Global ESG Case Studies

In 2021, CRREM extended its remit to include Asia & North America. This Case Study explains the aims of the pilot, the approach taken, key findings and lessons learned. This Case Study provides some updates on the next steps for the CRREM pathways and its implementation across Asia & North America.

As part of the building owner’s broader Sustainability agenda, Twenty8 Freshwater successfully expanded and upgraded end-of-trip (EOT) facilities by converting some car parking spaces to support bicycle commuting for tenants rather than driving a car. The addition of EOT facilities has increased the lifestyle amenities of this building, strengthened tenant relationships by promoting health and wellbeing activities and therefore improved the owner’s ability to renew tenant leases and maintain high occupancy rates. 

A report released in 2019 by Urban Land Institute and Heitman details the potential risks and implications of climate change on the real estate sector. Furthermore, the report makes a call to investors and investment managers to come into action and work towards better solutions in the future, for which the report presents a number of thinking paths.

Firstly, the report aims to give property investors a better understanding of climate risk and its real estate investment implications. As such, types of climate risk and their potential impact on real estate are explained.

Secondly, the research addresses the state of current practice for assessing and mitigating climate risk in real estate as well as highlighting best practices across the industry. From the examples it becomes clear that, nowadays, climate risk insurance is used as the main protection for asset value.

Finally, it is acknowledged that climate risk insurance alone is insufficient to mitigate the risk of devaluation in the future. As such, investors and investment managers need to find effective solutions. The report touches upon a number of potential solutions:

• Mapping physical risk for current portfolios and potential acquisitions;
• Incorporating climate risk into due diligence and other investment decision-making processes;
• Incorporating additional physical adaptation and mitigation measures for assets at risk;
• Exploring a variety of strategies to mitigate risk, including portfolio diversification and investing directly in the mitigation measures for specific assets; and,
• Engaging with policymakers on city-level resilience strategies and supporting the investment by cities in mitigating the risk of all assets under their jurisdiction.

Grosvenor Asia Pacific’s Hong Kong and Shanghai office refurbishments have both been awarded the International WELL building Institute’s™ (IWBI™) Gold Level Certification for the WELL Building Standard™ (WELL™). Both the Hong Kong and Shanghai offices were also awarded LEED Gold and Platinum, respectively.

With the release of the Financial Stability Board’s Final Recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and increasing expectations from investors and Australian regulatory bodies, there has been a growing impetus for companies to assess and report the risks posed by climate change.

Located in the heart of the major commercial precinct of North Ryde Sydney, the Sydney-based asset marks Australia’s first Holiday Inn Express hotel and Pro-invest Group’s first operational hotel. Holiday Inn Express Sydney Macquarie Park offers a smart choice for value conscious business and leisure travellers, with the hotel’s business model strongly ingrained in operating ‘smart’ – offering guests everything they need and nothing they don’t. This philosophy extends to the hotel’s sustainability design, considerations for furniture, fixtures and equipment, and operation.

New construction is a vital part of a balanced real estate strategy, but in many cases, there are equally compelling opportunities in improving the operations and management of existing assets. More than 75% of existing commercial buildings will continue to operate as is over the next 15 years. Thus, it is important tackling sustainability through improved operational efficiency rather than focusing solely in newly constructed properties. Many changes can be done at lower or no cost, with significant improvements to both operational efficiency and a property’s profitability, such as 2-degree Fahrenheit temperature adjustment or installing VFD pumps for water features. 

Furthermore, sustainability takes on even more important dimension when considering improved management and governance. By establishing a formalized sustainability program, property owners can then be better positioned to underwrite the skills and capabilities of the property managers needed to operate each property. Benchmarking properties will establish references which would make identification of sustainability success more apparent. Regular and open communication between all parties from asset manager to engineering team is also a key factor. 

Finally, it can be stated, that better operated buildings are more profitable. Next to lower operational costs there is evidence of garnering rental premiums, faster absorption as well es lower cap rates. Moreover, studies have shown that individuals working in green buildings are more comfortable and have fewer illness symptoms because of improved indoor air quality as well as natural lighting.

Prepared by Principal Real Estate Investors

Holiday Inn Express Melbourne Southbank is being developed by Pro-invest Group, one of the largest hotel investment platforms in Australasia. Together with the guidance of Clean Energy Finance Corporation (CEFC) - a specialist clean energy financier, investing with commercial rigour to increase the flow of finance into renewable energy, energy efficiency and low emissions technologies - will incorporate a range of initiatives into the Melbourne Southbank hotel, boosting the initial targeted 4.5-Star NABERS Energy rating to 5-Stars.

Southside, located in central Stockholm is a redevelopment of an office building into a state-of-the-art educational building that will focus on the wellbeing of its occupants, demonstrating strong social value credentials.

Prepared by EQT

Code, located in Paris CBD was a major redevelopment from a car park into a Grade A office with a strong focus on sustainability certifications and occupier health and wellbeing. Several sustainability and health and wellbeing certifications were achieved upon completion.

Prepared by EQT

Allee Center, located in Leipzig (Germany) is a daily needs shopping destination and community hub in the district. Indoor and outdoor greenery, water features and biophilic elements enhance the visitor experience. Active engagement with community groups and charities as well as holding community events have ensured strong links with the local community.

Prepared by EQT

In November 2019, Patron Capital announced its intention to establish the Women in Safe Homes (WISH) Fund, believed to be the world’s first gender-lens property fund, alongside Resonance and Big Society Capital. The fund will be a solution to the lack of affordable, safe and secure homes for women who are experiencing homelessness, have been involved with the criminal justice system, are survivors of domestic abuse or have other complex needs.

A lack of affordable housing is a global issue and not one exclusively seen in developing markets, with acute issues also common in property hotspots in Western Europe and North America. Whilst there is no single definition of affordable housing, generally the term captures a wide spectrum of housing options, varying from social rent, to intermediate rent, to first-time buyer schemes aimed at getting people on the property ladder.

Prepared by BMO Global Asset Management

The United Nations’ Sustainable Development Goals (SDGs) are a powerful organizational and communications tool for institutional investors and asset managers as they are universally accepted across multiple facets of society. But the SDGs are vulnerable to misuse, misrepresentation and dilution. Investors need to ensure that when a product is labelled as “aligned with the SDGs” that it moves beyond just alignment and makes a real contribution to positive social and environmental outcomes. In this article we explain how we have approached this challenge with an investment in affordable housing, one of the main sectors within social infrastructure.

Prepared by Franklin Templeton