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Whilst not conceived as an Impact Strategy, the Carbon Neutral Real Estate (CNRE) Fund is a good example of intentionality aspect of Impact Investment, as the investment thesis is focused on addressing a tangible environmental need, and investment decision making is rooted in meeting this goal in alignment with the  financial objectives of the Fund. CNRE is a joint venture between Columbia Threadneedle Investments, the Carbon Trust and Stanhope, developed specifically to reduce the carbon emissions of the built environment. Columbia Threadneedle explain the strategy here:

“UK office buildings contribute around a fifth of total carbon emissions in the UK. New build, carbon-compliant real estate developments are low in comparison to the total supply, and these buildings can be typically very carbon inefficient to redevelop. The Government's 2050 Net-Zero target, means emissions from existing buildings will need to be reduced by 100%, which realistically can only be achieved via refurbishment of existing buildings, and their ongoing efficient operation. As an institutional manager of UK real estate we have the ability - and the responsibility - to help drive positive outcomes for society. In 2010 we took a pioneering step towards carbon reduction in the built environment by teaming up with Stanhope, one of the UK’s leading commercial developers, and the Carbon Trust, a world-leading adviser to businesses, governments and the public sector on carbon reduction. This partnership between industry experts adds value throughout the entire lifecycle of each office building, from acquisition through refurbishment, leasing and occupation, to ensure carbon emissions are minimised.”

Prepared by Low Carbon Workplace 

Climate change is affecting the mindset of investors globally in a multitude of ways. A term originally defined for companies in the coal and oil industry ‘stranded asset risk’, is increasingly part of the broader investment vocabulary and linked to climate change. As a result of increasing awareness but also the Paris Climate Agreement, more and more real estate investors are taking climate-related financial risks into account. From a real estate perspective, properties are unlikely to become truly stranded as could happen with an oil well, but they do run the risk of becoming obsolete if they are no longer capable of generating rental income. In our view climate change related factors could cause property obsolescence through two partially related channels. The first is due to a lack of adherence to local regulation which forbids landlords to lease space and as such generate income.

Prepared by PGGM

SWELL is a new flagship property to be delivered in 2020 with quadruple certification: WELL “Silver”, BREEAM “Very Good,” HQE “Excellent” and Effinergie. The energy efficient 201,285 square foot project, initiated in 2018, includes 27,000 square feet of biophilic garden terraces with outstanding views of the Seine River.

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 AXA Impact Fund - Climate and Biodiversity, launched in July 2019, was developed in response to increasing concerns about how climate change threatens biodiversity.

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

As impact performance becomes a powerful differentiator and a meaningful new dimension of overall performance for all types of investing, understanding the current trends in the impact investing market becomes crucial to take part in this new type of race within the investment marketplace. 

With its latest Impact Measurement and Management (IMM) Survey  published in January 2020, the GIIN  provides a comprehensive overview of the current impact investing market .

The report take a look into how investors describe their objectives, motivations and strategies for understanding and improving their impact, and the processes for holding themselves and their investees accountable, along with the other elements of their IMM practices. 

Findings of the report reflect the growing sophistication and maturation of IMM, the integration of IMM into investment processes and the rising focus on impact results. 

Key Findings

1. While impact investors pursue diverse impact objectives, they universally agree on the importance of measuring and managing impact results. 

• The most commonly targeted impact themes or sectors include employment (71%), agriculture (63%), and financial services (62%).

2. Across the market, IMM practices have grown increasingly sophisticated as investors shift from building consensus for IMM to strengthening its integration within investment processes. 

• IMM responsibilities are allocated to investment teams (68%), to staff dedicated to IMM (50%), and to senior leadership (39%). 
• IMM is integrated into the investment process itself. Impact data is considered across each stage; most commonly during due diligence (81%), investment screening (77%), and identifying the social or environmental needs to address through investment (75%).

3. As the market grows and matures, impact investors increasingly demand insight into impact performance. 

• Key challenges of impact investing are cited as follows; a lack of transparency on impact performance (89%), the inability to compare impact results with market performance (84%), collecting quality data (92%), aggregating, analysing, or interpreting data (74%),
• Investors demanding resources; impact benchmarks (92%), pooled impact data (86%), case studies on best practices (86%), tools to strengthen impact screening (83%).

4. Impact measurement and management incurs some costs, but it also generates financial benefits.

• On average, impact investors spend an estimated 12% of their organisation’s total budget on IMM-related activities,
• Respondents use impact data directly related to an organisations’ financial strength, such as communicating results to stakeholders (89%) and assessing risk factors (45%), to strengthening IMM processes and improving impact results by identifying or refining metrics (69%), setting or revising impact goals (65%), and strengthening data-collection processes (62%). 

Summarised by Bahar Yay Celik, Analyst at INREV’s Professional Standards Team

The United Nations Environment Programme (UNEP) FI  Property Working Group and the Positive Impact Initiative  published a framework in 2018 in collaboration with RICS, UN PRI, and members of the Global Investor Coalition on Climate Change. The framework was initiated to develop an impact-based approach in real estate finance and management. 

The Positive Impact Real Estate Investment Framework offers a process tool for institutions to identify impact and corresponding investment opportunities, measure ex-ante and ex-post impact, and ultimately re-orient institutional capacities and capital for intentional delivery of outcomes that support the SDGs .

The framework provides a practical and action-oriented guidance for the real estate industry to accelerate the impact paradigm for the delivery of the SDGs. 

The Positive Impact Principles

• Four main principles are defined for positive impact within the paper; Definition, Frameworks, Transparency, Assessment
• The Positive Impact Principles require a holistic approach; appraisal of both positive and negative impacts, consideration of all three dimensions, i.e., economy, society and environment, and transparency and assessment of methodologies and impact achieved as a core requirement.

The Investment Objectives

• To operationalise the Positive Impact Principles, an action-oriented framework based on four Investment Objectives has been developed; Clarity of Impact, Market and Sustainable Returns, Measurement of Impact, Additional Finance and/or Impact Flows,
• The Investment objectives offer a way for institutions to frame decision-making for more immediate-term investment activities and longer-term aspirations that derive from a holistic and impact based approach,
• For each of the four Investment Objectives, the Framework provides a number of ‘leading questions’ and recommended actions to be considered by investment practitioners

Investors’ Motivation

• Positive Impact applies to all investment activities within institutions.
• Institutions will be subject to learning curves in building skills and capacity internally for an impact-based approach and for improved alignment between asset owners, asset managers, and others within the investment value chain.
• The framework listed the actions investors can take as they orient themselves on the adoption curve for applying an impact-based approach

Applying the Impact-Based Real Estate Investment Framework

• The paper provides a table showing an application of the framework for a preliminary assessment of property sector impacts and indicators, and how investment decisions can respond to those,
• Twenty two impact categories are included into the table with an aim of capturing all realms of sustainable development,
• Investment themes relevant to real estate investors are aligned to the impact categories,
• Suggested indicators are provided, both for delivered impact measurement and potentially for assessing additional finance and / or impact flows

Summarised by Bahar Yay Celik, Analyst at INREV’s Professional Standards Team

This starter guide provides a quick summary of how to manage environmental, social and governance (ESG) issues for direct and indirect real estate investors. It outlines options for how to include ESG issues throughout the investment process and in the relationship between asset owner and investment manager.

Prepared by PRI