IPF Commissions Study of the Role of ESG Factors in Benchmarking Real Estate Investment Performance
The increased role that environmental, social and corporate governance (ESG) factors play in influencing investment decisions presents key challenges to the property industry, particularly within the context of increased internationalisation of real estate investment funds. This is an area that has seen rapid development in recent years and, consequently, the availability and consistency of market-based benchmarks vary across countries. This could affect the approach of international investors to benchmarking and lead to different measures being adopted for different markets.
The IPF Research Programme has commissioned a consortium, led by Professor Graeme Newell of Western Sydney University, to provide a comprehensive and critical analysis of existing ESG benchmarks and to consider their potential evolution, in terms of future use and application. In identifying measures currently in use, the policies and practices of a wide range of European and global real estate investors will be assessed, as well as real estate companies/REITs and fund managers. Other members of the research team comprise Anupam Nanda, Professor of Urban Economics and Real Estate, Henley Business School, University of Reading, and Alex Moss, Director, Real Estate Research Centre, Cass Business School.
Miles Keeping, Director, Hillbreak, and chair of the IPF’s Environmental, Social & Governance Interest Group who is chairing the Project Steering Group (PSG) overseeing the research, said: “Whilst the real estate investment industry has adopted numerous visible and proactive strategies to address environmental issues and improve the energy efficiency of buildings, the “S” and “G” factors of ESG are perhaps not so prominent in people’s minds. Recognising their increasing importance, many organisations have established social and governance investment policies and this study will shed light on the range and calibre of different approaches and what may be required to ensure consistency of standards.”
Newell, commenting on the work that will be undertaken, said “The project team will examine ESG benchmarking for real estate investment. Key measures and opportunities will be identified, using stakeholder interviews with European and global real estate investors. Exemplars in the ESG space for real estate investment will be identified in this important project for the real estate industry going forward.”
Other members of the PSG comprise Abigail Dean (Nuveen Real Estate), Louise Ellison (Hammerson PLC), Richard Gwilliam (M&G Real Estate) and Sophie Carruth (LaSalle Investment Management).
Research findings are due to be published in mid-2019.