Positive Impact Real Estate Investment Framework

The United Nations Environment Programme (UNEP) FI  Property Working Group and the Positive Impact Initiative  published a framework in 2018 in collaboration with RICS, UN PRI, and members of the Global Investor Coalition on Climate Change. The framework was initiated to develop an impact-based approach in real estate finance and management. 

The Positive Impact Real Estate Investment Framework offers a process tool for institutions to identify impact and corresponding investment opportunities, measure ex-ante and ex-post impact, and ultimately re-orient institutional capacities and capital for intentional delivery of outcomes that support the SDGs .

The framework provides a practical and action-oriented guidance for the real estate industry to accelerate the impact paradigm for the delivery of the SDGs. 

The Positive Impact Principles

• Four main principles are defined for positive impact within the paper; Definition, Frameworks, Transparency, Assessment
• The Positive Impact Principles require a holistic approach; appraisal of both positive and negative impacts, consideration of all three dimensions, i.e., economy, society and environment, and transparency and assessment of methodologies and impact achieved as a core requirement.

The Investment Objectives

• To operationalise the Positive Impact Principles, an action-oriented framework based on four Investment Objectives has been developed; Clarity of Impact, Market and Sustainable Returns, Measurement of Impact, Additional Finance and/or Impact Flows,
• The Investment objectives offer a way for institutions to frame decision-making for more immediate-term investment activities and longer-term aspirations that derive from a holistic and impact based approach,
• For each of the four Investment Objectives, the Framework provides a number of ‘leading questions’ and recommended actions to be considered by investment practitioners

Investors’ Motivation

• Positive Impact applies to all investment activities within institutions.
• Institutions will be subject to learning curves in building skills and capacity internally for an impact-based approach and for improved alignment between asset owners, asset managers, and others within the investment value chain.
• The framework listed the actions investors can take as they orient themselves on the adoption curve for applying an impact-based approach

Applying the Impact-Based Real Estate Investment Framework

• The paper provides a table showing an application of the framework for a preliminary assessment of property sector impacts and indicators, and how investment decisions can respond to those,
• Twenty two impact categories are included into the table with an aim of capturing all realms of sustainable development,
• Investment themes relevant to real estate investors are aligned to the impact categories,
• Suggested indicators are provided, both for delivered impact measurement and potentially for assessing additional finance and / or impact flows

Summarised by Bahar Yay Celik, Analyst at INREV’s Professional Standards Team