This report shows public data only. Is this your organisation? If so, login here to view your full report.

CBRE Global Investors

PRI reporting framework 2020

Export Public Responses
Pdf-img

You are in Direct - Property » Pre-investment (selection)

Pre-investment (selection)

PR 04. Incorporating ESG issues when selecting investments

04.1. Indicate if your organisation typically incorporates ESG issues when selecting property investments.

04.2. Provide a description of your organisation`s approach to incorporating ESG issues in property investment selection.

During the sourcing and due diligence process, the investment team will assess whether the asset may be faced with any ESG risks that cannot be mitigated or whether unrealized ESG opportunities may exist to provide upside.

Environmental factors considered in investment selection include location, tenant and industry exposure, physical and transitional climate change risks and opportunities, potential energy and water use savings, presence of harmful materials or contamination, building exterior characteristics (orientation, facades, landscape, etc.), building interior characteristics (lighting, air quality, etc.), and access to public transportation, employment and amenities.

Social factors considered in investment selection include accessibility issues, reputational risk based on the tenant roster and the ability to incorporate our proprietary operating programs which address tenant and community engagement and programming among other items which lead to higher tenant satisfaction and retention.

Governance factors considered in investment selection include conformance with governmental regulations and the Firm's exclusions list. The Firm generally seeks 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, child labor, and endangered or protected substances (e.g. ozone-depleting substances).

04.3. Indicate which E, S and/or G issues are typically considered by your organisation in the property investment selection process, and list up to three examples per issue.

Environmental example 1, description

          A U.S. transaction being considered was an industrial cold storage asset intended for one of our funds. The property was adjacent to a site that had environmental soil contamination discovered after Investment Committee approval. As a result, the Americas Investment Committee debated whether a contamination in the proximity may or may not affect the property in the future. Ultimately, the transaction was not pursued as the result of this environmental issue.
        

Environmental example 2, description

          As part of our due diligence process, engineers review and assess an asset's ability to withstand various natural disasters and/or other environmental issues (such as a rise in sea level) and provide suggested mitigation measures or a potential resilience plan if indicated. For instance, an asset at the Scottish seacoast was assessed for physical climate change risk. Considering the approach roads and the entire site are all being lifted above the projected sea rise level as part of the development, physical risk has been mitigated. In addition, the marina which forms part of the asset has been designed to adjust to changing sea levels up and above the projected long-term rise.
        

Environmental example 3, description

          During the due diligence process, the Firm requires evidence of energy performance for each asset. For instance, in Europe, Energy Performance Certificate is assessed for validity, age, comprehensiveness and compliance with current and future regulations, and fund's ESG strategy. Where improvements are deemed necessary, the assessed cost of the project is included in the Investment Committee's consideration.
        

Social example 1, description [OPTIONAL]

          Reputational Risk and Exclusions: 

A U.S. office transaction being considered was intended for one of our funds. The property’s largest tenant, Friend Finder Networks, is an adult entertainment company. The Americas Investment Committee weighed the pros and cons of purchasing a transaction that included a tenant that had the potential to trigger ESG-related clauses or morality clauses in certain investors’ investment mandates. Ultimately, the transaction was not pursued as a result of this social issue.
        

Social example 2, description [OPTIONAL]

          During the due diligence process, the Firm checks compliance with applicable laws and determines whether any modifications are needed and budgeted for.
        

Social example 3, description [OPTIONAL]

          The Firm has launched a UK affordable housing fund designed to invest in affordable housing assets (multiple tenures) across the UK.  A comprehensive social impact assessment will be implemented, and results published on an annual basis tracking the Fund’s social contributions. The Social Impact assessment will complement the wider Environmental, Social and Governance (“ESG”) strategy. The Social Impact framework will be applied during the acquisition process and monitored on an ongoing basis.
        

