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The international business of Federated Hermes (formerly Hermes Investment Management)

PRI reporting framework 2020

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Overview

PR 01. Responsible Property Investment (RPI) policy

01.1. Indicate if your organisation has a Responsible Property Investment (RPI) policy.

01.3. Provide a brief overview of your organisation’s approach to responsible investment in property, and how you link responsible investment in property to your business strategy. [Optional]

At the international business of Federated Hermes (‘Federated Hermes’), our approach to responsible investment is that it is fully integrated through all of our processes to ensure that we meet the challenges and can take advantage of the opportunities that arise.

In line with our fiduciary responsibilities to our clients, we focus on protecting our investors' interests in the long term and delivering holistic returns to the beneficiaries.

We have long recognised that responsible investment practices are changing real estate market conditions. The regulatory drivers and growing market demand indicate that sustainable portfolio and building characteristics affects real estate investment's fundamentals: they create a reduced risk of obsolescence and depreciation, enhance tenant retention, reduce void periods and lower operating costs. Social and environmental sustainability has become an investment risk one cannot ignore, and the management of risks associated with sustainability issues is firmly embedded within our investment process.

We thus have a clear strategy implemented across all our asset management practices focused on areas that will affect returns and help mitigate long-term sustainability risks to our portfolios: anticipating policy changes, explicit risk assessments of new acquisitions and of the obsolescence of existing portfolios. This includes strategy, acquisitions and sales, development and refurbishment, active management, community and tenant engagement and supply chain management.

Federated Hermes is an industry leader in responsible asset management and has developed the Principles of Responsible Property Investment, which focus on effective environmental management, a key component of our real estate management proposition. We recognise the importance of collecting, sharing and linking sustainability and RPI information among the various organisational levels of our investment and asset management process. We have thus developed and integrated a series of RPI tools and procedures that link our strategic investment targets with portfolio strategies and the management of a property's technical characteristics and operational performance.

We continue to work with the real estate industry through our advocacy and sector engagement work to develop tools and methods to that effect in supports of market transformation.

We have continued to drive our “Impactful Intent” approach which aims to deepen our Responsible Property Investment practice, by intentionally seeking a defined positive environmental or social outcome in a particular place or market as a core focus of our responsible investment strategy, in addition to strong risk-adjusted financial returns.

This involves using a purposeful framework to focus our real-estate operations on three specific impactful investment themes. For each of these investment themes we are committing to activities with measurable environmental, economic and societal outcomes, which ultimately support specific targets of the UN sustainable development goals (SDGs). Our impactful investment themes are:

  • Meaningful place-making that creates civic pride
  • Healthy, engaged and productive communities that drive desirable social and environmental outcomes
  • Climate and resource efficiency. Achieving a just transition to a low-carbon, circular economy in order to help prevent further adverse climate change and resource scarcity

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