AREIM's Sustainability Report is an example of how ESG strategy has been implemented within the organisation. The report serves as an example of how to build a strategy and identify the objectives through a stakeholder engagement process and materiality assessment.
In July 2020, COIMA SGR received equity commitments of €400 million for the first close of the COIMA ESG City Impact Fund, the first urban regeneration ESG fund to be launched in Italy. With an open collaborative structure including co investments, partnership and financial leverage, the fund is targeting further equity raises up to €1 billion, to create a total investment capacity of over €4 billion.
The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. The global economy is facing an increased risk of stagnation, climate change is striking harder and more rapidly than expected, and fragmented cyberspace threatens the full potential of next-generation technologies — all while citizens worldwide protest political and economic conditions and voice concerns about systems that exacerbate inequality. The challenges before us demand immediate collective action, but fractures within the global community appear to only be widening. Stakeholders need to act quickly and with purpose within an unsettled global landscape.
After securing the first and largest sustainabilitylinked loan in Asia’s real estate sector from DBS Bank (DBS). The CapitaLand Group has signed new sustainability-linked loans with Credit Agricole Corporate & Investment Bank (CACIB), Natixis Bank and Société Générale to raise a total of S$600 million to date. CapitaLand has the flexibility to use these sustainability-linked loans for general corporate purposes.
This piece of research, commissioned by the PRI, looks at how ESG engagement creates value for both companies and investors, amid growing evidence that engagement by investors with companies on environmental, social and governance (ESG) issues can create shareholder value.
- Companies can enhance their communication with investors by closing the loop between internal ESG information systems, ESG engagement information and ESG reporting practices. This can be enabled by deploying dedicated information systems to manage investor relations.
- Learning opportunities can be extended by ‘acting rather than being acted upon’. Corporations can use engagement proactively and strategically to test ESG policies, identify more efficient ESG targets and KPIs, and build better ESG management systems.
- Political benefits can be maximised through enhanced internal coordination between corporate investor relations departments, sustainability departments, and board-level executives before meeting with external investors.
- Investors can enhance the communicative value of engagement by making their engagement objectives, expectations and desired form of success clear to companies upfront. Communicative value can also be increased through improved public transparency and disclosure – and hence social accountability – of how engagement processes are initiated, executed, managed, monitored and evaluated.
- Learning value can be advanced if investors strengthen the feedback loop between new ESG information and knowledge gained through engagement, and their main ESG integration databases and decision-making processes. Learning opportunities can be lost however, if engagement is outsourced without any standardised feedback process.
- Political benefits can be derived internally if ESG and financial analysts work more closely together on engagements. External political value can be gained through better collaboration with clients and their beneficiaries when developing or refining engagement policies, objectives and accountability mechanisms, as well as through balancing individual and collective forms of engagement to create and maintain long-term relationships with investee companies.
Prepared by PRI
Sustainable investing and environmental, social and governance (ESG) factors are increasingly becoming a priority for worldwide investors and a trend in what refers to investment strategies and best practices. Several studies developed over the last years, correlate the sustainable investing to superior returns and the investors are increasingly integrating ESG factors in the investment strategy, which positions Sonae Sierra as a reliable partner, and our owned and managed assets as best in class investments.
To help investors capitalize on opportunities in sustainable investing, this article developed by Mckinsey offers insights on how to integrate ESG factors with the investment process—from defining the objectives and approach for an investment strategy, through developing the tools and organizational resources required to manage investments, to managing performance and reporting outcomes to stakeholders. It is based on more than 100 interviews conducted with CEOs, chief investment officers, ESG leaders, investment managers, and others at a range of investment funds, about their experiences with sustainable investing: how they got started, what practices they follow, what challenges they encountered, how they resolved them, and how they have enhanced their sustainable investing approaches over time.
There are significant challenges in our world today, ranging from deep income-inequality to climate change. There are also advances in understanding and analysis that allow us to take a pragmatic approach to a critical but seemingly elusive question: how can we leverage capital markets to improve not just risk-adjusted returns, but our society as a whole? In other words, how can we create sustainable value?
