that the investors are starting to wake up to it a little bit because I do think there has been some greenwashing. I don’t think it has been insidious. I don’t think it has been sort of intentional, a bad thing that people are doing. I think the problem is that there are not standards. There’s not generally accepted sustainability practices like you have for GAAP for accounting, right? So I mean FASB is out there, there’s GRI, there are all these different frameworks. But even the frameworks themselves are, you don’t have a whole industry of Big Four accounting firms that are auditing your sustainability data. I mean a lot of people are getting third-party audits of their data, but there’s not standardization in the way that there is for financial reporting. I think that standardization is under way. There’s a lot of discussions between SASB and GRI and other frameworks on trying to consolidate and come together and have more consistency. I think it’s going to be a while before there really is anything approaching what we have for financial reporting.

In the meantime, I think investors are waking up to the fact that you have to have data behind what you’re doing. And I do think the SASB framework does a good job of cutting through some of that and being very explicit about this is what has to be disclosed as part of a SASB disclosure. We’re working on our first SASB disclosure. We haven’t done it yet. We have all the data. It's just cutting it a different way for them for that framework.

So I think for us, the way that we’ve dealt with it is when we did our first materiality assessment and maybe we can jump into that after this, but we identified our top ESG topics and then we set goals and metrics around each of the topics and, in some cases, multiple goals and metrics and we published the data. And we published the data to back up how we’re doing on this. So we published our employee engagement survey results, we published our gender diversity numbers, we started publishing race and ethnicity data even though we don’t yet have goals around that, but we’re working on it. We’ve been publishing our environmental data.

So I think having metrics, having goals and having the data to back it up is super important to avoid the greenwashing. And I do think GRESB, for example, they also kind of cut through the greenwashing a little bit, right? So that’s why I think frameworks like GRESB and the DJSI, the SASB or CSA for DJSI and CDP, you can’t really trick them, so to speak.

Helee: Yeah.

Kelly: And those scores are meaningful because they cut through a lot of the so-called “greenwashing” because you have to report 100% of your portfolio and you can’t just show what you want to show. You have to show everything so yeah.

Helee: Yeah, that makes sense. And I think while you point out that there’s still room for these standards to improve and for it to get even tighter, you and I have known each other for a while. We've been in this space for a while. Even just to think how far real estate has come in the time that I have been in the real estate space and sustainability and seeing frameworks kind of formalize. And at least now, the LPs know what they’re asking for and the investment managers know which frameworks they’re using. So I think yeah, it will continue to get better, but even where it has come just in the last decade is something.

Kelly: Yeah.

Helee: It’s progress.

Kelly: Yeah. It has definitely come a long way. I thought it was interesting in 2020 that both GRESB and DJSI, the CSA that’s used for the Dow Jones Sustainability Index, I'm not sure about CDP, I don’t know if I had seen their numbers, but they both had I think double-digit, mid-teens increases in participation in 2020 which I was curious to see how that would go with the pandemic and everything else that was going on last year if new participants would kind of wait a year or not. And I thought it was interesting that people didn’t. People continued to jump in and start participating in some of these frameworks, so I think that’s telling.

Ryan: Yeah, that is telling and it’s excellent to see. I think we, of course, Ventas and you, Kelly, are kind of, in our minds of course, on a pedestal and leaders in this. Ventas, for a long time, sounds like you have some budget and some resources, and you’ve been able to use third parties and you’ve been able to commit and do great things. Hopefully, others do find it important enough to put budgets towards it and consider it something important to do. And you talked about a lot of different standards that are valuable because they cut through greenwashing and do all that. What is the process to determine what is material, if you will, to decide what to do knowing that it’s so broad which is awesome, but then you’ve got to do something?

