On our behalf, PGGM integrates ESG considerations in its investment processes wherever that is possible. Both the desire to create a valuable future for our beneficiaries and the expected benign effects on risk and return in the long run support such an effort. The Listed Real Estate team aims to critically review any efforts not accepting dilution/deterioration in the risk/return characteristics of the portfolio over the medium to long-term.
The Listed Real Estate team manages one of the largest listed real estate mandates in terms of AuM globally, and takes great pride of the fact that the driving force of capital has truly had a pay-off. With concentrated positions in listed real estate companies, the team is well-positioned to have dialogues with senior management teams, investors and other stakeholders in order to strive for continuous improvement on multiple ESG matters. Given the successes achieved over the years, the team is well recognized as an industry leader in the field of ESG (winner IPE Awards Best Sustainable Investment Strategy, 2017). To capitalize on the thought leadership status the team participates in industry engagement activities whenever considered meaningful. These activities range from chairing/participating in ESG committees supported by the key industry groups EPRA, APREA and NAREIT to speaking invitations at marquee ESG events like NAREIT’s ESG Forum.
PGGM’s Listed Real Estate is also co-founding partner, member and Co-chair of the Investor Advisory Committee (ICA) in Europe. The aim of the Committee is to act as a catalyst for constructive and positive feedback on key issues that influence the attractiveness and quality of the sector. Through publications, the Members strive to address pro-actively topical issues that deserve the attention of the industry. The Committee will highlight key areas of importance to its members and will provide both companies and other stakeholders in the industry (e.g. governments and regulatory bodies) concrete recommendations on how to improve. Key focus areas that the Committee has identified to date are (i) standards of corporate governance, (ii) CEO alignment of interest with shareholders and (iii) consistency and depth of disclosure. The way in which the Committee intends to operate is to determine a consensus opinion on how these issues should be addressed by companies and to stimulate companies to thereby achieve better results.
Besides the active engagement program, the Listed Real Estate team has fully-integrated ESG into its investment process, because we firmly believe that listed real estate companies should strive to continuously improve in order to generate good and stable returns for their shareholders and outperform peers. Companies who strive for operational excellence, including ESG related topics, will outperform their peers, and will have lower (financial) risk (e.g. related to obsolescence of assets). Listed Real Estate has integrated ESG in the selection of research coverage as well as in their qualitative and quantitative modeling framework to project future returns.