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Finance, Tech Giants Using Their Wallets To Drive DEI Improvements Across CRE


Institutional investors in commercial real estate have billions of reasons why brokers, fund managers, developers and other industry groups should listen when they demand advancement in the sector's diversity, equity and inclusion initiatives.

Amazon's London Kemp, Google's Marcella Barrière and CohnReznick's Risa Lavine onstage at Bisnow's first-ever Rise Initiative Honoree event.

“I think at the end of the day, money talks,” Christina Scarlato, the principal portfolio manager for real assets at the World Bank Pension Fund, said at Bisnow's inaugural Rise Initiative event Thursday, which recognized commercial real estate companies making real progress with their DEI initiatives. “I think it's our responsibility as investors to continue to push our managers to do more.”

Commercial real estate has historically struggled to hire and retain diverse talent at all levels. While the industry has made some progress toward DEI in recent years, the financial sector is striding ahead of brokers, developers and other areas — and is pushing other players to follow suit, tying DEI goals closely to financial decisions.

Following the murder of George Floyd in 2020, many real estate companies publicly acknowledged that they could do more to level the playing field for people of color in the industry, and pledged to change. Bisnow's 2020 analysis of the leadership ranks of the largest companies in the industry showed that nearly 9 in 10 C-suite executives were White.

When Bisnow released an updated analysis of the industry a year later, it showed private development firms and brokerages' leadership looked largely the same. Publicly traded companies and financial firms, however, faced new requirements from federal government agencies to appoint people of color, female-identifying and LGBTQ+ individuals to their boards. 

Bisnow looked at 23 banks, insurance companies and private equity firms in November, and found that 22.5% of companies’ publicly disclosed board seats were filled by ethnically or racially diverse individuals — 20% higher than in November 2020. C-suites and executive teams also had more people of color, increasing from 63 to 70 over the course of the year. REIT board members of color nearly doubled between 2020 and 2021.

That change is now beginning to trickle down, with financial institutions expecting the commercial real estate operations they fund to apply the same DEI principles.

Tying money to DEI goals is key, Google Real Estate Project Executive Marcella Barrière said on a panel at the Rise event. When sending out requests for proposals, Barrière examines firms’ answers for information about how companies are prioritizing DEI internally — something she believes all financial companies can replicate to elevate DEI goals from aspirations to reality.

“When the responses come in and we are leveling, one of the questions that has to be included is: What is your DEI policy for permanent employees? What is your permanent policy on developing a diverse permanent staff?” she said. “That's what I've done in order to drive change.”

Invesco's Beth Zayicek, Savills' Mitchell Rudin, Artemis' Debbie Harmon, World Bank Pension Fund's Christina Scarlato, Ivanhoé Cambridge's Nathalie Palladitcheff and BentallGreenOak's Andrew Yoon.

In recent history, senior executives across CRE came from similar backgrounds — many knew each other from college sports teams, Artemis Real Estate Partners co-founder and CEO Debbie Harmon said. 

“It’s starting at entry level and widening the funnel,” she said. “Talent is evenly dispersed, it's just not evenly developed. So it's our responsibility to bring in the talent and develop the talent.”

Financial companies shouldn’t be afraid to use capital to enforce DEI goals, Ivanhoé Cambridge CEO Nathalie Palladitcheff said. Her firm manages the real estate investments of Canadian pension fund Caisse de dépôt et placement du Québec, which has more than $50B in property holdings.

“If you can't change the culture just by saying it or showing it, you have to do what we usually understand very well in this industry: It's about money,” Palladitcheff said. “When it could have some impacts on your remuneration, then it happens.”

The panelists said numbers alone are not an indicator of success. Paying attention to what roles people of color, minorities and women occupy within organizations is also critical to DEI initiatives, Scarlato said.

“For us, the biggest challenge at the bank is that most of the women sit in the administrative roles and not in senior roles,” she said.

Without a path forward at the company, mentorship and responsibility, any staff member — including people of color, minorities and female-identifying employees — is likely to feel undervalued, Scarlato said. 

Amazon Director of Global Real Estate and Facilities London Kemp echoed Scarlato’s statements later onstage, warning that a lack of retention policies would undermine any company’s attempt to meet its DEI goals.

“It is about making sure that you are providing opportunities for people to promote at the highest levels of the organization,” Kemp said. “If you're an organization that has band levels, do not hire someone into a midlevel band with the expectation that they will be able to promote. It is unfair, and it is not a way to retain top talent.”

A new piece of Amazon's DEI initiatives is specifically targeting commercial real estate. The Amazon Housing Equity Fund is providing a grant of more than $5M to Capital Impact Partners for its Housing Equity Accelerator Fellowship, the company announced Friday. The initiative sponsors 15 diverse developers in the D.C. metro area, providing mentorship, training and potential access to funding to promising individuals currently establishing themselves in development — a sector typically difficult to break into for people of color, minorities and women. 

Speakers at the Rise event acknowledged that while the finance sector of CRE has progressed, it needs to continue critically examining its own definition of diversity and expanding its ranks.

“Where we know that we struggle is diversity of thought," BentallGreenOak Managing Partner and Chief Operating Officer Andrew Yoon said. “We all have very similar backgrounds. We all have very similar work experiences, we tend to look at investments very similar. And what we realized is we need to create avenues for opportunities for different people — regardless of visible minorities or women — people who have different backgrounds. At the end of the day, real estate is a global industry. And it needs to be able to attract global talent.”