Kelly: Yeah. So the way we initially approached it, the frameworks themselves, if you’re responding to GRESB or CDP or DJSI, those kind of direct you a little bit as to what’s important because they kind of determine for you a little bit. But at the end of the day, you don’t want a third-party telling you that. You want to say for yourself what’s important. So there’s this process called an ESG Materiality Assessment or a Prioritization Assessment and this is something that comes out of the GRI framework. It's actually required to do an official GRI in accordance with the report which is to go through a robust process to identify what’s material for your company from an ESG perspective.

And you do an initial one and then you kind of refresh it every few years. So we did our first one. We completed it in early 2019. So in the next year or two, we’ll look to refresh it although we’re always constantly looking at it too and I can talk about a little bit of a tweak that we’re making based on the events of 2020. So the process itself, we did a really robust process. We did a lot of third-party, a lot of research through desktop research looking at the frameworks, looking at what other companies were doing, what our peers were doing in the industry and even outside the industry. And then we conducted interviews internally with departments and heads of different business functions so kind of a good cross-section of the company.

We interviewed two of our top investors that were focused on ESG so we knew they would have things to say about it. And ask some very targeted questions on like, “What do you see as the biggest risks and opportunities for Ventas from an ESG perspective over this work term and medium-term or long-term?” We had that conversation with investors. These were hour-long interviews that we conducted with two investors; two of our largest operating partners, two of our board members. And then our executive leadership team was involved in the whole process.

And we did these interviews, we collected this information and we did research and we brought it all together and actually scored. We said, “These are the universal things that could possibly be material topics for us.” We scored them and brought the information and ranked the top ones. We saw what kind of shook out to the top and we took it back to our executive leadership team, embedded it with them. To be honest, there weren’t any huge surprises, but we came out with eight topics. And like I said earlier, we used those eight topics to set goals and metrics for the company and have been tracking them and reporting on them in our sustainability report ever since. A lot of the practices and things that we were measuring on these topics, again, because none of these were a surprise.

For example, talent attraction and retention, our employees. I mean we’ve said for a long time that our employees are our biggest assets, outside of our actual portfolio. And we’ve done an annual employee engagement survey and we hadn’t disclosed that data performance. So it was an internal metric that we looked at, but because that was one of the topics that rose to the top with our materiality assessment, we set a goal that we want to always be in the top half of performance against our peers. You know the peer benchmark for the third-party that we used for that survey and we’re going to disclose this data and so people couldn’t see how we do. So that’s just one specific example of we already had good practices on it, but we really codified it and started disclosing more information on it which I think if I'm an investor or someone who is thinking about partnering with Ventas, to me that’s an attractive plus in do I want to work with Ventas or invest with Ventas at all.

Ryan: Yeah. No, it's brilliant. So materiality assessment will help you determine what’s important to your organization. And for you, that’s interesting that there weren’t a lot of surprises which makes sense because you were kind of living this and people knew, but it’s still probably important to get it down and go, “Okay, we really do agree on this.” I feel like others might learn sometimes, “Wow, we didn’t realize that was important or why isn’t that there?”

Kelly: Yeah. I mean certainly the discussions with our operating partners, our board members and our investors were illuminating. I mean, again, they weren’t saying anything we hadn’t heard before, but I think just the act of saying we want to hear your thoughts on this. When we were talking to the executives, our partners and the people who are managing our portfolios like the investors so they knew our company, but also had broader perspective.

And one thing I was mentioning earlier, we had kind of looked at health and safety as a component of talent attraction and retention. And with everything that happened last year, we’re moving towards pulling that out as kind of like its own stand-alone category. It was always something that we focused on and we did have at least one metric associated with it, but with everything that happened last year, I think it has really been kind of a sea change in how people think about the importance of health and safety and kind of where it falls in the sac of things. So that’s something that we’re trying to emphasize our existing focus on that more because of COVID and everything that happened in 2020.

