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Partners Group AG

PRI reporting framework 2020

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Pre-investment (selection)

PR 04. Incorporating ESG issues when selecting investments

04.1. Indicate if your organisation typically incorporates ESG issues when selecting property investments.

04.2. Provide a description of your organisation`s approach to incorporating ESG issues in property investment selection.

ESG considerations in property investment are integrated throughout the investment process, from sourcing, to DD, ownership, and exit. During the sourcing process we look for class B or class A type properties and thus exclude most properties that are more harmful to the environment. During the DD process we use our proprietary ESG DD tool, developed by the ESG team together with our Real Estate Asset Management team, to complete an ESG assessment, identify and mitigate material ESG risks.

With the launch of our climate change strategy this year, we integrated questions related to climate risks and impacts into our ESG assessment tool. This is particularly relevant for our property investments, given their potential vulnerability to physical climate risks, as well as their impact on climate change through resource consumption.

During due diligence, we assess various aspects of a particular asset's ESG performance, including, for example, adherence to any sustainability standards, past legal or regulatory fines, and community outreach programs. This process also enables us to prioritize ESG value creation projects post-acquisition such as improving the properties' lighting and HVAC units. 

This year, we engaged closely with the property Asset Management team to identify an energy management provider that we can use to consistently track properties' energy usage. We will roll this out to our entire actively-managed portfolio in 2020. In addition, we now leverage the information we have collected for many years in our annual ESG KPI survey and report publicly on these KPIs through our annual Corporate Sustainability Report. We use this information to work with our asset management team to prioritize ESG projects in their portfolio.

04.3. Indicate which E, S and/or G issues are typically considered by your organisation in the property investment selection process, and list up to three examples per issue.

Environmental example 1, description

          As part of our due diligence, we consider whether an asset adheres to any recognized sustainability certification body (e.g. LEED, BREEAM, Green Star, HQE, etc.), and whether they work with utility management consultants to improve energy efficiency. If not, Partners Group will work with the asset operators to find a cost-effective way to improve energy efficiency.

Environmental example 2, description

          During due diligence, we look at the most recent 3rd party environment assessment completed and any recommendations identified related to contamination. We also review legal DD to determine whether there have been any legal or regulatory fines imposed on the asset. Serious environmental issues are flagged for our investment committees.

Environmental example 3, description

          As part of our ESG assessment, we ask for any initiatives in place to optimize resource use, including water, paper and energy (as mentioned in example 1) and to reduce waste and GHG emissions

Social example 1, description [OPTIONAL]

          As part of our ESG due diligence assessment, we look at how accessible the property is to public transportation. We look for properties close to public transportation systems since they are both good for the environment and protect the value of the property

Social example 2, description [OPTIONAL]

          As part of our ESG DD assessment, we look at whether the operator or contractors comply with all relevant regulations related to employee health and safety. We also assess information related to their health and safety records and review the measures they have in place to improve their performance.

Social example 3, description [OPTIONAL]

          Labor standards: with the launch of our responsible contractor policy in 2018, we now include DD items on compliance with union requirements, labor regulation and any violations over the past 24 months.

Governance example 1, description

          As part of our ESG DD process, we review operators' systems to mitigate business ethics risks as well as past events or fines related to the topic, and how these polices cascade to contractors. As an area of particular expertise for Partners Group, we are well-equipped to conduct thorough due diligence on this topic.

Governance example 2, description

          As part of our ESG DD assessment, we ask about financial and operational audits to be conducted in the asset, to help ensure compliance with policies and procedures, to educate and enforce best-practice, and to ensure an independent view of any potential conflict.

Governance example 3, description

          Cyber security: Cyber security is a topic of increasing importance across our portfolio, including for our property investments, who may have access to tenants' sensitive financial information. As part of our DD assessment we assess any recent cyber security breaches as well as systems in place to ensure security, both in the asset and in the operator. We also have an in-house cyber security expert that provides support as needed.

04.4. Additional information. [Optional]

PR 05. Types of ESG information considered in investment selection (Private)

PR 06. ESG issues impact in selection process

06.1. Indicate if ESG issues impacted your property investment selection process during the reporting year.

06.2. Indicate how ESG issues impacted your property investment deal structuring processes during the reporting year.

06.3. Additional information.

ESG issues in property investments play a significant role in helping PG identify risks as well as value creation opportunities. As part of the property assessments third-party consultants perform, Partners Group looks for ways to improve energy and resource efficiency and determine relevant value creation plans alongside the asset operator.