We invest with fund managers following a wide range of environmental regulations and adoption of ESG practices which vary significantly across global markets. We engage with our investee funds to improve their performance but we do not currently apply specific targets across all investments. Where we have more influence, we include targets such as a portfolio minimum building certification rating e.g. we wanted a fund developing student accommodation to design every building to achieve a minimum 4 star Green star rating. For some real estate sectors, the benchmarks are still evolving. CBRE GIP actively works with all investee funds to improve their ESG performance from early adopters who are implementing climate change strategies to late comers who are only analyzing their energy and water consumption. We actively encourage investee funds to participate in accreditation systems (in-country or international) and provide performance updates in their regular reporting and include ESG as a standing item on investor meeting agendas. To date, we have not linked the achievement of ESG objectives or targets and the remuneration of the underlying fund managers. Our flagship CBRE Global Investment Partners Global Alpha Fund which invests indirectly worldwide will be including ESG targets in its ESG strategy.
Prior to investing, GIP actively ensures that the manager has the policies, systems and expertise needed to integrate environmental considerations into their investment decisions and ownership activities; that the operating partner will not engage in socially irresponsible activities; that the operating partner’s governance provisions meet best practice standards; and that reporting will meet GIP requirements for transparency.
We provide our Responsible Investment Policy and request a copy of their equivalent.
We include ESG related questions in our Due Diligence Questionnaire
We confirm whether the manager is a signatory or are committed to the PRI.
We highlight our ESG requirements early in the selection process: Participation in annual GRESB survey, quarterly reporting on ESG issues (including GRESB), and agreeing to a building use exclusion list: uranium, armaments, tobacco, gambling, pornography, endangered wildlife, child labour etc.
CBRE GIP’ negotiates preferred underlying investment terms in line with best practice including references to governance best practice, prohibited uses/exclusions, participation in GRESB annual survey, compliance with GIP valuation policy, reporting etc.
If managers are not prepared to meet our requirements and work towards our common goal, then we will not select them. We look to engage with managers to "bring them along the journey" and will invest with managers may not be quite there yet but who are keen to improve their ESG processes and are willing and able.
CBRE GIP includes our assessment of operating partner/fund manager’s approach to ESG in investment recommendation papers: strategy, due diligence process when acquiring buildings, team resources, adequacy of financial reporting, internal controls procedures, track record of good corporate governance and transparent engagement with investors. We undertake reference checks with prior investors if it is a first time investment with the manager. We note CBRE GIP has a strict internal investment process which is externally audited annually.
When monitoring the investment, we report on the GRESB survey results, monitor for any breaches "Red Flags" and escalate to GIP ESG Incident Response Team and request annual confirmation from the manager that they have complied with our Side Letter.