Real estate fund managers link sustainability and returns


A resounding 95% of real estate fund managers believe there is a relationship between environmental performance and financial returns, according to a survey of UK and European property funds. However, “the majority felt this [relationship] was difficult to quantify at the current time,” said Aviva Investors, sponsors of the survey along with the Environment Agency Pension Fund.

Richard Jones, managing director of UK real estate at Aviva Investors, said: “Buildings are responsible for almost 50% of the UK’s energy and carbon emissions, and with the introduction of increasingly stringent and ambitious targets for carbon reduction by governments in both the UK and Europe, it is essential that real estate companies do their part to actively manage and reduce carbon emissions.”

“The challenge is that despite this awareness, both actual performance and demonstrable commitment remain low, and few funds disclose, monitor or report environmental performance to investors,” added Jones.

The survey found only 41% of funds reported on carbon emissions. Climate change and environmental issues are “not an area any investor, especially those in for [the] long term, should overlook”, said Howard Pearce, head of the UK’s Environment Agency Pension Fund.

Pension fund trustees have a front-line role to play in “challenging their property managers to ensure environmental issues are considered in managing their portfolios”, said Jones.

A number of initiatives are underway, such as that by the property working group at the UN Environment Programme Finance Initiative, which seek to quantify the relationship between environmental performance and financial value.

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