Advancing the ESG agenda

The INREV Sustainability Committee has been in place since 2014, but is now really gearing up its activities as Environmental Social and Governance (ESG) considerations take centre stage in our industry. Here’s a taste of what it is doing.

HIGHLIGHTING THE S IN ESG
It’s well recognised that environmental factors impact the real estate investment process, but social and governance issues are coming to be seen as equally important. The Sustainability Committee is placing more emphasis on exploring, promoting and sharing knowledge on the social factors relevant to non-listed real estate, while governance issues are already included in the work of our Corporate Governance Committee. The Sustainability Committee members are currently investigating ways of analysing the financial, perceptual and physical benefits from integrating health, wellbeing and productivity in investment portfolios. This includes the community-related aspects of real estate and sustainable governance.

PRACTICAL GUIDELINES FOR SUSTAINABILITY REPORTING
Through 2018 the committee will also be reviewing the sustainability guidelines and the related online assessment tool, originally introduced in 2016. The goal is to simplify the guidelines and make the assessment process easier to understand, potentially making compliance more straightforward in the long run. Investors and managers can use the assessment tool to check how closely vehicles are complying with the INREV Guidelines and to understand how their sustainability reporting can be brought into line with industry best practice.
 

MOVING TOWARD ASSET LEVEL SUSTAINABILITY
Hot on the heels of INREV’s project to develop asset level performance measurement, a working group within the committee is being set up to investigate how to measure asset-level sustainability in real estate non-listed vehicles. This is likely to focus on measuring the carbon footprint of buildings. Putting together this kind of reporting data may not be easy, but the committee intends to build on methods already used by other organisations involved in the field. Once available, the information should help managers implement action plans and report back to investors on their vehicles’ sustainability credentials.

CREATING A GLOBAL SUSTAINABILITY HUB
Building on INREV’s existing Sustainability Library, which currently contains more than 50 case studies, publications and reports relating to the European experience, a global sustainability library will now be created in collaboration with ANREV. This year INREV is also stepping up its own efforts to generate material for the library.

GLOBAL ESG DEFINITIONS
Developing ESG definitions for the Global Definition Database (GDD) has also been a focus over the recent period. In January this year, the committee helped provide the first 24 ESG-related terms for the GDD and is now collaborating with INREV’s regional partners to include more.

In today’s changing investment landscape where investment decisions are becoming more complex, investors are paying more attention to sustainability and integrating ESG factors into their decision-making processes, to drive strong performance and move forward their responsible investment agendas.