A Conversation on ESG: Actions Beyond the Acronym
Cousins Properties has played an active role in building healthy communities for decades. You can see the imprint of their long term investment in the bricks and stones that define the skylines and through their consistent care for the people who call their communities home.
Founded in 1958 by Tom Cousins, few realize how many thousands of people have benefited from Cousins long-held corporate philosophy “doing what’s right when others aren’t looking.” This simple phrase guides company-wide strategic investments as well as the daily culture of this now multi-billion-dollar public company and preeminent commercial property company across the sunbelt.
In a recent conversation with President and CEO, Colin Connolly, we discussed the practical application of a corporate philosophy, their recent effort to pay their civic rent here in Atlanta and how concepts like ESG are merely the latest label for an on-going commitment to good governance and positive impacts in the lives of people and the planet.
“Do what is right when others aren’t looking.” How has this simple corporate philosophy guided decision-making for you personally and for the company?
Early in my career at Cousins, a review of a massive closing document revealed that our counterpart had made a significant mistake. It was a multi-million dollar error on their part and we alerted our counterpart to it. The Cousins culture is to “do what is right when others aren’t looking” and we always want people to know they can trust us.
Fast-forward to 2020 when the pandemic was just hitting, this corporate philosophy once again had serious implications for the business. We realized that our customers were going to feel a tremendous amount of uncertainty and anxiety about the future. As small business owners, they had no idea when they were going to be able to open again. So, we went to all of our customers and told them not to worry about rent for now. We would figure it out along the way but that they did not need to worry about that for now.
We also knew that our people were feeling the same uncertainty and anxiety because there were going to be layoffs all over the world. As an executive team, and with the Board, we made the decision at the start of the pandemic that there would be no layoffs and no changes in compensation during that time. It was the right thing to do at the time, but we also gained the trust of both our customers and our employees that continues to be a business benefit today. As I’ve been talking to my peers about the “Great Resignation,” I’ve been able to say that we really have not experienced it. When our people get offers, they remember our loyalty.
What do you make of the recent ESG controversies?
You’re right, ESG has absolutely become a kind of a political football, which is certainly not an area where we want to spend a lot of time. I look at ESG very differently. Since 1958, we have recognized the importance of a commitment to thoughtful and responsible operations, with a sustainable model that prioritizes corporate social responsibility and creates meaningful value for all stakeholders.
We strive to have the right mechanisms in place, to operate in an appropriate manner and be measured on our environment impact, social involvement, and governance. Rather than one lump sum, I think of them as three very different and very important priorities.
Environment. As a company participating in the built environment, which is incredibly impactful on long term environmental sustainability, it’s obviously incredibly important for Cousins to be a good steward and do everything we can to not only minimize our impact, but also ensure the cities and neighborhoods in which we operate are cleaner and healthier because of our involvement. We look at the broader Cousins family, not only our kids and grandkids, and want to have a role in creating an environment in which they all prosper.
Social. Cousins has been focused on social issues for decades and we’ll touch on that later. When it comes to issues of diversity in particular, we consider diversity a strength for the company and believe it is a competitive advantage. Ultimately, we want the Cousins company to reflect our customers.
Historically the commercial real estate industry was predominately white, but this is not the demographic of our customers. We learned long ago that part of gaining the trust and respect of someone whose business you want to earn includes having a company where they can see themselves reflected in the company itself. We’ve been working on changing the commercial real estate business for a long time, working to create a welcoming environment, attracting talent from a broader, wider pool and incentivizing people from diverse backgrounds who may not have shown an interest in commercial real estate.
Governance. I think corporate governance goes beyond specific bylaws and SEC requirements. The hallmark of good Governance is a well-informed board. Transparency plays a major role in not only sharing what we are doing as a company but why we are doing it. We foster an environment where people with broad perspectives on important issues feel comfortable engaging in debate and dialogue.
This way of operating proved itself out in 2020. So many people were scared, they froze. Because of our relationship with our board, we were able to move rapidly to sell 20% of our lowest quality assets and reinvest the capital into higher quality assets. Being able to make that strategic move at a unique, stressful point in time has really set us up well for the future.
Again, it goes back to the beyond-compliance aspect of good governance that included having a board who had confidence that they were informed, understood the situation and could be supportive, allowed the team to make a big move in an uncertain time and do it with speed. As a public company, that kind of agility is not something you hear about often.
Let’s talk about Cousins role in developing East Lake Community and how it influences the company’s current community engagement strategy?
As I mentioned, Cousins has been focused on social issues for decades. Our founder Tom Cousins’ vision and involvement in the East Lake neighborhood is a great example of how Cousins intentionally partners in creating vibrant communities where those who might not have had the same chances at life could see an ecosystem around them that fosters success. It’s a model for investing not only in the success of individual communities, but in Atlanta as a whole.