To answer to this question, State Street conducted a global survey of almost 600 institutional investors who are, or are planning to implement Environmental, Social and Governance into their investment process. In this study, they also surveyed 750 individual investors, including both ESG and non ESG investors, and interviewed 25 executives. The goal is to provide a pragmatic approach to ESG integration that delivers on the principle of sustainable value creation through risk-adjusted returns.
With commercial real estate finance sector witnessing a dramatic shift in attitudes towards sustainability agenda, leading lenders are now exploring new opportunities that go well beyond risk management through sustainability initiatives that drive new business, strengthen customer relationships and improve the data they hold on the buildings in which they have an interest.
The report outlines the drivers and opportunities to lenders by showcasing best-practice examples, including:
- Improved borrower engagement, where ING Bank and ABN AMRO have used innovative technology as an engagement tool to help their borrowers identify energy improvement measures that will provide both a financial return and improved environmental performance;
- New lending products, where Lloyds Bank has launched its Green Lending Initiative;
Deep integration of sustainability practices, where Better Building Partnership (BBP) members Hermes Investment Management and TH Real Estate have taken learnings from their longstanding direct real estate investment funds and are applying this to the newer debt side of their business.
The report also issues a call to action urging real estate lenders to recognise the significant opportunities available, explore the commercial and reputational prizes to be won and collaborate to develop standards that will help products and services to become mainstream.
Over the last 10 years or so, the investment community has become increasingly alert to the sustainability qualities of the property portfolios they invest in.
Sustainability has been embraced for its potential to provide cost savings to customers and value to capital partners, as well as for its benefits to wider society. The case study describes Goodman’s response to this trend and how they have continually improved their GRESB score resulting in a steady outperformance of the peers.
Goodman has developed a long-term approach to sustainability with a strategy focusing on four main areas: sustainable development, asset management, corporate performance, and people and community. In response to the lack of a specific external sustainability tool for industrial property Goodman has developed a unique assessment tool – the Goodman Sustainability Snapshot – to measure the energy efficiency features of its properties. The tool gauges the intrinsic quality of just the building. By measuring the quality of assets in this way, Goodman is better able to advise on investment and timing for feature upgrades, including those related to sustainability.
Prepared by Goodman and INREV
ntegrating sustainability into investor communications is genuinely difficult and requires internal collaboration.
Too few companies get clear sustainability performance messages out to their investors and one of the main barriers is the internal dynamic between Sustainability and Investor Relations (IR) departments.
The report makes the case for stronger internal engagement to enable proactive, integrated communications to investors. It starts by outlining five key gaps related with language, time frame, expertise, relationships and resources. It then moves on to examine each gap in detail, exploring the reasons, the pain points and solutions that have been proven to help close the gaps. The report also includes case studies in which companies have successfully applied the solutions to build stronger internal collaboration on investor communications.
In Closing the Sustainability-Investor Relations Gap, the report outlines five key gaps where Investor Relations and Sustainability teams feel misalignment:
The report makes detailed suggestion how to overcome such misalignment and presents practical steps organisations can take to improve the link between the investor relations and sustainability teams.
Prepared by SustainAbility
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.
Summarised by Barbara Maltha-Koppelman, ESG Committee member
40 Holborn Viaduct is a prime example of how using technology can help to enhance occupier experience, drive energy savings and optimise maintenance – all in line with our goal of developing a sustainable portfolio where the customer comes first. The building has already made a 12% reduction in energy use and is on track to achieve a 20% saving over a four year period. Health, wellbeing and productivity has also improved in the building with better regulation of temperature. Nuveen is now in the process of rolling out similar solutions to its offices and retail centres across Europe.
Prepared by Nuveen
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.
This document is the final report for the DG Energy study ‘Preparation of common guidelines and recommendations to improve the consistency of the implementation of certain aspects of Article 8 and Annex VI of the Energy Efficiency Directive’.
