Logan, Utah-based Rent Dynamics is dedicated to improving the lives of those working within Multifamily, but also the residents of these properties. The graphic shows an enlightened young woman with ambition to take on the word. Her entrata into the world screams confidence as she is ready to take on challenges and face them with the found confidence provided to her from her leasing office. The text reads "ESG in Multifamily."

ESG Compliance in Multifamily

What is ESG? 

You’ve probably heard ESG come up in conversations recently. If you are a multifamily owner, operator, investor, or a part of a multifamily corporate leadership team, ESG compliance is (or should be) top of mind for you.

Let’s break it down – ESG stands for Environmental, Social, and Governance, and is a set of standards for companies to operate in a socially and environmentally responsible manner. Investors and federal regulators look at ESG criteria when screening their investments for compliance.

In 2022 and beyond, ESG initiatives are not just a “nice to have” within company policies and procedures, they are becoming a requirement for investment capital, and encourage companies to operate in a way that is both beneficial to business and beneficial for the greater good. 

Pandemic or no pandemic, everyone wins when ESG initiatives are implemented and prioritized.

Environmental criteria that is assessed in ESG includes the company’s impact on the environment relating to carbon emissions, waste management, and impact on climate change. 

These criteria are particularly important for businesses in the commodities industries, but multifamily businesses can certainly play a role in having a reduced environmental impact. The following changes can make a big difference towards reducing the carbon footprint across your portfolio:

  • Replace toilets, faucets, and shower heads with low-flow fixtures, and introducing landscaping with options that lead to more efficient water usage
  • More efficient light fixtures and solar 
  • Smart home HVAC methods for efficient temperature control

Social criteria looks at diversity and inclusion at all levels, regardless of race, ethnicity, age, gender, religion, sexual orientation, gender identity, gender expression, disability, economic status and other diverse backgrounds (including economic inclusion), data protection and community involvement. 

Leaving a lasting social impact is beneficial to your business, but also to your employees, and to the residents you serve. “Society is demanding that companies, both public and private, serve a social purpose,” Larry Fink, CEO of BlackRock, wrote back in 2018. Some examples of socially responsible initiatives include:

  • Offering financial services, such as RentPlus, to your residents to promote economic inclusion 
  • Supporting organizations that make a difference through donations and/or encouraging employee volunteering
  • Affordable community options in your portfolio mix
  • Employee diversity and inclusion training and policies 

Governance criteria is related to a company’s diversity of leadership, executive pay, board governance, corporate ethics, IP protection, and the rights of shareholders. Examples of responsible corporate governance include:

  • Leadership programs
  • Board and executive diversity and inclusion
  • Risk management
  • Fair tax strategy

Why is ESG important

ESG investing is ramping up in demand, and is not showing any signs of slowing down any time soon. If anything, the COVID-19 pandemic has heightened conversations around ESG and the importance of social responsibility.

Isela Rosales (she/her), Managing Director, Head of ESG & Sustainability at Bridge Investment Group, says,A focus on ESG is absolutely critical to capital raising in this day and age. Those who don’t prioritize ESG programs, initiatives, and goals will not be able to keep up with investor demands and expectations.”

Companies investing in ESG initiatives are “ahead of the pack” and will set the example for other companies to follow suit towards sustainable and responsible business practices, as noted in a 2021 Harvard Law Report. Investors should see this as an opportunity to aid in the promotion of more socially responsible behaviors and business practices around the world.

A recent Financial Times article reports that PricewaterhouseCoopers (PwC, the second largest professional services network, and one of the Big Four accounting firms) is making a $12 billion investment into ESG, adding 100,000 employees dedicated to ESG within their audit and consulting group. This is a strong signal that ESG and the social impact of businesses will become a core aspect that investors should be looking for within their investments.

How Rent Dynamics (and RentPlus) can help with ESG Compliance

Rent Dynamics can help you achieve Social compliance by offering your residents RentPlus, a service that promotes financial freedom and economic inclusion. RentPlus is a socially responsible initiative that is easy to implement, and risk-free for businesses. 

  1. Rent Reporting: Rent reporting is the act of submitting on-time rental and utility payments to credit bureaus so that residents are able to establish, build, and maintain credit just by making their monthly payments as they normally would. (Learn more about how rent reporting helps residents achieve their financial goals, and how this is a new requirement starting July 1st, 2021, for multifamily portfolios with affordable communities in CA with the passing of SB-1157.)
  1. Financial Resources: In addition to rent reporting, RentPlus includes world-class financial resources such as budgeting tools, so residents are able to set goals and track their expenses, as well as a custom financial education program offered through FinStrong. 
  1. Identity protection: RentPlus includes a $1 million fraud protection policy to keep your residents’ identity safe and secure. 

The Power of Social Responsibility

Many renters across the country are in the “unscorable” or “poor” credit categories. When purchases like a car or a home would normally feel impossibly out of reach, a product like RentPlus can easily put residents on their path towards financial freedom, and give them a tangible benefit that will provide them (and their families) lasting, meaningful value. 

Organizations like the Credit Builders Alliance (CBA) report that credit reporting “helps millions of individuals with subprime credit or no credit” participate in the mainstream financial system by building credit. The CBA reports that 1 in 3 U.S. adults are credit challenged (no score, or score below 600), and rent reporting is an easy, accessible way for them to increase their credit score without taking on additional debt. To learn more, you can listen to the CBA speak to this in a webinar with Rent Dynamics, Conservice, and the CBA. 

Rental payments account for an average of 30% of a person’s income. Ensuring that these payments are counted as credit tradelines is a simple step that can be taken to incorporate a socially responsible initiative throughout your portfolio. 

There are a number of ways to offer this financial amenity – whether you would like to offer it to residents (with the option to opt-out of it), offering it to residents to opt-in, provide it to your residents with no charge to them, or extend it as resident-funded offering where they pay a small monthly fee – in any case, the residents are the end beneficiaries of this service, and companies feel good about making a positive impact on their residents lives and providing a service that is a competitive differentiator. 

It’s not just about being more attractive investment and being good for your business (though that is a guaranteed result), but socially responsible initiatives promote a greater collective good and set an example for other companies to follow. 

Get in touch with us today at sales@rentdynamics.com to learn more about how everyone wins with RentPlus.

Big News! Rent Dynamics has been acquired by Entrata!