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CBRE Investment Management

PRI reporting framework 2020

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You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes

Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories (Private)


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Improving the manager's ESG policy and processes to meet our requirements during Selection/Appointment Process
        
Conducted by
Asset class
Scope and process

During due diligence process with a major multi-national fund manager, our team requested GIP's ESG requirements in the term sheet and these were accepted. To assist the fund manager to meet these requirements, GIP agreed to the engagement of a consultant and reviewed the shortlisted parties to ensure economies of scale and the necessary reporting metrics for our analysis during the hold period of the investment.

Outcomes

GIP and the fund manager collectively agreed on the selection of the preferred consultant despite the higher cost as their platform utilized Measurabl to track and benchmark asset level energy, water and waste; and provide annual GRESB reporting and who were able to provide all the information GIP required. Therefore, GIP ensured the decisions was based not only on cost but also on quality of services provided.

Topic or issue
          Ensuring ESG Included in Annual Business Plan in the Monitoring Process
        
Conducted by
Asset class
Scope and process

GIP has constantly highlighted to the manager our requirements for ESG reporting and identifying ESG. ESG discussions led by GIP at the time the business plan was being prepared, highlighted some possible initiatives which could potentially translate to long term cost savings while also improving the carbon footprint of the assets.

Outcomes

Improvement in GRESB Score from 68/100 to 75/100 while outperforming peer average score of 68. Sustainability initiatives in the final Business Plan included the installation of solar panels and smart meters, cargo lift modernization and improvement in stakeholder engagement by engaging LEED consultant to advise on potential areas for improvement

Topic or issue
          Approving ESG initiatives at Advisory Board Level in the Monitoring Process
        
Conducted by
Asset class
Scope and process

Following regular engagement by GIP and other investors, the fund manager sought approval from the fund's Advisory Committee to approve the use of rooftops to be leased to a renewable energy company. 

Outcomes

The Advisory Committee (including GIP) was supportive and voted in favour. The leases are generating income on previously non income generating space, and the fund is contributing to the supply of renewable energy to the community.

Topic or issue
          Incorporating ESG objectives into Fund Documents during Appointment Process
        
Conducted by
Asset class
Scope and process

When a manager was establishing their second fund, GIP requested significant improvement to the governance terms in the second fund's documents compared to those in the first fund as well as the inclusion of a sustainability target for the development projects. 

Outcomes

GIP negotiated into the documents significantly improved governance terms in line with best practice and a requirement that all student accommodation buildings developed by the fund would be designed to achieve a 4 star Green Star rating as a minimum with a 5 star Green star rating target (in addition to GRESB participation and our Restricted Uses language).  

Topic or issue
          Engagement in Monitoring Process to achieve building certification
        
Conducted by
Asset class
Scope and process

GIP invested in a fund consisting of large format, warehouse style retail assets on long term "double net" leases where the tenant was responsible for all operations, repairs and maintenance (building owner only responsible for structural issues). Manager reluctant to seek a building rating given perceived "lack of control" over operational issues that could influence rating. GIP encouraged manager to appoint consultant and engage with tenant to participate and share energy/water/waste data and discuss potential for further initiatives e.g. solar panels on roofs of entire portfolio, and seek an initial rating to understand the "base line". 

Outcomes

Buildings will achieve an initial 1 star rating Green Star as expected, however next steps/initiatives have been identified and agreed with tenant and fund manager will work towards an improved rating for the next rating period.

Topic or issue
          Negative screening in Selection Process
        
Conducted by
Asset class
Scope and process

Approached to invest in carparks for casinos which were generating an attractive income return. 

Outcomes

Declined to proceed as the majority of the revenue relied on people visiting the casino to gamble and gambling is one of our restricted uses in our Responsible Investment Policy. 

Topic or issue
          Advisory Committee rejecting new acquisition due to JV partner's arms dealing
        
Conducted by
Asset class
Scope and process

GIP was a member of the Advisory Committee. The fund manager presented an opportunity for the fund to forward purchase 50% from the developer of an attractive grade A office building under development . The developer and future JV partner was part of a corporate group that was also actively invovled in weapons manufacturing and arms dealing to African nations. The building's signage rights were retained by the developer, the developer was going to be a tenant in the building and the building was to be named after them. 

Outcomes

GIP and other members of the Advisory Committee did not support the acquisition due to the nature of the developer's corporate entity's involvement with the manufacture of weapons and arms dealing. The acquisition did not proceed.

09.2. Additional information.

Example 8

Topic or Issue:  Making LEED Certification a requirement to receive performance fee

Conducted by:  Internal Staff

Asset class:      Property

Scope and process:  GIP engaged with fund manager to ensure the preformance payment for the developer and operator of a new hotel property had both sustainability targets and financial hurdles that needed to be met within the agreed budget.

Outcomes:  Hotel development project achieved a LEED platinum certification on completion and is progressing towards the financial targets. 

Example 9

Topic or Issue:  Ensuring use of ESG consultant for student housing investment

Conducted by:  Internal Staff

Asset Class:     Property

Scope and Process:  GIP decided to invest in a student housing project with a less experienced manager. GIP actively engaged with manager to work with an ESG consultant to improve the operational efficiencies and design outcomes.

Outcomes: The project has benefited from the specific expertise brought by the ESG consultant and the manager has adopted some of the recommendations into their own business practices as a result. 


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