Global Definitions Database

Access, learn and discover all terms related to the non-listed real estate sector.

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A

Absolute energy

The total amount of energy consumed by an entity and those deemed to be within its organisational boundaries. View full definition

B

Boundaries

The boundaries that determine the direct and indirect emissions associated with operations owned or controlled by the reporting company. This assessment allows a fund manager to establish which operations and sources cause direct and indirect emissions, and to decide which indirect emissions to include which are a result of its operations. See also the following definitions on financial control, operational control and equity share. View full definition

Building energy intensity

The amount of energy used per unit of an appropriate denominator (e.g. floor area, persons). View full definition

Building GHG intensity

The amount of carbon used per unit of an appropriate denominator (e.g. floor area, persons). View full definition

Building water intensity

The amount of water used per unit of an appropriate denominator (e.g. floor area, persons). View full definition

C

Carbon Disclosure Project

The Carbon Disclosure Project (CDP) works with shareholders and corporations to disclose the greenhouse gas emissions of major corporations. View full definition

Carbon trading

Carbon emissions trading (also known as cap and trade) is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. View full definition

Climate Risk

Climate risks result from the impacts of climate change and comprise 'Physical Risk' and 'Transition Risk'. Both components of climate risks might have significant impact on real estate assets and investments as real estate is a location-bound and a long-term investment. (In line with TCFD Definition) View full definition

Common parts

Areas which are shared with other occupants in multi-let buildings, including entrance areas, corridors, lifts, staircases, waste storage stores, communal kitchen or breakout facilities and any other parts within the asset and outside which are intended for the use of the occupiers of that asset. View full definition

Corporate Governance

Corporate governance is a cornerstone for the success of non-listed real estate Vehicles. Corporate governance defines how responsibility for key decisions is allocated, and impacts the structure, processes, policies and legal framework that determine how a Vehicle is managed and controlled. Corporate governance frameworks work alongside and are complementary to the external legal and regulatory environment at both international and national levels. Corporate governance includes principles, such as transparency, accountability, and acting in the best interest of investors and other stakeholders. View full definition

D

District heating and cooling

District heating and cooling is a system for distributing hot or cold steam and water generated in a centralised location for residential and commercial heating requirements such as space heating and water heating. The heat is often obtained from a cogeneration plant burning fossil fuels but increasingly biomass. Heat-only boiler stations, geothermal heating and central solar heating are also used. View full definition

Diversity, Equity and Inclusion (DEI)

Diversity is the presence of differences within an industry or an organisation. A diverse environment is likely to exist where individuals are able to think and act differently. Examples of diversity types may include race, gender, religion, sexual orientation, ethnicity, competency, nationality, socioeconomic status, language, physical or mental disability, age, or political perspective. Including populations that have been underrepresented in the broader society may also help create functional diversity. Equity and inclusion are not natural consequences of diversity and diverse representation does not automatically lead to diversity of thought. Equity requires acknowledgement that everyone has different needs, experiences, and opportunities. It promotes justice and impartiality within the procedures, processes, and resource distribution and requires treating diverse members of the team fairly. People are likely to feel included when an organisation invites them and are able to feel hear fully in the decision-making processes and development opportunities within an organization or group and consequently positively impact outcomes. (Reference: https://dei.extension.org/) View full definition

E

Environment, Social and Governance (ESG)

