Research - APRIL 7, 2017

Investors embrace ESG principles

by Larry Gray

Institutional real estate investors across the globe are implementing environmental, social and governance (ESG) principles as part of their overall investment approach, as they embrace the credo of “doing well by doing good,” according to a recent report titled ESG means business, published by Institutional Real Estate, Inc. in cooperation with GRESB.

“Sustainable real estate can meet premiere tenant demands supporting their attraction and retention, while focusing on initiatives that decrease ongoing operational expenses,” says Deborah Ng, director – strategy and risk, head of responsible investing, with the Ontario Teachers’ Pension Plan. “The business case is very strong.”

Real estate has become an example of the benefits of ESG integration. The report also notes the clear relationship, for the real estate sector, between sustainable practices and outperformance, backed by a fairly long history of research and evidence. The application of sustainable principles drives NOI growth and property value. Such empirical evidence can help promote or support activity in other areas of a pension plan’s ESG process.

Anne Valentine Andrews, managing director with BlackRock, adds: “Whilst return on investment and long-term value remain key drivers, our business case for ESG investing is broad, and we ultimately believe that such factors help drive improved risk management, greater engagement with boards of directors and enhanced stakeholder relations.”

The 20-page special report covers the merits of adopting ESG principles, implementing a process, benchmarking, and future trends. To access a copy of the complete report, click here.

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