As environmental, social and governance (ESG) issues become a growing priority for governments and companies around the world, real estate and infrastructure investment management businesses are in a unique position to drive change by influencing stakeholders across the built environment.
To put that scale of potential influence in context, with almost $150bn in assets under management, CBRE Investment Management (CBRE IM) has a portfolio that equates to the size of an average city. By engaging and influencing its network of investors, operators and tenants to adopt more sustainable practices, CBRE IM aims for a multiplier effect that will significantly move the needle on ESG and create a more sustainable future. The firm believes that a focus on sustainability can enhance returns and mitigate risk for its investors.
To underpin this goal, CBRE IM has adopted a three-pronged approach that incorporates climate, people and influence.
“As a global leader in real assets investing, CBRE IM has an opportunity and responsibility to help the environment and the communities we serve,” says Helen Gurfel, head of sustainability and innovation at CBRE IM. “Our opportunity lies in using our market position, scale and expertise to influence how buildings are built, managed, occupied and sold. We regularly exert our influence as a global investment manager through robust engagement with our stakeholders, including tenants, employees, clients and communities.”
Depending on the investment strategy, CBRE Investment Management will have different approaches for engagement and driving change.
Tenants
“Since millions of people use our assets every day, we strive to help improve their social and physical wellbeing,” Gurfel says. “One of our many tenant-engagement programmes aims to anticipate and address tenants’ needs through next-generation property management and place-making practices that enhance tenant satisfaction and retention.”
The firm is also able to partner with tenants to help them develop their own ESG mandates.
Gurfel says that with operations in 20 countries worldwide, the firm thinks creatively as to how it can accelerate decarbonisation across its portfolio where possible. For example, CBRE IM has over 600 logistics assets spanning 200 million square feet, and Gurfel says the firm is establishing a solar programme across its logistics assets in Europe and the US.
“Recently we started working on four community solar-rooftop projects, which will provide renewable energy at a lower cost to our tenants and also the larger community, as well as accelerate our decarbonisation efforts,” she says. “These projects require engaging with tenants to get their buy in for implementation and in some cases have led to further sustainability engagement.”
Investors
The firm has deep relationships with institutional investors around the world and considers these to be a significant catalyst for change. “As an investor-operator, we strive to help our investors understand that driving sustainable operational efficiencies can improve returns and mitigate risk. We also work with our clients to measure these results through industry-recognised frameworks, which has further deepened their desire to expand their own initiatives.
Our assets are the building blocks of communities, and we want to have a positive impact in making these communities stronger
Companies
When CBRE IM invests in listed securities, they actively engage with those companies to understand their ESG strategy and risk factors; convey the responsible practices which are most important; and influence them to apply best practices and a disciplined proxy voting process.
Similarly, when CBRE IM invests with other managers, they require the other managers to either have in place or agree to implement certain ESG commitments. CBRE IM also engages with partners on an ongoing basis to continuously improve their portfolios. As an example, they ran a physical risk assessment for all 8,000 assets in their indirectly managed portfolio and asked managers to create plans to mitigate any identified physical climate risk.
In their infrastructure portfolio, CBRE IM’s sustainability commitments include investments in renewable energy and sustainable transportation. Their infrastructure team now owns a company called Norled, a leader in innovative and environmentally friendly transportation solutions, which has invested significantly in new types of vessels and eco-friendly technology, including hybrid and battery-driven vessels. Since the initial acquisition, Norled has launched the world’s first hydrogen-electric ferry. While this is a clear win for the environment, the sector’s resilience also makes it an attractive investor proposition.
Communities
“Our assets are the building blocks of communities, and we want to have a positive impact in making these communities stronger,” says Gurfel.
The firm recently worked across several stakeholder groups on a new life science development in Atlanta, partnering with a developer, a client and a new tenant to create an educational fund that helped establish a life science initiative to train teachers and students in the surrounding neighbourhood in careers in biotech. “We want to make sure that we’re creating communities that are genuinely giving people the opportunity to thrive,” Gurfel notes.
Employee upskilling
Gurfel believes that change must begin with the firm’s own people. “They are a critical component of our ecosystem,” she says.
“A vital aspect of integrating sustainability across our global business is knowledge and education, which is why one of our key objectives is to create greater sustainability fluency across our organisation,” she says. “Education drives empowerment, so we’re upskilling our entire organisation to positively influence others across our network.”
CBRE IM’s employee engagement programme started with an internal sustainability knowledge hub, which provides educational tools and resources, including a gamified learning platform, that has helped employees further embrace sustainability efforts.
To further integrate sustainability across the organisation, the firm launched an ESG ambassador programme comprising 80 internal champions who will embark on a formal learning programme centred on sustainability.
Gurfel concludes: “If you’re not embracing sustainability then you are missing an opportunity. Standing still is no longer an option. The more people have a sustainability mindset, the better off we are as a society.”
For more information please visit cbreim.com
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