Through the Tomorrow's World Sustainable Property Management programme, Nuveen Real Estate tracks relevant KPIs in order to measure the impact of ESG issues on both financial and ESG performance. In both cases, through the established environmental monitoring programme in place it is possible to see the positive impact of operational efficiency initiatives (e.g. energy and water initiatives) on overall asset efficiency performance and therefore on Net Operating Income (via reduced utility costs) for the Fund, ultimately increasing return. The outcomes from the impact analysis of ESG issues on ESG and financial performance feed directly into property management and asset management reporting in order to inform future decision making.
A further example of the financial impact of ESG issues relates specifically to the UK portfolio where the Minimum Energy Efficiency Standards came into affect in April 2018. The legislation sets a minimum property level energy performance threshold for the letting of property in England and Wales - the performance is indicated via Energy Performance Certificates (EPC). On that basis, if properties do not meet the minimum required threshold as per the EPC, then we have already identified instances where this has impacted on price, and therefore Fund performance