Helee: Yeah. We always talk about like if there was a silver lining of 2020, it kind of brought some of these concepts front and center. You can’t ignore them anymore and things like ESG in general or things that felt that they were nice to have before, we’re starting to see why they’re a need to have. And I think that’s part of what’s giving it this boost or push or bringing it to the spotlight, if you will. And just one other thought on the materiality assessment, I mean the reason I love it is for the exact reason you’re saying. You’re involving almost like a 360° perspective of all the folks that touched or appreciated or are impacted by the ESG program.

And if I think about the evolution in the industry, as I mentioned before, it used to be just random acts of sustainability, as Dan Winters always says, at the asset level, right? That’s how it always started is like we did an energy project or got a certification at the building level and then fast forward a couple years to be like, “Well, how do we put this all together?” What are these random things we’re doing and how do we roll it up into a true strategy or program? And now, people who are starting off for the first time or even like you, you’re very much in the middle of your sustainability journey, are doing it probably the right way where they’re saying let’s start with this materiality assessment, the 30,000-foot view. Like who are we? Who is everyone around us? What is our business? Why do we exist? And then what should our sustainability program be in response to that? And how do we push that down rather than having the proverbial tail wag the dog.

So that’s a definite new trend that I have seen just in the last year or two that I think makes sense and excited to engage with folks on this materiality journey to help them figure out who they are and what the ESG program means to them. So that kind of brings me...

Kelly: Yeah. One thing I would...

Helee: Sorry, go ahead.

Kelly: Just sort of add too is another step I’m seeing in the evolution is, especially with particularly the public companies that have to disclose their executive compensation, is starting to incorporate some of these ESG metrics into executive compensation. We actually added a metric on gender diversity to our executive compensation in 2020 for the first time. And I expect we’ll probably be adding additional ESG metrics over the coming years. So, again, it’s all part of the evolution, right? If we hadn’t then identified these as our like this is what we’ll focus on for ESG and then said this is how we’re tracking it and these are the metrics that we care about and that we’re going to publish data on, that laid the groundwork for being able to continue that evolution, to say, and how we’re going to start paying our executives, at least in part, based on our performance on these. So I think that’s really nascent right now, but that will continue to grow.

Helee: Yeah, and it’s just another way to add teeth, right? And to the analogy we talked about before, greenwashing data puts the teeth in greenwashing and having these concepts affect the executive compensation puts the teeth in D, E, and I and some other concepts rightfully so, right?

Kelly: Yeah.

Helee: You’ve got to make it work. So can’t do materiality assessment, can’t engage on a meaningful ESG program without the stakeholder engagement. And I know that this has been a challenge for folks as far as how to make it effective and how to get the stakeholders to engage, for lack of a better term. So it seems like you guys have a pretty collaborative subset of stakeholders around you that have wanted to get involved and dig in. Did you face any challenges with stakeholder engagement? And if you did, how did you overcome them or where were they? Or any advice or thoughts on that?

Kelly: Yeah. I mean to some extent, I’d say stakeholder engagement, it’s an ongoing process, right? And for us, obviously our investors, our investor relation department is talking to our investors on a daily basis and work constantly trying to give them as much information as we can and be as transparent as possible. But in terms of more employees or our operating partners, again, I think part of that that’s who we consider our primary stakeholders in addition to our investors, obviously. And part of that is just kind of built into the way that we do business.

Doing our employee engagement survey every year and we actually did, this past year or couple months ago or maybe it was just a few weeks ago, we did a pulse survey. With everything going on and working from home and you’re not seeing people and also encouraging the managers to engage with their employees. Going a little above and beyond what you might normally do when you’re actually seeing people in the office.

And then with operating partners and tenants, again, it’s sort of built into our asset management and property management process to have that constant engagement. And it really sort of came to a head in a way with COVID-19 last year with everything going on with the virus. And we have seniors housing, a large seniors housing portfolio and medical office buildings that are serving patients as well as hospitals and skilled nursing homes, we wanted to be as helpful as possible. And so stakeholder engagement for us last year became becoming a resource for them and helping them navigate COVID-19.

