Savills IM integrates the awareness and consideration of ESG issues throughout our investment decision-making process, and believes that doing so is a key part of our primary responsibility towards investors, clients, employees and other stakeholders, as well as those in the wider community.
As a property investment manager, we recognise that it is increasingly important for us to focus on sustainability objectives; these include sustainable development, energy, waste and water consumption, carbon monitoring and reduction.
We endeavour to apply these objectives at each stage of our investment process:
All purchases are reviewed and presented to the TAC. The TAC paper template contain guidance on ESG considerations to be made in stock selection, and purchase due diligence, such as environmental and social risks and opportunities, regulatory compliance, green building accreditation or value-add innovation.
We identify opportunities for, and the inherent risks of, sustainable practices. Opportunities may include tenant engagement to help meet sustainability targets, the installation of green technology and infrastructure within an asset, or participating in benchmark surveys and reporting at both a fund and corporate level. We evaluate and manage the impact that sustainability has on investment performance; for example this may include depreciation costs due to additional capital expenditure or the ability to let or sell a property. We seek to manage these elements in a manner appropriate to each fund or mandate’s risk and return profile.
For all investment management mandates Savills Investment Management aims to:
- Meet and where possible exceed the minimum requirements of any relevant planning, construction or environmental legislation; and
- Consider the sustainability credentials of an asset or development prior to purchase and include details in the papers presented to the TAC.
Sustainable Portfolio Management
Property development, refurbishment or fit-out: Integrating sustainability and ESG considerations into the earliest stages of design and construction of asset development, refurbishment or fit-out creates an opportunity to add tangible value to asset value, future-proof against obsolescence, improve occupancy appeal and results in improved building performance.
Property management: Where we manage the assets in our investment portfolios, we select managing agents who have a strong track record in sustainability and responsible property management, and expect that they adhere to our Responsible Investment strategy and incorporate ESG into all aspects of their management mandate. We expect that our managing agent has integrated the Managing Agents Partnership core provisions for integrating sustainability into property management: http://www.betterbuildingspartnership.co.uk/our-priorities/managing-agents-partnership
Our focus on integrated sustainability and ESG into property management practices ensures we are able to continue to add value, improve and enhance assets in our ownership, reduce operation costs and foster tenant satisfaction and occupancy appeal by engaging with occupiers on ESG issues and our own policy.
Energy and water efficiency programmes, waste management plans and performance monitoring and reduction targets, tailored to each portfolio
The TAC provides guidance at the time of asset disposal on how to consider ESG criteria in disposal decisions.
Considering sustainability measures and programs at the time of sale may enhance a asset’s status and maximize value. Such features help differentiate the asset from other offerings in the market and serve as an indicator of overall quality. By bringing high-performing assets to market exposes us to a greater choice of prospective buyers, and may lead to a more profitable and efficient exit.
We recognise that attitudes towards sustainability may impact investment risk and return, and both asset and fund level performance. We seek to identify both opportunities for, and the inherent risks of, sustainable practices as part of our investment process. Opportunities may include tenant engagement to help meet sustainability targets, the installation of greener technology and infrastructure within an asset, or participating in benchmark surveys and reporting at both a fund and corporate level.
Savills Investment Management evaluates and manages the impact that sustainability has on investment performance, for example, assessing depreciation costs due to additional capital expenditure, or the ability to let or sell a property. We manage these elements in a manner appropriate to each fund or mandate’s risk and return profile. For all investment management mandates Savills Investment Management aims to:
- Meet and where possible exceed the minimum requirements of any relevant planning, construction or environmental legislation;
- Consider the sustainability credentials of an asset or development prior to purchase and include details in the papers presented to the Transaction Advisory Committee;
- During ownership, ensure sustainability forms part of each property’s asset plan, the progress of which is regularly monitored by the Portfolio Management Committee;
- Collect and analyse energy consumption data for all properties where we have control of the supply, and attempt to do so where we do not;
- Consider Green Leases or a Memorandum of Understanding on Sustainability with tenants where commercially viable, to formalise co-operation between landlord and tenant to improve sustainability;
- Engage with tenants and other stakeholders to promote sustainability and investigate opportunities to reduce the environmental impact of each asset;
- Monitor energy and sustainability legislation for changes and potential financial risk to the portfolio;
- Take a proactive stance with regard to regulatory changes, anticipating and exceeding requirements to preserve long-term value; and
- Disclose all consumption data for reporting under GRESB and UNPRI with results issued to investors.