In our business, Environmental, Social and Governance (ESG) practices are more than trends; they’re fundamental to the business strategy of our Firm, our investors, our tenants and the key stakeholders in the communities, properties and funds in which we invest.
CBRE Global Investors’ mission is to provide real estate investors with exceptional performance worldwide and the Firm recognizes that taking ESG considerations into account in any investment decision are integral to enhance returns and preserve value for our investors.
We see ESG management as a key element of our investment operations during the entire investment lifecycle. We don’t only focus on new acquisitions; we actively drive the sustainability improvement of all our investments during the entire lifecycle of our investments.
ESG is integral to our investment management process and incorporated into CBRE Global Investors’ Investment Policies and Procedures and CBRE Global Investors Way (our investment process). The RI Policy is supported by ESG strategies and targets by product. Minimum standards, ESG-related operating procedures and implementation approaches are developed based on our ESG ambitions and communicated both internally and externally. We seek to partner with our external service providers, such as property managers, to ensure consistent application of our ESG approach and compliance with all regulations, fully cognizant that business requirements and regulations vary across regions and investment programs.
At CBRE Global Investors, a specific emphasis is placed on environmental sustainability and improving the environmental footprint of each asset under management. We recognize that we can make a tangible impact on improving energy efficiency, reducing greenhouse gas emissions and slowing climate change.
As such, we require investment teams to evaluate opportunities for green improvements for each asset prior to acquisition and track efficiency and performance during the hold period with clear guidelines that we implement across our global investment programs at all stages – starting with the acquisition due diligence process and continuing throughout our asset management activities. We routinely engage third-party consultants to evaluate the physical and environmental characteristics of potential investments to identify opportunities for improvements that would reduce a property’s environmental impact.
Each team considers these findings when defining the investment strategy and capital expenditure program for a property, including location; energy savings; building environmental characteristics (orientation, facades, landscape, etc.); presence of harmful materials or contamination; access to public transportation and environmental characteristics impacting tenants (such as lighting, air quality, etc.); as well as other relevant sustainability factors.
INVESTMENT LIFE CYCLE
Portfolio level: Portfolio-level strategies seek to include material ESG factors which get tracked and analyzed through a global data management system. CBRE Global Investors will, in an advisory capacity, seek to work with our separate account clients on the implementation of appropriate ESG initiatives designed to enhance portfolio performance.
Exclusions: We generally seek to exclude investments in assets with a primary use being in industries involved with armaments (manufacture or storage), nuclear/unknown, tobacco and tobacco-related products, gambling, pornography, prostitution, child labor, endangered wildlife or prohibited substances (e.g. ozone depleting substances).
New acquisitions: Due diligence checklists seek to include measurable ESG factors appropriate to the asset class and market.
Existing portfolio assets:
- The Annual Business Plan and Hold-Sell Analysis includes measurable ESG factors appropriate to the asset class and market.
- Semi-annual reporting processes include measurable ESG factors appropriate to the composition of the portfolio.
- Vendor contracts (including property managers) include implementation and reporting of ESG factors.
- In addition, we seek to join CBRE’s central procurement initiatives to track vendor ESG performance.
Partial interest/joint venture assets: CBRE Global Investors seeks to support and educate all partners on ESG issues as applicable. We seek to work with all partners to develop and implement measurable ESG asset management initiatives.
Refurbishment: Capital expenditure programs and refurbishment strategies will seek to evaluate the possibility of improving all aspects of the asset including addressing ESG issues. If an ESG improvement project is determined to be unfeasible (e.g. uneconomic, pay-back period too long, not approved by investors) this shall be documented.
New development: New developments will seek to incorporate the highest ESG standards feasible and seek to attain a domestic and/or an international green certification, such as LEED, BREEAM, Green Star Rating, Energy Star or HQE.
Leasing and operations: Investment teams will seek to:
- Provide a tenant signing a new lease with the opportunity to participate in an ESG memorandum of understanding or include Green Lease clauses in their standard lease agreement.
- Engage tenants through an annual tenant satisfaction survey.
- Engage employees of our tenants through programming as part of our proprietary operating programs for office, retail, multifamily assets and industrial assets.
- Provide customer service and other trainings for our service provider staff.
- Hold-Sell Analyses will seek to include ESG improvements to each asset and measure results of the improvements.
- Due Diligence Checklists will seek to include measurable ESG factors appropriate to the asset class and market.