In a constantly evolvingworld, even a traditional sector such as real estate changes and innovates. In the view of KPMG, the future of real estate is directly linked with innovation. The startupsof today are the potential industry leaders of tomorrow. Incumbent firms that not only want to survive, but also thrive, should constantly follow developments and trends of these innovations and startupsas there are numerous lessons to be learned. KPMG gives a comprehensive overview examples and insights into the innovations and startups that might shape the future real estate landscape. Startus have been categorized by several innovation topics based on current market trends, including:
- digitizing processes
- flexible workspace
- healthy workplace
- innovative constructions
- internet of things
- new ways of funding
- platforms to connect
- sustainable innovations
- virtual Reality & 3D mapping
The purpose of the document is to provide insight into the current innovative developments in the real estate market. The information provided for each startup includes key information such as name, country of origin, founding year, key words and website details. Not all startupsare ‘live’ or in full production yet, leaving room for innovations that might disrupt the sector at a later stage. Next to the general classification of startups into nine innovation topics key words are included to describe each startup using specific and recognizable characteristics. Besides key information the publication provides a short summary of the company and the respective product.
222 Exhibition Street is a 29-storey office building built in 1989. When LaSalle Asia Venture Trust purchased the property in 2015, LaSalle saw an opportunity to improve the building, in particular its sustainability performance to achieve better building efficiency overall.
LaSalle took a long-term, asset lifecycle approach to sustainability at this property, believing that exceptional outcomes can be realized without millions of dollars in capital expenditure.
In 2014, Invesco Real Estate acquired 321 Exhibition Street, a 30,200 square meter office building in Melbourne, Australia.
The property is a 20-level office/retail building constructed in 1990. It was fully refurbished and upgraded with modern specifications in 2011.
Upon acquisition, improvement works have been carried out to upgrade the building’s National Australian Built Environment Rating System (NABERS) Energy rating from 5.5 to 6 Stars, where 6 stars represents market leading performance. The time period to achieve this current rating took about 9 to 12 months and costs around AUD100,000.
Galaxis is located in the heart of one-north district, a 200-hectare development designed to host a cluster of world-class research facilities and business park space, and target end-users engaged in Biomedical Sciences, Infocomm Technology, Media, Physical Sciences and Engineering.
The project’s objective is to develop a sustainable business park building that would achieve a higher BCA Green Mark Platinum standard. Key features include extensive greenery, recycling bins at common areas, high efficiency multi-tiered chiller plant and air-conditioning system, high eco-friendly interior fittings and materials, effective ETTV, as well as intelligent lighting control.
Galaxis was designed to achieve more than 30% energy consumption saving against the Singapore Building Control (Environmental Sustainability) Regulation 2008. This translates to an estimated energy and water consumption savings of S$0.9 million per annum.
In September 2016 Real Estate of Credit Suisse Asset Management acquired a new building in the city center of Amsterdam.
The office building is situated in an excellent location fronting a river near the Amsterdam city center. Just four years old, the high-quality property mirrors the neighboring industrial charm by offering large outdoor areas and floor-to-ceiling windows. The entrance hall provides communal lunch facilities and a lounge area on the ground floor entirely fit out in the style of the building.
The building underlies a profound analysis of its energy efficiency performance. Energy Star identifies energy efficient buildings by both defining reference of energy use (comparable buildings) and benchmarking its performance (US building population). Real Estate collaborates with Siemens in order to achieve its ambitious target of a top quartile score performance (+75) within 3 years.
CUBE 2020 is a European energy consumption contest for buildings, run annually by the Français pour la Performance du Bâtimen (IFPEB) in France. The contest awards winners based on their ability to reduce energy consumption in buildings over a one-year period through quick win solutions and improved management and operations processes.
This case study features four projects and contest participants located throughout France. The following four case studies – taken from prize winners of the 2015-16 competition – illustrate the dramatic improvements in building efficiency that can be possible over a relatively short space of time.
• The Carré Suffren, Paris, owned by Foncière Des Régions (FDR)
• Le Leoni, Montigny Le Bretonneux, owned by Perial Asset Management and let to Leoni Wiring Systems
• Rennes Colombiers, owned by Poste Immo
• Quai Vendeuvre, Caen, owned by Poste Immo
Garden Square is the oasis in the Jing’an district, Shanghai. Completed in 2013, with a 10,000 sqm garden full of greenery and paths that allows busy people to feel at ease, Garden Square aims to be one of the most environmental friendly and unique commercial buildings in Shanghai.
In 2016, it has undergone further improvements and achieved LEED platinum certification. It has achieved the highest score within the LEED scale for office in China and thereby it has set the new standard for office buildings in China.
