What is responsible property investment?

The appeal of institutional and private investors for investment products that integrate ESG criteria into their strategy is accelerating. In 2020, the Responsible Investment Barometer showed that 44% of respondents were prepared to invest more than 30% of their savings in ESG products. But 31% of them criticised the market for the lack of information on ESG-oriented financial products. 

What’s more, the Covid-19 crisis has shown that funds with an ESG component were more resilient than others: risk control seems superior, the rental impact is more controlled and they consequently meet the needs of investors who now want to invest in more meaningful products.
 

Sustainable finance affects all sectors of economic activity. Real estate investment allows investing in physical real estate and/or intangible real estate investments. In France, these investment products can take the form of SCPI, OPCI, OPPCI, etc. These real estate investment products can integrate ESG criteria into their investment strategy, both in the selection of assets in the portfolio and in the management of the assets once they have been acquired, with the aim of controlling their environmental impact and reducing their carbon footprint.

In the face of the climate challenge, the real estate sector must accelerate its energy transition to meet the Paris Agreement, which aims to limit global warming to well below 2°C by the end of the century.  For a building or a real estate fund, the environmental component of ESG strategies often focuses on reducing energy consumption and therefore CO2 emissions. This involves carrying out an energy audit to identify high energy consumption items and areas for improvement. For office buildings, the social aspect focuses particularly on the well-being and comfort of the building's occupants by encouraging soft mobility, offering adapted services and activities around the common areas, and ensuring accessibility for all.

The BuzzWords: integrating ESG into real estate funds is aimed at both seasoned investors interested in ESG-oriented real estate financial products and novice investors. Far from professional jargon, it provides the keys to understanding responsible property investment:

1.    Definitions including SRI, ESG, real estate funds
2.    An overview of European regulations and a focus on Germany, Italy, the United Kingdom and France 
3.    A focus on impact investing 
4.    Examples of responsible real estate funds
5.    Examples of buildings that have integrated an ESG strategy, their action plan and quantified results