Particularly, we felt like we could be helpful in terms of helping navigate the relief packages from Congress and there were these really huge bills and understanding what does the Paycheck Protection Program look like and how do you apply for it and what can you expect to get from it and what are the rules around it. And we weren’t being legal advisers, but we were trying to take really complex information and simmer it down in ways that they could digest it more easily given that they had so many other things going on in their world. And we also played a role with our seniors housing operators and looking at testing and getting access to Mayo Clinic tests for our operators and just researching all the different testing technologies for COVID-19.

And we held a webinar with them. We actually, going back to the economic relief piece, we created a whole website on COVID-19 and links on the economic relief. So Paycheck Protection Program, the Healthcare Fund that was created by HHS and all sorts of other things that were coming. The states all had different programs. So I mean it was super complex and we just jumped in and started trying to figure this out and getting information. We had regular emails going out, we created a website, we had a webinar on testing for our seniors housing operators. So I mean, to me, that’s stakeholder engagement in action and that’s how we handle things.

Helee: Yeah.

Ryan: Yeah, that’s impressive. That reminds me of a story I heard today from someone who runs a multi-family home, rental units mostly. And I keep hearing just incredible, inspirational stories like this. One of their ideas was that they want to reduce the amount of evictions, right? Evictions are not good for anybody. So what might you do? Well, they got to the core of the problem and they’re helping educate people on resume-building and keeping their jobs and getting those marginal promotions and stuff. So, to me, it seems like you’re saying you’re going almost outside the scope of what you do to help other people that are your customers, your end customers, your partners, educating them on the PPP and helping them get through things that almost seem out of scope for your business. And the fact that ESG kind of inspires people to do that, it’s just incredible.

Helee: Well, anything you have downstream...

Kelly: Yeah. And it may seem out of scope, but it’s helping them both because we care, but we also partly care because they’re the ones paying us rents and keeping their buildings full and so...

Ryan: Correct.

Helee: Yeah, that’s right.

Kelly: But like we’re aligned which is a good thing, right?

Ryan: Right.

Kelly: I mean that’s how it should work and so, yeah.

Helee: So no great segue here so I'll just be out with it. Let's talk gender equality in the workplace. Shall we?

Kelly: Let’s do it.

Helee: So one thing that Ventas has been on my radar, as a female executive, is that your CEO is one of the very few female CEOs in the Fortune 500, if you will. And as I look here through just some of in line with SDG Goal 5 of Gender Equality and look at the strides that you guys have made so you’re quite close to maintaining your 50/50 gender balance. You’ve already achieved your minimum over three female board members, including your CEO, I assume, achieving 25% female representation in senior leadership teams so you guys have made great strides here. So I might ask, do you think that that is because of having a female CEO? Or, again, maybe I go back to my words of causation, correlation or coincidence? Or do you think that that does have an impact on how it matriculates through the organization?

Kelly: Yeah. Debbie, this is a passion point for her and I don’t think it’s a coincidence that she’s a woman and she cares about this stuff. So it’s definitely coming from the top, but it’s also from the bottom up. I mean I think our entire executive leadership team cares about this and thinks it’s important. They are fathers and brothers and sons and so they understand the importance of diversity, both gender and racial and ethnic diversity. There has been a lot of studies that show that companies that are more diverse perform better and that’s compelling to us.

So I think Debbie certainly has really driven, our CEO, she has really driven a lot of the focus on diversity, but the company has embraced it. And we certainly have a long way to go. I mean I’m really proud of the fact that we’ve been really transparent with our data, that we have these goals that we’ve set up there. And we included in our goals for this year that we were developing a diversity, equity, inclusion framework which will go beyond gender. And we will publish some goals beyond gender-related diversity goals. So we’re working on that, but we’ve been publishing our gender data and we published our race and ethnicity data for the first time, last year. That’s the first step is looking at your data, getting it out there, being comfortable putting it out there.