ESG refers to a set of factors related to environmental, social and governance issues. They may present both risks and opportunities for a particular investment, and can be used to define investment strategies, performance and risk metrics, and criteria for investment. Taking them into account in the investment process as well as in the ongoing operations, can help improve future financial performance. Environmental criteria may include climate change and carbon emissions, air and water pollution, biodiversity, deforestation, energy efficiency, waste management and water scarcity. Social criteria may include tenant satisfaction, gender and diversity, employee engagement, community relations, human rights and labour standards. Governance criteria may include board composition, audit committee structure, bribery and corruption, executive compensation, lobbying, political contributions and whistleblower schemes. The UN PRI defines ESG integration as “the explicit and systematic inclusion of ESG issues in investment analysis and investment decisions”. It is more than a decision about doing what is environmentally or socially responsible or morally right. Instead, it is about generation of long-term returns which is dependent on stable, well-functioning and well-governed social, environmental and economic systems. (Reference: https://www.unpri.org/fixed-income/what-is-esg-integration/3052.article) Ultimately, Integrating ESG into investment decision making contributes to better long term decisions for stakeholders through visibility of risk and structured management of material risks. View full definition

Equity-share

Used to define organisational boundaries for financial and sustainability (and especially GHG emissions) reporting. Equity share reflects the economic interest, which is the extent of rights a fund has to the risks and rewards flowing from an asset. Typically, the share of economic risks and rewards in an operation is aligned with the fund’s percentage ownership of that asset, and equity share will normally be the same as the ownership percentage. View full definition

F

Feed-in-Tariffs

A feed-in-tariff is a policy mechanism designed to encourage the adoption of renewable energy sources. View full definition

Financial control

Used to define organisational boundaries for financial and sustainability (and especially GHG emissions) reporting. Financial control relates to where the fund manager has the ability to direct the financial and operating policies of the asset with a view to gaining economic benefits from its activities. View full definition

Floor area

Codes for defining floor areas vary by location, building type and landlord-tenant arrangement, for example: common parts area, lettable/leasable area, internal area, usable area, occupied area, conditioned/treated area. View full definition

Fugitive emissions

Fugitive emissions are emissions of gases or vapours from pressurised equipment such as air conditioning due to leaks and various other unintended or irregular releases of gases. View full definition

G

Greenhouse gas (GHG) emissions

Greenhouse gases (sometimes abbreviated to GHG) are gas in the Earth’s atmosphere that is the fundamental cause of the greenhouse effect which can greatly affect the temperature of the Earth. GHGs are the six gases listed in the Kyoto Protocol: carbon dioxide (CO2); methane (CH4); nitrous oxide (N2O); hydrofluorocarbons (HFCs); perfluorocarbons (PFCs); and sulphur hexafluoride (SF6). Since the beginning of the Industrial Revolution, the burning of fossil fuels has substantially increased carbon dioxide (CO2) emissions into the atmosphere thereby contributing to the greenhouse gas effect. View full definition

H

HVAC

Heating, Ventilation, Air Conditioning View full definition

M

Mandatory disclosure requirements

Legally binding reporting requirements for listed or non-listed companies. In the EU, these requirements include the European Accounts Modernisation Directive, which is interpreted in different ways by different countries. View full definition

N

Net Zero Carbon Building

The IPCC defines net zero as that point when “anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period”.[1] With regards to real estate, “net zero carbon” is when the carbon emissions emitted as a result of all activities associated with the development, ownership and servicing of a building are zero or negative.[2] This definition encompasses the entire life cycle of a building, including construction, operation, refurbishment, and demolition, and includes emissions associated with whole-building energy use during the operational phase (operational carbon) as well as emissions embodied in building materials during the construction phase (embodied carbon). The net zero carbon balance has to be achieved on an annual basis. Consequently, these emissions include those attributable to the ownership of the real estate and from the activities of tenants in occupation. [1] IPCC Special Report: Global Warming of 1.5 degrees [2] BBP Net Zero Carbon Framework View full definition

O

Operational control

Used to define organisational boundaries for financial and sustainability (and especially GHG emissions) reporting. Operational control relates to where the fund manager or one of its subsidiaries has the full authority to introduce its operating policies and ability to influence operational decisions within directly managed and controlled areas. View full definition

P

Persons

The average number of persons used as a denominator of a building energy intensity indicator. For example: visits to shopping centres, workstations in offices, workers in industrial, residents in multifamily housing, guests in hotels. View full definition

