How do you incorporate sustainability and social impact factors into your pro forma analysis?

1 Define your goals and metrics

The first step is to define your goals and metrics for sustainability and social impact. What are the specific outcomes and benefits that you want to achieve with your project? How will you measure and report them? For example, you might want to reduce your carbon footprint, improve energy efficiency, enhance biodiversity, create affordable housing, support local businesses, or promote social inclusion. You can use frameworks such as LEED, BREEAM, WELL, or GRESB to guide you in setting and evaluating your goals and metrics.

2 Estimate your costs and revenues

The next step is to estimate your costs and revenues associated with sustainability and social impact factors. How will they affect your development budget, operating expenses, and income streams? For example, you might incur higher upfront costs for green building materials, renewable energy sources, or community engagement activities, but you might also save on utility bills, maintenance fees, or taxes. You might also generate higher revenues from premium rents, lower vacancy rates, or tax credits. You can use market research, benchmarking, or case studies to estimate your costs and revenues.

3 Analyze your scenarios and risks

The third step is to analyze your scenarios and risks related to sustainability and social impact factors. How will they influence your cash flow, return on investment, and break-even point? How sensitive are your projections to changes in market conditions, regulations, or stakeholder expectations? For example, you might face higher demand or lower competition for sustainable and socially responsible projects, but you might also face stricter standards or higher scrutiny from regulators, lenders, or tenants. You can use sensitivity analysis, scenario analysis, or Monte Carlo simulation to analyze your scenarios and risks.

4 Communicate your value proposition

The final step is to communicate your value proposition based on sustainability and social impact factors. How will you convey your competitive advantage, brand identity, and stakeholder alignment to your target audience? How will you demonstrate your credibility, transparency, and accountability for your results? For example, you might use marketing materials, certification labels, or impact reports to showcase your project's features, benefits, and impacts. You might also use storytelling, testimonials, or awards to highlight your project's stories, successes, and recognition.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?