In June 2013 Cromwell Property Group acquired a portfolio of 6 assets from the New South Wales Government (GPNSW) with a lease back provision, including a Green Lease that required the parties to work towards achieving a number of prescribed sustainability objectives.
The objective of this case study is to identify the process that Cromwell followed in partnership with stakeholders to develop and implement the EMPs under the GPNSW Green Lease.
The aim of this guide is to provide asset owners with a range of investment strategies and solutions to address the risks and opportunities associated with climate change. The guide is targeted at asset owners and more specifically at trustee boards and investment committees, but also contains insights for asset managers. The guide concludes that there is a need for these actions to be more widely integrated into mainstream investment processes to ensure that investment portfolios are more resilient to the financial implications of climate change. This requires, in part, the development and adoption of new industry norms, tools and expertise that embed climate change into core investment processes, which this Climate Change Investment Solutions guide aims to contribute to.
The guide presents a framework for considering climate change investment solutions, by:
presenting actions to integrate climate change into investment beliefs and investment policies that are actionable and transparent,
discussing actions for measuring and managing the risks and opportunities of climate change, both within the existing asset allocation structure and through evolving the asset mix over time, mitigating investment actions to reduce the carbon intensity of existing assets, along with opportunities to invest in low carbon, clean energy and energy efficient assets.
discussing actions to reduce the vulnerability of existing assets to the physical impacts of climate change, as well as building exposure to adaptation opportunities.
The guide also affirms that corporate and policy engagement are important complementary strategies which can address climate change risks across portfolios and facilitate new investment opportunities.
Prepared by the Global Investor Coalition on Climate Change
The ambition to create the most sustainable redeveloped shopping centre in the Netherlands has paid off.
The case study of Heuvel Eindhoven shows how the implementation of a sustainable strategy can turn an outdated asset into one of the top-rated shopping centres in the Netherlands with a double Outstanding score.
This project has been approached first and foremost from the perspective of sustainability and provides details of technical and operational improvements.
This resulted in a BREEAM-NL In-Use Outstanding score for the asset and an Outstanding score for the operations. The score of 90.82% is the highest score in the field of operations in the Netherlands, unique for a 25 year old shopping centre.
Prepared by CBRE and CBRE Global Investors
BRIGHT is an innovative project developed by Sonae Sierra in 2014, which uses a theoretical model to produce optimal energy consumption figures for each of its shopping centres.
Le Terrazze in Italy provides a case in point. After applying the Bright analysis, it was found that the shopping centre was consuming more energy in practice than it should in theory.
Through a series of management measures, and the introduction of free cooling, Le Terrazze was able to identify potential savings of €163,000 – equivalent to 27% of the shopping centre’s annual electricity bill.
Prepared by Sonae Sierra and INREV
ESR Kunshan Distribution Centre, a 2-storey ramp-up logistics facility with leasable area of 61,851 sqm, achieved LEED Gold certification with its innovative design and construction, which optimises energy performance and minimises portable water consumption.
The vision was to construct a logistics facility that would meet the high environmental standards of current and future occupiers, have a reduced environmental impact, provide savings in operating costs and provide a template for future ESR projects in China.
In 2010, Deutsche Asset Management’s (Deutsche AM) real estate business acquired G-Square, a 6,800 square meter office building in Tokyo.
Upon acquisition, G-Square underwent improvements to upgrade the building in order to qualify and apply for the CASBEE (Comprehensive Assessment System for Built Environment Efficiency).
Similar to BREEAM in the U.K. or LEED in the U.S., CASBEE is a tool for assessing and rating the environmental performance of buildings and built environment in Japan. BEE (Building Environment Efficiency), using Q and L as the two assessment categories, is the core concept of CASBEE. The assessment results for buildings can be ranked on a diagram as class C (poor), class B-, class B+, class A, and class S (excellent), in order of increasing BEE value.
Earning a CASBEE (Comprehensive Assessment System for Built Environment Efficiency) “A” rank is an important differentiator among a tenant base in the Shibuya submarket. This will attract younger, creative technology companies that focus more on modern, healthy workplaces and resource efficiency.
