by Scott Sowers

Environmental, social and governance factors hold greater sway in the multifamily housing industry.

The rise of environmental, social and governance (ESG) factors has accelerated in the worlds of finance, politics and the multifamily housing industry. It has accumulated new designations and labels along the way including green finance, social impact investing and mission-driven finance.    

The roots of the concept stretch back to the 1980s as academia became interested in “social capital,” the notion that added value could be attached to a company that was doing good deeds. The concept appealed to investors looking for places where they could earn a decent return while also helping humanity.    

The U.S. Government Sponsored Enterprises officially invested in ESG in 2016 when Freddie Mac Multifamily launched its Green Advantage Program. The program has proved successful and now touts its advantage over non-green programs by claiming almost $28 million in reported annual savings, which equates to roughly $48,900 per loan, and $191 per unit on projects that qualify for the program.

Read Scott Sowers’ article in UNITS.