Governance example 1, description

          The General Partner and Manager of the Fund may retain CBRE and its affiliates to provide services for Fund investments, which creates a potential conflict of interest. The structure of the Firm’s relationship to its parent and affiliates serves to minimize this conflict of interest, as follows:
•	All investment decisions, including the selection of service providers, are made solely by CBRE Global Investors professionals. 
•	No employee of CBRE Global Investors is financially rewarded in any way for fees paid to affiliates. There is no financial incentive to engage or retain affiliates other than on the basis of performance and cost.
•	The compensation of senior management and investment teams is largely dependent upon portfolio performance which aligns the economic interests of investment professionals with investor clients and partners.
•	The relationship between the Fund and affiliated service providers is governed by an agreement which ensures access to the highest quality professionals on arm’s length terms and outlines the services to be delivered by CBRE.
To further mitigate conflicts of interest and avoid any potential incentive to direct business to CBRE on behalf of client accounts, the Firm prohibits its employees from owning CBRE stock without the consent of senior management and the Chief Compliance Officer.
        

Governance example 2, description

          To ensure the Firm does not fall victim to money-laundering schemes and to comply with applicable AML laws, a comprehensive global AML Policy has been established. Systems and controls to identify, assess, monitor and manage money-laundering risks are comprehensive and proportionate to the nature, scale and complexity of the Firm’s real estate activities. The AML Policy reflects relevant industry standards and international regulations as currently in place. Emphasis is placed on:
•	Performing due diligence prior to establishing a formal business relationship,
•	Identifying the ultimate beneficiary owner,
•	Screening of controversial industries,
•	Checking for financial sanctions imposed against certain persons, companies and countries,
•	Prohibiting certain types of transactions (e.g. cash transactions, accounts with foreign shell banks, etc.) and
•	Assigning clear roles and responsibilities within the Firm to manage this risk.
        

Governance example 3, description

          During due diligence, there is a review of applicable regulations that the investment is subject to, which is reviewed by legal counsel. We will reject any investment that does not meet all applicable regulations.
        

04.4. Additional information. [Optional]

When selecting properties, we look for opportunities to implement our proprietary operating programs which involve a higher level of tenant engagement, programming for tenants and the greater community as well as philanthropic activities.


PR 05. Types of ESG information considered in investment selection (Private)


PR 06. ESG issues impact in selection process

06.1. Indicate if ESG issues impacted your property investment selection process during the reporting year.

          ESG issues impacted the business plan developed during the due diligence process. Mitigation measures/ESG initiatives were developed when appropriate during the selection process.
        

06.2. Indicate how ESG issues impacted your property investment deal structuring processes during the reporting year.

          During due diligence, asbestos was discovered. The deal was structured requiring the seller to remove the asbestos and therefore delayed the closing.
        

06.3. Additional information.

Below is a summary of two recent examples of transactions that had significant ESG-related issues.

Hamilton Plaza: This transaction was an office asset intended for the value-added fund series, not U.S. Core Partners. The property’s largest tenant, Friend Finder Networks, is an adult entertainment company. The Americas Investment Committee weighed the pros and cons of purchasing a transaction that included a tenant that had the potential to trigger ESG-related clauses or morality clauses in certain investors’ investment mandates. Ultimately, the transaction was not pursued as a result of this social issue.

Olinder Court: This transaction was an industrial cold storage asset intended for U.S. Core Partners. The property was adjacent to a site that had environmental soil contamination discovered after Investment Committee approval. As a result, the Americas Investment Committee debated whether contamination in the proximity may or may not affect the property in the future. Ultimately, the transaction was not pursued as the result of this environmental issue.

Virtuo portfolio: An opportunity has been identified to certify the portfolio of assets to a higher level of green building certification than initially proposed by the developer (BREEAM Very Good instead of Good). The developer was requested to provide a list of additional sustainability features to include in the design and construction of the buildings. The additional cost was deemed acceptable and the development is progressing with an enhanced sustainability approach for all five buildings.


Top