Physical Risk

The physical, locational and integrated systems risks associated with the impact of climate change on real assets and investments. It can be event driven (acute; e.g. natural hazards, cyclones, hurricanes, or floods), or longer-term shifts in climate patterns (chronic; e.g. sea level rise or chronic heat waves). Physical risks may have financial implications for organisations, such as direct damage to assets and indirect impacts due to extreme temperature changes (e.g. increased demand of heating and/or cooling). (In line with TCFD Definition) View full definition

R

Renewable energy

Energy sources and specific clean energy technologies that emit fewer GHG emissions relative to other sources of energy that supply the electric grid. Includes solar photovoltaic panels, solar thermal energy, geothermal energy, landfill gas, low-impact hydropower and wind turbines. View full definition

S

Sustainability

Sustainability is a broad concept reflecting three dimensions; economic, social and environmental in a balanced and integrated manner. The United Nations defines sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” and identifies sustainable development in its three dimensions; economic, social and environmental (also known as profit, planet, people) (Reference: https://www.un.org/en). Integration of the three dimensions is key to achieving sustainable development and the capacity to create a sustainable future is balanced between productivity and respect to environment and to the society. View full definition

Sustainable Investment

Derived from sustainability definition, sustainable investing is broadly defined as the practice of using environment, social and governance (ESG) factors when making investment decisions. Sustainable investment is a desire to make responsible investment decisions, to carry out activities without depleting resources and having harmful impacts and to target positive impact on environment and society. Sustainable investments are deemed to be products that promote sustainability or achieve a sustainable objective. Sustainable investment is about the responsibility and potential the real estate industry holds to invest in a manner which is consistent with achieving medium to long term sustainability targets. These may include contribution towards climate targets, environmental goals or social impact outcomes. Sustainable and Responsible Investment is a long-term oriented investment approach, which integrates ESG factors in the research, analysis and selection process of securities within an investment portfolio. It combines fundamental analysis and engagement with an evaluation of ESG factors in order to better capture long term returns for investors and to benefit society by influencing the behaviour of companies. (The European forum for responsible investment – Eurosif) The SFDR defines sustainable investment as "an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices". Disclosure requirements apply under article 8 to products that promote also environmental or social characteristics, whereas disclosure requirements apply under article 9 to products that have sustainable investment as their objective. Article 8 SFDR (Published March 15, 2021 in the joint consultation paper: Taxonomy-related sustainability disclosures): “To develop additional disclosure rules on the pre-contractual information for Article 8 products using the environmental taxonomy (so-called “light green” products – i.e. that promote environmental characteristics), divided into technical standards for climate objectives and other environmental objectives”. Article 9 SFDR (Published March 15, 2021 in the joint consultation paper: Taxonomy-related sustainability disclosures): “To develop additional disclosure rules on the pre-contractual information for Article 9 products (so-called “dark green” products – i.e., that invest in an "economic activity that contributes to an environmental objective") making use of the environmental taxonomy, divided into technical standards for climate objectives and other environmental objectives”. View full definition

T

Total direct GHG emissions

Direct GHG emissions come from sources that are owned or controlled by the fund manager. All direct emission sources are classified as scope 1 under the GHG Protocol. View full definition

Total indirect GHG emissions

Indirect GHG emissions are those that are a result of the activities of the fund, but that occur at sources owned or controlled by another entity. Indirect emission sources are classified as either scope 2 or scope 3 under the GHG Protocol. View full definition

Transition Risk

The risks associated with the transition to a low carbon economy. The components of transition risks include regulatory and legal risk and broader commercial environment within which the asset/investment exists and operates, such as technology risk, market risk (under transactional risk) and corporate reputation risk. (In line with TCFD Definition) View full definition

W

Waste by disposal route

The method by which waste is treated or disposed, including composting, re-use, recycling, recovery, incineration, landfill, deep well injection, and on-site storage. View full definition