I think now is sort of a little bit of a golden period because right now for the most part with diversity-related data, you’re getting credit just for putting your data out there. Our data is not where we want it to be certainly for the leadership level for gender and really at any level for race and ethnicity, but you can’t change and improve what you don’t measure. And you can’t be held accountable for it if you don’t disclose it. So we put our neck out there and put the data out there even though it’s not where we want it to be and we’re committed to making it better, but it will take time.

Helee: Yeah, I know you’ve got to take that first brave step, right? Of being like here is the line in the sand. I'm not proud of it or maybe I am, but here it is and it could just get better from here. And that was my dog, Henry. He agrees and feels very passionate about the topic of D, E and I. So one thing I might ask you, so like you said a goal for 2021 is to develop specifically diversity, equity and inclusion framework. Some of that does fall under the S and the G of ESG, right? Like within the Social and the Governance. Why do you guys feel that it’s necessary to develop a whole separate D, E and I framework and address that outside of like perhaps the regular framework of the E, S and G that already addresses it there? Why go above and beyond?

Kelly: Yeah. I think with diversity, I mean especially when you start to get into race and ethnicity, it's really complicated and even the gender piece too. So we felt like in order to move the needle on it, we needed to understand it better, we needed to be really thoughtful about it and not just focus on one area. What comes to mind is just focusing on hiring, you know? It’s not enough to just get diversity on your slates, on your interview slates and hopefully, that reflects in your hiring. I mean that's not really moving the needle. It's important and we want to do that and need to do that, but you also need your company culture to reflect diversity and inclusion. You want the people where you give your business, where we bank with, and legal services that we use, and development and operating partners that we use, we want to work with them on this too. And so we knew it needed to be multi-faceted in order to really make an impact. And so we’re being really thoughtful about it and would want to elevate it kind of as its own thing in order to give it the attention and time that it needs to really make a difference.

Helee: That makes sense. And are there frameworks? One last question about that. It's interesting to me. It's just an interesting topic to me, but are there frameworks out there for you guys to align in the same way that there’s GRESB and CDP and otherwise? Or when you say it’s under development, are you guys really building this ground up?

Kelly: Yeah. I haven’t seen anything from a third-party, so to speak, like a GRESB framework. I mean certainly there are questions related to diversity. And actually, Bloomberg has a Gender Equality Index. It's just focused on gender that we participated in for the first time, last year and we got on the index. The new index is being announced in the next couple of weeks. So we had that to look at a little bit. I mean that was really just a lot of questions on how are women in the upper, middle and lower quartiles for pay and what are your policies and all that stuff. So there was that.

And we also look to you know there are some companies, there has frankly probably been more outside of real estate and some of the financial services firms that we’ve looked to to what they were doing. A couple other real estate companies have made strides in this. So we definitely were taking from what other folks have done and looking to that. And then just thinking about for Ventas specifically, like we do with anything, like what matters for us and what’s going to make the most impact on our business. But it is, I mean it’s definitely an evolving area. I'm excited that I feel like we’re pretty on the forefront of it even though, again, if you look at our numbers, they’re not where we want them to be, but on the forefront in terms of thought leadership and putting this framework together which will eventually be published. And so I’ll be excited to share once we have it all buttoned up, but laying the groundwork to make improvements.

Ryan: Yeah. That’s what I was just thinking was thought leadership. And to your point of you keep seeming to be at least one step ahead of the foundational type stuff that people are trying to do right now and you really got me thinking. You were talking about hiring practices for D, E and I are just not enough. They're important, but not enough. And then I was thinking, yeah, you might hit all the numbers and have them right, have great diversity within your organization, but that doesn’t necessarily mean you have a culture that benefits from that. I mean you get those different points of view and different perspectives and actually get the value out of it. So, yeah. You tend to think that well, look. It’s 50/50 or whatever. We did it, but maybe that’s maybe not enough.

