Our investment managers refer to our in-house sustainability regulatory risk assessments to identify typical risks that should be incorporated when devising the parameters entered into the investment models (using discounted cash flow analysis).
Responsibility and sustainability assessments are integrated into investment analysis on the basis of the data provided by the asset vendor and our in-house surveys and assessments. We collect data from the seller and perform our own building and environmental surveys; both surveys include an RPI questionnaire. We compare building data that is available from the benchmark we use for our directly-managed properties.
The investment managers integrate ESG information in their investment analysis and discounted cash flows models, which typically can affect such investment fundamentals as the refurbishment budgets required to upgrade an asset to Federated Hermes' minimum responsible refurbishment and development requirements. We also assess the risks of voids, lease lengths and obsolescence for low and high spec sustainability assets in a particular location.
Material elements identified are included in the investment papers submitted to the investment committee.