AEW: Improved climate for impact investing

Despite a lack of clarity on environmental, social and governance (ESG) metrics such as building-level certification, recent initiatives — from labels for green financial products to specific real estate fund-benchmarks — will allow sustainable investing to scale up as investors shift from awareness to proactive impact investing, according to AEW.

Investors’ increasing awareness of ESG issues is shifting to climate change risks, as evidenced by more than $33 trillion in assets under management managed by Climate Action 100+ signatories.

In addition, investors are shifting from awareness to pro-active impact investing. This has already fueled strong growth in sustainable investment products – such as green bonds and unlisted green funds.

So far, however, real estate constitutes a relatively small fraction of ESG investment products, which are so far dominated by bonds, equities and infrastructure.

Investors lack clarity on definitions and metrics r