Kelly: Yeah.

Ryan: So that’s great thought leadership.

Kelly: Yeah, absolutely.

Ryan: So you touched on COVID-19. It's 2021 now. I don’t think we can stop talking about it yet, but maybe a little bit different angle. You said some of the great things and I assume good response you got from that and your preparedness, especially with senior housing and medical office buildings. What about the future? I mean maybe it’s not our last pandemic. Are you guys bulking up? You said you were going to pull out health and safety and focus that differently than just on the employee side. Is there anything else kind of nice lesson learned or preparedness for next time that you’ve engaged on so far?

Kelly: Yeah. I mean certain things like filtration. I think we increased filtration where we felt it was necessary so that’s not going to go away. I think protocols and seniors housing, I mean this is a little bit more operational. We don’t operate seniors housing directly, but I think our operators have learned a lot from having to deal with a pandemic. I think certain practices from a health and safety perspective are probably not going to go away. Perhaps in terms of cohorting and obviously just being super vigilant about handwashing.

One thing that I have been saying from the beginning, and it will be a few years before we see if this plays out, is that my one hope from all this is that seniors housing is always impacted by the flu season. And my hope is that everything we’ve been doing to keep COVID from spreading, that we keep some of that in place with the flu and are able to reduce the impact of flu in seniors housing from what we’ve learned. And certainly, I don’t think this is going to be the last pandemic. It’s not the first and it’s not going to be the last so I think some of it is here to stay.

Helee: Yeah. I thought, when COVID first happened, I thought it was going to be a two to three-week situation. And I think, unfortunately, people are still kind of riding that high of the calendar flip of, “Oh 2020 is finally over,” but I don’t know, and I'm an optimist, okay? I'm an energetic, passionate optimist, but also a realist. And I agree it’s not going to be the last time that we see things like this. And I think some of the things that we got used to seeing are, like I don’t know the next time I'll see like a crowded sporting event or train where you’re inches away from other people’s faces at rush hour, but...

Kelly: Yeah.

Helee: So anyway, the world has changed with regards to COVID. So with regards to environmental which is a lot of what Goby helps you guys work through is actually the KPIs that go along with emission, energy, water, waste. So you guys have made improvements year over year. And one thing I would ask you is, because I've heard critics of programs like the ones that you guys report to will say that you spend more time and effort and energy actually collecting the data, manipulating the data and chasing down the data and chasing down more data than actually doing meaningful things like at the assets. So I just might ask like your opinion on that. It’s obviously a balance, right? You’ve got to do some stuff at the actual assets, but then you also, to your point at the beginning of this podcast, it’s almost like you didn’t do it if you’re not effectively communicating it. So how have you guys struck that balance? Or put the effort and energy appropriately into doing actual stuff versus just the arduous effort of collecting and reporting and assuring the data that you collect?

Kelly: Yeah. No, it’s a huge challenge. I think you can’t measure improvement or even really improve if you don’t have the data. So you have to have it. It's not a question of whether you’re going to do the data or not, you have to. Because otherwise you can’t measure anything and you can’t report to these frameworks and get credit for what you’re doing. So I think for us, you know because we had, and I understand that not everyone is going to be able to do this, but having a dedicated ESG resource. Me, and we actually hired a second full-time, as you guys know. She might have come from a great company called Goby...

Helee: We forgive you for poaching our talent.

Kelly: Hired in 2019...

Helee: Water under the bridge.

Kelly: Yeah. You guys were very gracious. By having dedicated ESG resources that what we do is that rely on our operating partner groups and the asset management and property management teams to help us with the implementation of the actual work. So we’re kind of pushing on like okay, we’re showing you. Here’s how we’re doing and here’s our goal and here’s what we’re seeing other real estate companies do to achieve their goals. Like LED lighting, okay. We know that works. Let's go do it and like working together to do the implementation. So there’s a little bit of dividing and conquering on implementation versus the data piece. And because we have the data and are pushing and doing the reporting, that puts us in a position to kind of push on the rest of the business to implement.