To be clear the community development work that built the East Lake Community has always been done out of the East Lake Foundation, which is operated by the Cousins family. Mr. Cousins saw a neighborhood that at the time was plagued by violence, drugs, and lack of opportunity. But my sense is that two things caught his attention 1) he understood that a cradle-to-grave ecosystem could make a difference in people’s lives, and he envisioned creating an environment that would give the children of East Lake real opportunity and 2) he understood that vibrant neighborhoods support and attract talent in Atlanta. And a vibrant Atlanta with greater opportunity and vibrant neighborhoods was good business ultimately for Cousins Properties. And I think that vision is part of the reason why Atlanta is now a top destination for corporate relocation.
The East Lake model of a purpose-built community has been a huge success. Success in creating a mixed income approach where middle- and higher-income levels live in neighborhoods alongside people from historically lower income levels. Today, there are fifteen communities around the country that have employed the East Lake “purpose-built communities” model. In fact, you’re seeing it again in Atlanta with the West Side Future Fund that is leveraging lessons learned from the East Lake effort to accomplish similar goals on the West Side of Atlanta.
Serving our community has always been important to us at Cousins. We strive to make an impact not only on the skyline, but also have a positive impact in our communities. For instance, we continue the Cousins commitment to the East Lake Community by hosting an annual internship program with the East Lake Drew Charter School. Year-over-year, we are in awe of the caliber of students coming out of the school. It’s a fulfillment of Tom Cousin’s vision for giving children from an area that was once the poorest in the city real opportunity.
More broadly, every year we ask our teams across the sunbelt what’s important to them in their market and then we come together as a company, across our six different markets, to serve together in what we call our “CuzWeCare Week.” We call it a CuzWeCare Week because we spend the entire week not only giving money (which is important) but also spending time in the community at different organizations. It’s been rewarding for all of us.
CuzWeCare Week has an impact on the community, but it also builds camaraderie amongst our team members. We missed that kind of thing during COVID. In a recent survey, I asked the teams what we needed to do differently, and they responded that they wanted to do more community service, which is pretty amazing.
You talk about this idea of paying “civic rent.” Could give us a recent example?
We’ve always talked about our obligation as a company to pay our civic rent. In addition to community service, it’s important to Cousins and our shareholders that we are willing and available to help.
For instance, recently there was an effort underway to try to break up the city of Atlanta and create a new city of Buckhead. Our corporate headquarters is in Buckhead, and we are largest property taxpayers in the proposed new city. The root of the problem in that moment was crime. Our perspective was that the “right thing to do” was to focus on the root problem. So, we donated space and helped raise private funds to build a neighborhood district police station in the middle of Buckhead that gave the Atlanta Police Department an expanded presence. It gave officers the chance to build relationships and create an environment where people feel safer.
Building relationships was a fundamental part of our efforts. We worked collaboratively with Mayor Dickens, the Atlanta Police Department, and the Buckhead Coalition, and the precinct has helped build the confidence of residents that we are headed in the right direction under the Mayor’s leadership. Honestly, it was just another example of how Cousins operates knowing that what’s good for business is doing the right thing.
One last thing, as a commercial property company do you think this dramatic shift in office space use is a permanent reality or temporary reaction?
We do not think that the reactions to COVID are the long term perspective on being together in an office setting. I think the positive take way from all of this is going to be flexibility. The type of flexibility that used to be reserved for only the more senior leadership of a company is now more broadly shared and I think that’s great. Everybody is generally back in the office at Cousins, but there’s a new level of understanding that things can come up in life that require a little more flexibility.
In my opinion, people are always going to want to be together, to collaborate, to build. Before COVID, people generally wanted to come together, to work together, to build a culture, collaborate and be creative. Today’s knowledge worker ultimately wants to do that in an environment that’s welcoming, exciting, dynamic. In early 2020, while many people focused on the notion that we were all going to be remote forever, our perspective was what we call a flight-to-quality. Rather than spending time focused on solving the work-from-home concern, we focused on selling about $1.2 billion of our oldest vintage commodity properties and reinvesting that $1.2 billion into new, exciting properties in some of the best locations in the best neighborhoods across the sunbelt.
We decided we needed to pivot away from what we call old and tall and focus on new and small, neighborhoods like Atlanta Belt Line and Ponce City Market. We invested in properties where people want to spend their day. Everything has a more welcoming feel inside with more collaborative space. Equally important is everything outside. Are you in an exciting neighborhood with restaurant options, bars, health clubs and energy on the street? We stayed focused and invested in properties and in neighborhoods that have energy that attracts people to leave their house to go spend the day and that has served us well.