Institutional investors, backed by leading sustainable real estate scientists and advisors, have joined forces in the Global Real Estate Engagement Network (GREEN) to accelerate sustainability in the real estate sector and thus reduce their financial and non-financial climate risks. At the IPE’s Real Estate conference in Copenhagen, the Global Real Estate Engagement Network (GREEN) was formally launched. Other investors are now invited to join as well.
Real estate sector responsible for 30-40 percent of worldwide carbon emissions
The real estate sector is responsible for approximately 30 – 40 % of worldwide energy consumption and greenhouse gas emissions. Therefore, environmental regulations are becoming increasingly stringent, with net-zero by 2050 legislation becoming an increasingly plausible future requirement for tenants and investors alike. Coupled with physical risks, such as floods, fires, and other natural hazards, investors in real estate run significant unmanaged and unrewarded financial risk and contribute to negative impact. Scientific research however shows that a careful implementation of sustainability factors contributes to the risk/return ratio of real estate.
Significant potential for successful engagement and real-world impact
Research shows that the sector is not yet on track to reach the goals of the Paris agreement, but compared to other sectors it is (relatively) easier to reduce carbon emissions in real estate without major impact on business models or financials. While these factors contribute to the likelihood of successful investor engagement, the sector remains largely under-engaged. As science shows that engagement is an effective way to instigate change, in terms of both risk return characteristics and real-world impact, the founders of the network recognised that it is important that investors collaborate and collectively have more impact.
GREEN focuses on both listed and non-listed real estate funds and companies. It engages on financially material topics in the real estate sector, as defined by the Sustainable Accounting Standards Board: These include energy & carbon emission reduction along with physical climate risk management & adaptation.
GREEN’s ambitions are aligned with the investor expectations of the Institutional Investors Group on Climate Change (IIGCC), a € 39 trillion investor coalition. The ultimate goal is that real estate funds/companies and the sector effectively reduce their carbon emissions and manage progress against science-based targets, such as the Carbon Risk Real Estate Monitor (CRREM) pathways. Thereby ultimately allowing investors to monitor and work towards managing their portfolio footprint in line with the science-based Paris-aligned pathways themselves. This will ultimately lead to better risk return characteristics of real estate portfolios and contribute to a future proof planet.
The founding members of GREEN
GREEN is a network of Asset Owners and – Managers with founding members PF Detailhandel (retail industry), Pf Achmea, Pf Philips, Pf Nedlloyd, Pf TNO, and Pf Schilders (painters) representing 70 billion euros’, consisting of the savings of 1.5 million people. GREEN makes use of the services of advisory firms Finance Ideas and Almazara and cooperates closely with asset managers which also engage with the sector including Vert Asset Management. GREEN is grateful to Laudes Foundation for the financial support to help further develop the initiative. Want to join the network or know more please visit our website (https://green-engagement.org/)
Bedrijfstakpensioenfonds Detailhandel: Together with other Institutional investors we join forces in the Global Real Estate Engagement Network (GREEN) to accelerate sustainability in the real estate sector and thus reduce our financial risk and contribute to the Paris-agreement.
Wiebe Hofstra (Pensioenfonds Achmea): Real estate is responsible for over 30% of greenhouse gas emissions. The GREEN network gives us the power of a coalition to push for more sustainability.
Anita Joosten (Pensioenfonds Phillips): We joined this initiative to further develop our active ownership activities, to contribute to adequate financial climate risk management by the real estate funds we invest in and reduce the negative impact of our investments.
Frans Dooren (Nedlloyd Pensioenfonds): Our Real Estate managers are incorporating ESG in their investment processes. However, by joining GREEN together with other pension funds, we encourage them to take even bigger steps in reaching the Paris Agreement Goals.