I work and help sort of rally the troops, I guess, to put together okay, here’s an LED project. It's going to cost this much and we know this much is the return and help shepherd it through the internal approval process. But the actual implementation then is more on the property teams and our operating partners so we don’t have to get too bogged down in the implementation, but it’s still hard. I mean that’s a lot. It's a lot.

Helee: Yeah. Yeah, no doubt. It’s a huge undertaking especially at the volume of buildings that are under your purview. If you have a couple hundred or even like a handful, it’s one thing, but you guys are thousands upon thousands so you need a program that’s scalable and cost-effective so that’s no small feat. As you look into 2021, what are specific initiatives you’re focused on as far as environmental KPIs or climate change, renewables, environmental goals? What are you up against this calendar year?

Kelly: So we reset out environmental goals at the beginning of last year. They're published in our most recent report which we’ve been looking at. So we’re excited to have new goals, new baseline and start measuring that. We modified our waste goal. I think there’s a lot of issues with waste data and I don’t think people fully understand waste data and how it works, but we do. And because of that, we modified our waste goal to be, we do have good information on whether we have recycling programs in place. And so we made our goal based on percent of assets with recycling in place. So I'm excited to have that as a goal which I feel like is really tangible and measurable and impactful. Obviously, at some point, you want to make sure the diversion is high. Like just having program in place if you’re not using it doesn’t mean anything, but right now, measuring the diversion just really isn’t all that meaningful.

So we did that and then we’re really focused on renewables for this year. We haven’t done as much on that. And we’re starting to see some of our peers do it, we’re starting to see more questions from investors on what is your net zero strategy and so we’re working on that. I think it will take some time to develop that. But looking at on-site renewables, virtual off-site, power purchase agreements, purchasing renewable energy credits as a last resort. So we’re trying to sort all that out. It's complicated especially for our buildings.

Helee: It is, yeah.

Kelly: Like there’s not a lot of space to do on-site so we’re still playing around a little bit with that.

Helee: And do you personally feel strongly about like do you feel like if you are buying off-site or renewable energy certificates versus installing solar panels on a roof, do you feel like one is more effective than the other? The net result is the same? It feels equal enough or, like you said, still sorting through it probably?

Kelly: Yeah. I mean it’s this whole idea of additionality, right? If you’re purchasing credits, you’re not really contributing to additionality. And at some point, my sense is that at some point, I think it’s already kind of this way. You don’t get as much credit for that. Like you can’t just go buy RECs and call it a day.

Helee: You can’t just throw money at it.

Kelly: Yeah, and it’s expensive too. I mean it’s not economical. It doesn’t make sense. You can potentially make money off of a virtual power purchase agreement or on your on-site solar potentially. So...

Helee: Right.

Kelly: I mean if there’s a more economical way to do it that also is more sustainable, then that’s obviously a better option. So that’s what we’re trying to sort out.

Ryan: Well, that’s great.

Helee: Makes sense.

Ryan: So you’re very thoughtfully thinking of these things that you’re going to do in the future. We’ve talked about a lot of the things that you’ve done and accomplished and we’re not talking about them in the idea of random acts of sustainability because as we can see from the website, you have a beautiful report. If we’re offering something or telling people to buy the boat or get started and start publishing your results and then there’s a best-in-class way to do it which is more than just buying that first boat. There's an incredible example of seriously a beautiful report that inspires with the fact that you’re disclosing this stuff which is just incredible that an organization would put that stuff out there publicly. Like you said, incredibly brave and meaningful and drives the industry to do better and sets you up for the next thing you want to do. So you keep raising the bar and being a leader and raising the bar so that’s just incredible. I really think that everybody should read your report and be inspired by the beauty of it and the impact and depth of it. So how do you keep raising the bar? What’s next if we talk about CSR reports? Is there anything else you can share about this coming year or the year after? Or at this point, it’s just like keep improving that data or is there something dramatic you want to share?

