Feature: GREEN IS THE NEW BLACK
The only way
is ESG
As broad industry pledges to do better are replaced by data-driven targets, the property world is getting to grips with its sustainable responsibilities.Isobel Lee reports Allianz Real Estate’s Coeur Cologne provides sustainable office space in the heart of the German city
T
he COVID-19 crisis delivered a critical opportunity for organisations to engage with environmental, social and governance (ESG) issues, driving them to pay closer attention to external risks. For the real estate industry, it has proved transformational. “For most real asset investors, over 95% of their carbon footprint is within their buildings,” says Guy Grainger, global head of sustainability services & ESG at JLL. “If you combine that statistic with the fact that the built environment contributes 38% of the world’s greenhouse gas emissions, then it is all the evidence you need to see that we in the real estate industry are part of the problem — or, if we are prepared to change — part of the solution.” Yet solving this thorniest of issues — real estate’s carbon foot-
print — requires a clear and defined strategy, Grainger says. “That’s where things get complicated. There are no set benchmarks or targets, so many investors are comparing to their peers and waiting for market forces to justify the investment and CapEx needed. The longer you wait, the more there is to do.” Despite these complexities, a number of real estate firms are emerging as ESG pioneers. Explains Christy Hill, PGIM Real Estate’s Americas head of asset management & global head of ESG: “PGIM Real Estate continues to focus on established and well-respected ESG reporting standards to disclose our ESG performance. We benchmark our ESG performance on a fund-level through the annual Global ESG Benchmark for Real Assets (GRESB) and communicate results to investors.
“PGIM is a public supporter of the Task Force on Climate-Related Financial Disclosures and uses this framework to assess physical and transition risks to the portfolio as well as individual assets,” Hill adds. “We also committed to a net-zero target that aligns with the Paris Accord and recommendation to limit global temperature increase to 1.5 degrees Celsius. Finally, we have assessed our funds from the perspective of the Sustainable Finance Disclosure Regulation (SFDR) and are complying to it with few of the funds being Article 8.” As a premier partner of the recent UN Climate Change Conference, COP26, PGIM had the chance to see how in-step the firm is with current thinking. “Retrofitting existing building stock is an essential ingredient,” Hill says. Marrit Laning, newly appoint-
ed chief strategy & innovation officer at real estate investment manager Redevco, says that the firm has devised “a clear ambition for the portfolios we manage to be net-zero carbon by 2040”. She adds: “As we are traditionally invested in the high streets of inner cities, our focus is on making existing buildings better and contributing to making the cities more liveable and sustainable. Whenever we redevelop an existing building, we see an opportunity to improve the building’s sustainability performance, but also through our design and concept, the functionality of the location. We want to add value to the location and fulfil key functions that will support its neighbours’ and visitors’ (social) wellbeing.” Allianz Real Estate describes the issue as a “highest priority”. Dr Raphael Mertens, the firm’s chief
MIPIM PREVIEW • 31 • February 2022 MIPIM_Green_New_Black_+D_+S.indd 1
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