The purpose of the Responsible Real Estate Investment Management Policy is to:
- Promote transparency and disclosure on material ESG issues. We believe that sustainability and other ESG issues are a material consideration in the underwriting and management of all our investments including unlisted direct real estate, listed property companies, unlisted indirect real estate, infrastructure and private equity. We are mindful that business requirements vary across regions and investment programs.
- We seek to employ responsible environmental policies and practices for the Firm’s discretionary programs and elevate our ESG disclosure rankings in GRESB and PRI, as well as to share such policies and best practices with our non-discretionary clients and within industry organizations.
- Commit CBRE Global Investors to responsible investment throughout its operations, and
- Outperform and be a leader in ESG performance as evaluated by industry benchmarking initiatives such as GRESB and PRI.
By adopting a culture of responsible investment, we hope to create value for our investors via:
- Higher returns related to higher occupancy, higher rents and lower operating costs for our investments in properties; higher shareholder value due to property companies adopting responsible business practices and governance resulting in stronger performance for our investments in listed securities; and/or strong performing investments due to mitigation of significant risks and identification of opportunities in the infrastructure and private equity asset classes.
- Risk mitigation by addressing ESG-related legal or regulatory requirements, climate change issues, early recognition of emerging tenant demand for ESG-related factors, and an ability to capitalize on government and utility district incentives by implementing ESG systems and best practices.
Through this policy, we strive to meet goals that are driven by:
- Our fiduciary responsibility to identify potential intangible risks (e.g. climate change impacts, water supply, energy costs) that could impact our investments;
Local and national governmental regulations for building development, building operations, infrastructure, corporate transparency and reporting, that mandate minimum ESG-related standards;
- Investors seeking strong performance while also meeting ESG targets to comply with commitments made to their beneficiaries, governmental agencies and non-governmental agencies (“NGOs”), such as PRI; and
- Institutional investors who increasingly require measurable and material ESG metrics from investment managers.
ESG is an integrated part of our investment management process and is incorporated into CBRE Global Investors’ Investment Policies and Procedures. The Responsible Real Estate Investment Management Policy is supported by the fund/account-specific ESG strategies and implementation plans. Please see our RI Policy which is uploaded for how we integrate ESG into the Firm's investment management process.
DIRECT REAL ESTATE INVESTMENTS
At CBRE Global Investors, 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 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 climate change-related transitional and physical risks and opportunities; location; energy savings; building environmental characteristics (orientation, facades, landscape, etc.); presence of harmful materials or contamination; access to public transportation and environmental characteristics impacting wellbeing tenants (luminosity, thermal, visual, audio and olfactory comfort, etc.); as well as other relevant sustainability factors.
INDIRECT REAL ESTATE INVESTMENTS
ESG practices are an integral part of the analysis and management of indirect investments through CBRE Clarion Securities and CBRE Global Investment Partners. Many of the property companies, operating partners and funds that we view as high-quality investments for our listed securities and unlisted indirect real estate portfolios have incorporated favorable business practices over time. This includes, for example, the practice of developing and maintaining portfolio assets, which at some level conduct activities which emphasize the use of resources more economically, including increased waste paper recycling, the economical use of water and light, HVAC upgrades, building energy management systems and creating desirable workspaces for users. From a corporate governance perspective, such practices include responsible and diverse board structures, a code of ethics and conflicts of interests policy, compliance structure as well as accurate and transparent accounting methodology. CBRE Caledon formally considers ESG characteristics as part of its investment process when evaluating investment opportunities in both infrastructure strategies and private equity. The investment process consists of a (minimum) two-stage approval process whereby the deal team presents each investment opportunity at least twice to the CBRE Caledon Investment Committee (consisting of the CBRE Caledon’s Partners) and once to the CBRE Caledon Advisory Committee (consisting of experienced external advisors). The deal team is required to directly address ESG considerations in presenting to the Advisory and Investment Committees. In this way, ESG considerations are brought to the fore and inform the decision to approve or reject each underwritten investment.