Taking advantage of the wholesale conversion scheme by the Hong Kong Government, Pamfleet acquired an industrial building at 164 Wai Yip Street in Kwun Tong and re- positioned it as a quality office property. The building went through the process of BEAM plus certification, a green building certificate issued in Hong Kong.
Sydney’s Masters Home Improvement store at Chullora Business Park, New South Wales, Australia, is a unique and outstanding example of the adaptive reuse process. Goodman has redeveloped a former vacant and redundant warehouse into a new, modern retail facility, whilst retaining elements of the original building.
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
ParkLake, located in Bucharest, Romania, is a multi-award winning retail destination developed by Sonae Sierra. It offers a truly unique retail experience that harnesses the beauty of nature by bringing the outside environment inside, giving it a 'park-like' feel. Having attracted a variety of diverse and high quality tenants, ParkLake has become a popular destination not only for people residing in Bucharest, but also those living across Romania.
Sonae Sierra applied its rigorous Safety, Health and Environment Development Standards (SHEDS) throughout the development project, from planning and design through to deliver. The SHEDS encompass a set of holistic requirements to ensure that a shopping centre will operate with minimum safety and health risk to customers, tenants and suppliers whilst limiting its environmental impact and ensuring the most efficient management of utilities consumption and waste production. By embedding the SHEDS throughout the development, and providing a Safety, Health and Environment Management System (SHEMS) during construction phase, Sonae Sierra has created a future-fit retail destination that fulfils our commitment to creating shared value for our investors, society and the environment. These endeavours were externally recognized with BREEAM Excellent environmental performance rating, as well as the construction works certification according to ISO 14001 and OHSAS 18001 standards.
Prepared by Sonae Sierra
Chateau Mount Tai is a high-quality neo-Chinese residential development located in Tai’an city at the foot of Mount Tai. White Peak (“WP”), a Swedish fund manager and developer, acquired the land in 2014 and developed it with a vision to create one of the most iconic ecocommunity in this famous and historically significant city.
The project received exceptional sales result with transaction price of 30% higher than market competitors. Chateau Mount Tai has become an iconic development in Tai’an bringing new living standard to the local market. The success of Chateau Mount Tai was followed with a second investment from White Peak in Tai’an.
Are you or have you recently worked on a project which has specifically considered governance as part of an investment selection or monitoring process? Perhaps your organisation has implemented a governance policy related to Diversity & Inclusion? We are looking for Governance related case studies to populate this section of the Global #ESG library.
For more information, please reach out to email@example.com firstname.lastname@example.org
Sustainable real-estate investments are often characterised by various sustainability benchmarks and certificates, which set varying requirements. How do these efforts result in a more sustainable organisation? To what extent can the organisation’s sustainability performance be assessed by the market?
A case study prepared by Altera Vastgoed
Altera Vastgoed ESG Library Case Study ESG Benchmarks
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.
Nuveen’s Private Markets Impact Investing Report highlights its approach to impact investing and how they built their impact strategy over the last decade. Together with the real estate impact investing case studies, the report illustrates how to create a theory of change for impact evaluation and an example of building a responsible exit strategy.
Theory of Change
Nuveen created a robust Theory of Change connecting its investments to its overarching goal, “to create or preserve safe, affordable, and sustainable housing for low-income individuals and families”. To develop its ToC, Nuveen identified the challenges it seeks to address and the specific types of impact it intends to achieve. Through this process, Nuveen’s team recognized that its impact investment strategy for affordable housing encompasses several sub-strategies creating impact across multiple dimensions beyond access to affordable housing, such as access to social services related to financial inclusion, health and education, and building sustainability.
Nuveen’s U.S. affordable housing strategy aims to increase access to sustainable, safe and affordable housing for underserved and low-income communities.
In 2018, Nuveen invested in Shore Hill Senior Community, an affordable senior housing community located in the Bay Ridge area of Brooklyn, NY. The complex includes studio and one-bedroom rental units and tenants pay no more than 30% of their income towards rent.
As affordability restrictions were due to expire in a few years, there was the threat that a traditional investor could have bought the asset to profit from a sizeable rental uplift when exchanging tenants and modernising housing units. To counter this, Nuveen extended the affordability restrictions, which kept rent costs 45% below market rate for the tenants.
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.”
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.
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.