Investing in Retail Sustainability

Jeffrey S. Edison, Chairman and CEO of Phillips Edison & Company (PECO), knows sustainability will play a large role in the operation, development, design and longevity of today’s shopping centers. With that in mind, PECO has developed a number of programs and initiatives that target the three R’s: recycle, reduce, reuse.

What are PECO’s sustainability goals?

Edison: Our company is committed to becoming an industry leader in energy efficiency, alternative power sources, sustainable design, recycling and other initiatives that will help Phillips Edison preserve and protect the environment. We want to make a difference in the communities where our grocery-anchored shopping centers are located.

We are always looking for ways to reduce our environmental impact by relying more on sustainable resources, such as the installation of solar panels and solar car ports; reducing water consumption with the use of low-flow fixtures and smart irrigation controls; and reducing energy consumption through LED lighting retrofits both internally and externally at our centers.

What are some of the challenges associated with retail sustainability?

Edison: The challenge in retail sustainability is to find socially responsible solutions that are scalable and cost effective. We have found, in this regard, that simplicity is key. Small changes — when scaled across the 340-plus shopping centers PECO owns and manages — can significantly reduce our environmental impact and result in cost savings. For example, we upgraded 1,889 tons of HVAC units at 203 centers in 2018, thereby reducing energy consumption and generating more than $342,000 in energy cost savings.

What are some of the most impactful green initiatives retailers and shopping center owners can implement?

Edison: Reduction in energy consumption is a significant area of opportunity for retailers and landlords. The PECO team has tackled this in a variety of ways, however, our best results have been through lighting retrofits, HVAC upgrades and white roof installations. Since 2015, PECO has retrofitted parking lot lights with LED bulbs, conserving energy and generating cost savings of more than $1 million. Since 2010, Phillips Edison has installed or replaced more than 8,600 tons of HVAC with higher-efficiency units, reducing energy consumption by more than 13 million kWh annually and saving more than $1.5 million in energy costs annually. To date, we have installed 93 million square feet of white reflective roofing, the energy-saving equivalent of removing around 20,000 cars from the road or planting more than 76,000 acres of trees.

The key to success for any sustainability initiative is being locally smart. A team must truly understand the social, economic and environmental needs of the neighborhoods and communities around each and every property in their portfolios. The insights gained from being locally smart allow retail owners to tailor sustainability efforts to meet those needs effectively and efficiently, implementing programs that benefit the community, the retailers, the shoppers and, ultimately, investors.

How do effective green technologies play a role in PECO’s sustainability efforts?

Edison: Technology is making it easier than ever to promote the principles of reduce, re-use and recycle. “Smart” irrigation controls are reducing water use in landscape irrigation systems. Updated T-5 and LED lighting is reducing energy used to light our parking lots, while advances in solar technology are making the generation and use of solar energy more efficient. Consumer demand also plays a role. As the electric vehicle market has continued to expand, Phillips Edison has installed 41 EV Charging Stations in our shopping centers, with more scheduled for 2019.

How has the growing Millennial demographic, which values sustainability, eco-friendliness and brands that stand for something, influenced PECO’s sustainability efforts?

Edison: Increasingly, our stakeholders — from our investors to our tenants and customers — are aligning their capital with their values. Shoppers want to know their neighborhood shopping center is an environmentally and socially responsible community citizen, and they want to buy goods that reflect those same values. We’re working to meet that demand in a multitude of ways. For example, some of the fastest growing product categories are local, fresh, natural and organics. Customers want healthier options and are increasingly choosing businesses that will help them live out their values. Investors are demanding a similar value proposition.

— Interview by Nellie Day. This post was published as part of Shopping Center Business’ Retail Insight series.

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