Kelly: Yeah. No, I think that some of the stuff we’ve talked about I think it’s building out our D, E and I. It's going to come under content then, right? So building out our diversity, equity and inclusion. I’m really excited about getting some of that buttoned up and published here in the next few months and making progress on renewables. So I think it’s really the report itself. The point of it is to communicate what we’ve done. And so it’s doing more renewables, making progress on our environmental goals and continuing on our diversity, equity and inclusion buildout.

Ryan: Well, that’s incredible. Before we wrap up, we’ll say thank you again. We have one quick, little game here we’re going to play. It's really quick. It's the listener favorite so everyone always hangs on to the end here and then we’ll give our thanks and whatnot. But this game, Kelly, is called “Beer or Beans,” okay?

Kelly: Okay.

Ryan: In this world of craft things, everyone’s brewing beer or making coffee these days. So it’s “Beer or Beans.” All you have to do is say which one it is. I'm going to give you a name of something, you tell me is that beer or beans.

Kelly: Oh, okay. Oh boy. I’m not going to do well on this.

Ryan: All right. I’m going to give you a hint.

Helee: That’s the spirit!

Ryan: This is not Chicago so don’t think Chicago when I say this, Green Line.

Kelly: Green Line? Beer.

Ryan: It’s not the Chicago one.

Kelly: Oh, oh. Oh, okay. Ah, beans.

Ryan: Yes! You did it! Is there a connection or no on where I might have gotten that?

Kelly: No. So you’re saying there is a Green Line like...

Helee: I’m sure, yeah.

Kelly: Well, I know there’s the L Train in Chicago, but I thought there was a beer. But maybe there’s just...

Ryan: There is Green Line beer so you’re correct.

Kelly: So that’s a trick question then if it’s really close.

Helee: Yeah, so she was right.

Kelly: That’s a total trick question.

Ryan: But I was trying to connect. I believe you went to the world’s first collegiate business school. And in 2003, there was what looks to be a popular café there called The Green Line Café.

Kelly: Oh!

Ryan: Since 2003, I figured that was a regular place where you’re doing all your studying.

Kelly: No. No, I don’t remember that.

Ryan: Doesn’t ring a bell?

Kelly: No.

Ryan: All right. Well, either way you win.

Kelly: I totally failed.

Ryan: We’ll give you the win on the Goose Island Green Line Beer...

Kelly: There we go!

Ryan: Which was their ode to sustainability.

Kelly: Ooohh! I actually didn’t know that.

Ryan: Yeah, they refused to put it in, now they do, but they refused to put it in cans. You could only get it in places. It was kind of like their ode to sustainability. So...

Kelly: How nice.

Helee: But then they sold out?

Kelly: Yeah.

Ryan: I think it was kind of like they made a thing about it and then they became a beer you know...

Kelly: And then it was too popular.

Helee: Greenwashing.

Ryan: Yeah, they greenwashed the crap out of it.

Helee: Yeah.

Ryan: I don’t know. Well, I think Helee’s going to take us out, but I'll say thank you very much, not only for being here and telling your story, but for running the story and doing the incredible work that you and Ventas and your team are doing. So thank you for that and thank you for sharing it with us today.

Helee: Yeah, thank you.

Kelly: I’m happy to be here.

Helee: You’re truly fighting the good fight, if there was a good fight. So we appreciate you for joining us today, Kelly, and of course, our thousands of loyal listeners. We'd be nothing without you. In our next show, we will elaborate on how D, E and I fit into your ESG strategy or as we kind of touched upon today, how it might need to be its own special snowflake separately. So thank you again for listening and if you want to continue the conversation between episodes, don’t forget to follow us on your favorite social media channel at #esgexperience. And with that, have a wonderful afternoon, evening, morning.

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