When Mayor Antonio Villaraigosa delivered his final State of the City speech April 9, he touted L.A.’s embrace of sustainable development practices as one of his most profound achievements. He went on to say that L.A.’s “commitment to sustainability isn’t a passing fad.”

As mayor, he embraced environmental leadership and in many ways has made Los Angeles a model sustainable city. Throughout his eight-year tenure, Villaraigosa worked to reduce the city’s carbon emissions by nearly 30 percent, more than any other major U.S. city. He also worked to cut water use by 20 percent so that Los Angeles uses less water per capita than any other major U.S. city.

It is hard to dispute that over the last eight years, Los Angeles has also emerged as a national leader in the green building movement. According to Vision 2021, L.A.’s first comprehensive environmental plan, the square footage of municipal buildings in Los Angeles certified to meet Leadership in Energy and Environmental Design standards jumped from 9,000 in 2004 to almost 1.8 million in 2010. The city also requires all municipal projects to attain LEED Silver certification.

Fortunately, L.A.’s environmental leadership extends to the private sector. Trends are showing that the real estate sector – especially commercial real estate investors – is championing the environmental movement. Real estate investment trusts in particular deserve praise as they have been strong leaders in the green building movement.

REITs are often focused on lowering energy consumption that translates to higher efficiency and fewer operational costs. One example of progressive leadership is Douglas Emmett Inc., a Santa Monica-based public REIT. Over 90 percent of the company’s eligible office space is Energy Star certified by the Environmental Protection Agency with energy efficiency in the top 25 percent of buildings nationwide. The company has invested more than $30 million to reduce energy consumption, increase efficiency and diminish its carbon footprint.

More and more real estate investors are collecting and reporting energy consumption data, but some information is hard to find. According to the 2012 Global Real Estate Sustainability Benchmark Survey, an initiative backed by more than 40 of the world’s largest institutional real estate investors and investment managers, portfolio coverage of energy data is still limited as 52 percent of respondents had data for less than 10 percent of their portfolio. According to the survey, measuring tenant-obtained energy remains a challenge, with less than 8 percent of respondents collecting such information.

As real estate financiers increasingly look to improve energy and water efficiency they want assurances that their investment will equate to lower operating costs and increased asset value. This important information gathering is about to become much easier for real estate investors with the launch of the first green property index. A partnership among market research firm FTSE Group, National Association of Real Estate Investment Trusts and non-profit U.S. Green Building Council has resulted in the development of an index that will allow investors to see the sustainability ratings of companies that own large real estate investments.

This new index is a significant milestone and one that I believe should be well received by institutional investors. The green property indexes are based on the analysis of 13,126 LEED and 18,402 Energy Star projects that have received third-party certification based on their green achievements and performance. These projects represent 4.7 billion square feet of commercial real estate.

This new benchmark will enable real estate investors to make informed and strategic decisions about incorporating sustainability and building efficiency measures into their investments. Enabling real estate asset managers to fully evaluate the risk and reward profile of green property will strengthen the leadership of REITs in green building development.

As Villaraigosa recently said: “In the last eight years, we’ve racked up a whole set of big city environmental firsts.”

The new green property index is a major first for the real estate industry and will go a long way in furthering the green property market, especially in Los Angeles.

Michael Crooke, Ph.D., is an assistant professor of strategy at Pepperdine University’s Graziadio School of Business and Management.