Property investment selection is aligned with the investment strategy for the relevant fund, which incorporates ESG elements: see PR 04. Consideration of ESG factors begins at the earliest stage of the investment process and continues through to the investment decision making process of the Real Estate Investment Committee.
Due diligence. The Property Transactions Team manages due diligence in conjunction with the Fund Manager and Asset Management Team (the entity responsible for managing and maximising value and performance of the asset). The Property Transactions Team may appoint external advisors such as engineers or environmental consultants where specialist skills or technical knowledge is required to inform the transaction due diligence process.
Due diligence identifies key ESG opportunities, risks and impacts that may materialise over the investment horizon. It considers both the immediate markets and sectors, and broader factors including changes in government policy, legislation, tenancy demand and investor sentiment, as well as relevant sustainability issues including contaminated land, hazardous materials and, operational energy and water efficiency, and climate change risk. These are taken into account in asset pricing and risk management plans, as well as the decision to proceed with the acquisition. ESG issues are also considered in a Fund's recommendation to dispose of an asset, if they cannot be managed in a manner beneficial to our client's interests.
Acquisition. Recommendations to invest are brought to the Real Estate Investment Committee, inclusive of any ESG issues raised. The potential acquisition must be accretive to the fund, and ESG issues must not negatively impact the investment or other investments within the fund. The recommendations extend to management of ESG issues post-investment.
Whenever we invest, AMP Capital considers the specific asset, the industry sector in which it lies, and the market or economy in which it operates. AMP Capital therefore draws on comprehensive proprietary and externally-sourced ESG perspectives when making its property selection decisions.
Access to broad ESG perspectives. AMP Capital was one of the first global investment managers to genuinely integrate ESG factors into traditional financial analysis. That has given us the time to develop, test and improve our proprietary approaches, to build the data sets and relationships that allow a richer understanding of ESG issues, and to build the team to act on those insights. Our team is one of the largest and most experienced of its kind in the Asia-Pacific. It has the bandwidth to pursue active international ESG stewardship with investees and other investors, to develop proprietary tools and analyses, and to integrate those insights across all major asset classes and investment teams.
ESG perspectives relevant to our property investments extend beyond the real estate sector, to broader social, environment and economic issues, and to the sectors which rely on properties. AMP Capital's ESG Research Team supplements its extensive proprietary in-house research with data from external providers. Additional information and insights on ESG issues are derived from a range of sources:
• Over 600 one-on-one meetings with investee companies per year
• In-house research on over 200 ESG metrics, with information drawn from company meetings, ESG disclosures, and other stakeholders (e.g. labour unions, NGOs etc.)
• ESG data from external service providers
• Non-consensus information sources including suppliers, customers and industry bodies
• Insights gained from AMP Capital teams including our Investment Strategy& Economics, Credit Markets and Multi-Strategy teams
• Investment team meetings to share news and ideas, discuss implications, and explore different perspectives.
Access to transaction-specific ESG perspectives. AMP Capital's Property Transactions Team may appoint internal and external advisors, such as engineers or environmental consultants, to add asset-specific technical knowledge to our broader ESG knowledge. These advisors may uncover historical issues which may influence the decision to invest in the property. Examples are potential contamination issues, technical life cycle of equipment, climate change physical or transition risks, heritage listings, government notices of rectification, or other legal or planning implications.
Specialist advisers may then be called on for perspectives on any potential ESG issue. The Property Transactions Team may include funds management executives, transaction manager, asset manager, operations, sustainability manager, debt advisory, tax advisors and development managers. The Property Transactions Team reviews the incoming asset to ensure any potential ESG issues are raised and investigated and can appoint external experts to provide additional advice and coverage.