Aviva Investors, UBS, AXA Real Estate, Sonae Sierra and Mitsubishi UFJ Trust and Banking Corporation are among the companies integrating environmental, social and governance (ESG) criteria into investment processes, according to a report by the United Nations Environment Programme Finance Initiative.
Responsible Property Investment: What the Leaders are Doing says climate change and resource scarcity — both of which can damage or enhance the long-term value of property assets and businesses — are driving more companies and agencies toward sustainability in commercial real estate and responsible property investment (RPI).
The report says RPI principles can give companies a competitive advantage by helping them get ahead of increasingly strict environmental regulations, such as requirements that buildings are improved or retrofitted to meet certain levels of sustainability and environmental performance.
The report also includes more than two dozen case studies of RPI best practices. It says UBS has developed its own rating system to measure the sustainability performance of its properties. The system analyses profitability, eco-friendliness, natural hazards, health and comfort, accessibility and technical building services (see chart).
UBS also uses the rating system to drive sustainability improvements in its buildings. For example, 11 office buildings in the UBS (D) Sector Real Estate Europe Fund have cut power use for communal/shared areas by 10 percent and reduced water consumption by 10 percent, both between 2009 and 2010, and reduced CO2 emissions from heating and electricity by 12 percent.
In another case study, the report detail a 2009 analysis undertaken by Sonae Sierra, to understand the potential impact of climate change in regions where it operates. The company owns 47 shopping centers in Portugal, Spain, Italy, Germany, Greece, Romania, Croatia, Morocco, Algeria, Colombia and Brazil.
The study found that the increased demand for — and price of — energy is expected to reduce profitability between 2 and 5 percent in 2030, and between 3 and 6 percent in 2050, with variations between the different shopping centers.
Climate change is also expected to increase water costs, thus decreasing profitability between .15 and 2 percent over the same time period, and increase insurance costs by 21 percent.
A study published last month by the US SIF Foundation found US investment in sustainable and responsible investments rose 22 percent between 2009 and 2011.