Boston Properties (BXP), a real estate investment trust (REIT), is the largest publicly traded developer, owner, and manager of premier workplaces in the United States. The company, through its subsidiaries, owns and develops office, residential, and retail properties throughout the country. Its properties are located in Boston, Los Angeles, New York, San Francisco, and Washington, DC. As of December 31, 2022, BXP owned or had joint venture interests in 194 commercial properties which includes 173 office properties, 14 retail properties, six residential properties and one hotel, totaling 54.1 million net rentable square feet, including six properties under construction totaling 3.2 million net rentable square feet.
With a strong commitment to environmental, social, and governance (ESG) issues, the company has set ambitious goals to reduce its carbon footprint and promote sustainable practices within its operations. In 2021, BXP announced several milestones in its ESG journey, including a commitment to develop onsite renewable energy systems, off site renewable energy procurement, and voluntarily transition to 100% renewable electricity. This commitment is part of the company's broader sustainability strategy, which has earned it recognition as one of America's Most Responsible Companies by Newsweek magazine.
According to Owen Thomas, Chairman and CEO of BXP “Our steadfast commitment to ESG allows [us] to be a more purposeful company. Focusing on ESG is both the right and smart thing for us to do,” he said recently. “The important role of real estate companies in addressing the climate crisis and the opportunities for BXP to provide leadership have never been more evident.”
BXP’s sustainability leadership in real estate is noted by a number of progressive steps as it seeks to to achieve its goals. Particularly, with regard to its Scope 2 emissions there’s been a lot of focus on the procurement of renewable electricity. In 2018, the company signed an agreement to purchase specific-source renewable energy equal to the expected electricity needs of its actively managed Massachusetts portfolio. This procurement of 650,000 MWh of environmental attributes over three years is expected to reduce the company's carbon footprint by more than 55,000 metric tons of CO2 equivalent annually and lower the carbon intensity of its Massachusetts operations by approximately 78% compared to a 2008 base year.
Ben Myers, BXP’s Vice President of Sustainability recently emphasized that "we believe it is possible to advance sustainability without sacrifice. From realizing cost efficiencies, to reaping environmental benefits, to incorporating added building features for stakeholders, we find sustainability initiatives can be a ‘win-win' for all parties—without requiring drastic trade-offs or behavior change. ESG is not just a theory, it is about getting things done and making good happen—and Boston Properties is so determined to show the intentionality behind our sustainability actions that we have chosen to set some of the most ambitious targets possible." Those progressive steps continued in 2023 after BXP signed a new power purchase agreement taking 21MWh of solar power from a new project to be constructed in Delta, Texas. This cements BXP’s "efforts to advance meaningful decarbonization at BXP have been centered on energy efficiency, electrification, and renewable energy procurement," said Doug Linde, President, at BXP.
He added that "by contracting for renewable power that is additional, we are making a positive impact by supporting the growth of renewable energy generation and broader transition to a clean energy future. We are pleased to grow our relationship with Enel as a partner in our sustainability journey." The result of these efforts is that “BXP is a more purposeful company because of our commitment to ESG and our focus on measurable impact,” added Thomas when discussing the release of the company's latest ESG report. “Our position as leaders underlies our efforts to ensure that we deliver exceptional performance in the impact areas most important to our stakeholders, both internally and externally.” Myers noted further that “the ambition of our organization and perseverance of our team drives the execution of business activities aligned with stakeholder economic, environmental, and social priorities.” In the end at BXP “we’re pleased with our progress to date and recognize the important role of the real estate industry in addressing climate change, human health, and social justice. Together with our stakeholders, we will continue to pursue positive performance outcomes and initiatives aligned with our sustainability strategy centered on climate action, resilience, and social good.”
However, there may be risks associated with sourcing 100% renewable electricity, such as fluctuations in renewable energy generation and potential changes in regulations or market conditions. One way BXP could improve its progress is by including Renewable Energy Certificates (RECs) with additionality in its strategy. RECs with additionality can have several positive impacts, such as:
Reducing reliance on unbundled RECs and increasing investment in longer-term renewable energy projects.
Accelerating the transition of the grid to renewable energy.
Mitigating costs over time associated with continued renewable energy procurement using RECs without additionality.
Enhancing the company's ability to make a more impactful marketing claim for sustainability purposes.
Providing scale to emission reduction strategies needed to cover increased consumption of MWh of electricity as the business continues to grow.
By incorporating RECs with additionality into its renewable electricity procurement strategy, Boston Properties can further strengthen its commitment to sustainability and continue to lead the way in environmentally responsible real estate development.