This is a case study that's a part of the 2021 REIT Industry ESG Report, an annual report detailing the REIT industry's environmental, social, and governance (ESG) performance details in the publicly traded U.S. REIT industry. Featured case studies showcase REIT leadership and ESG innovation from a variety of sectors and serve as a practical tool for stakeholders to assess the scale and impact of the REIT industry's ESG commitments and initiatives.
Physicians Realty Trust's (DOC) ESG program aligns with the company's mission "to help medical providers, developers, and shareholders realize better health care, better communities, and better returns."
The organization takes a practical approach to environmental stewardship in which being "green" through capital initiatives equates to a "green" cash return via cost savings over time—a strategy that is reinforced through ambitious goal-setting, rigorous board oversight, and executive accountability.
As part of its ESG strategy, DOC chose to pursue IREM Certified Sustainable Property (CSP) certifications and use enrollment in IREM's Volume Program as a mechanism to establish policies and programs that apply to all properties and ultimately improve overall portfolio performance.
The IREM certification process includes a defined scorecard of specific requirements properties are required to meet, spanning energy usage, waste management, water management, recycling, health, and other key criteria.
"Sustainability is an integral part of our business. From our committed board to our dedicated leadership and throughout our organization, every department and every team member shares our commitment to ensuring ESG principles inform our decision-making and guide our growth as a company. This commitment to ESG is engrained in our culture, visible in our goals and performance metrics, and a hallmark of our success as a health care REIT."
Ryan Yetzer, Senior Manager—Construction and Sustainability
In 2019, eight DOC properties received IREM certification. To show the organization's commitment to scale this program and improve sustainable practices across DOC's entire portfolio, it established an ambitious and transparent goal to achieve 30 new property certifications over the next three years—and tied this goal directly to executive compensation.
Beyond the certification process, DOC was able to cross-reference its utility data with properties under green leases in 2020. This process allowed the organization to identify its highest energy users and target energy savings opportunities, such as lighting retrofits. It also enabled DOC to bill the project costs back to its tenants for a long-term return on investment. This creative approach allowed DOC to maximize its energy reductions while driving mutually beneficial cost savings for DOC and tenants without significantly affecting its capital budget.
DOC perceives its alignment to the IREM certification guidelines—combined with other energy management practices—to be a "win-win" for its properties and stakeholders, providing brighter, cleaner, and healthier environments for patient care.
Physicians Realty Trust (DOC) is a publicly traded real estate investment trust focused on medical office buildings (MOBs), including outpatient facilities, surgery centers, and cancer centers.