1. ESG integration in real estate is about the entire value chain
Real estate portfolio management companies are now increasingly implementing an ESG strategy. An ESG strategy can be applied to investment funds and guide the management of a specific property.
2. ESG integration applied to real estate concerns both the acquisition and management of real estate assets
When acquiring a property, the management company may decide, for all or some of its funds, to screen the property against an analysis grid composed of ESG criteria. Depending on the result and the objectives set by the management company or the fund, the property may or may not be acquired.
ESG integration can also be carried out for a specific building. In this case, a building adopts an ESG strategy through an action plan and performance indicators that will be monitored annually to identify areas for improvement.
3. The integration of ESG criteria in a real estate fund focuses on the environmental characteristics of buildings
For a building, an ESG strategy can target several environmental performance objectives: reduction of the carbon footprint (reduction of CO2 emissions), increase in the energy performance of buildings, waste sorting, obtaining environmental labels applied to real estate (BREEAM, HQE), promotion of soft mobility (bicycle parking, charging stations for electric cars)
4. The integration of ESG criteria in a real estate fund also concerns the building's occupants and its stakeholders
The social aspect of an ESG strategy within a building focuses on the well-being and comfort of the occupants: indoor air quality, services (concierge service, fitness room, company restaurant, etc.), accessibility of buildings to people with reduced mobility, etc.
BuzzWords ESG : Integrating ESG into real estate funds
What is responsible property investment ?
5. The European Union requires more transparency for responsible investment products
The European Union is adopting ambitious measures to support sustainable growth and promote responsible investment. The Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation strengthen the transparency obligations of portfolio managers on the products they offer, including those with a strong ESG orientation.
6. Labels to distinguish responsible real estate funds
SRI labels distinguish funds that invest in assets with an ESG performance or that work to improve their environmental and social performance. With the Real Estate SRI label, France has the first European label completely adapted to real estate. Other labels exist, such as Towards Sustainability (Belgium), LuxFLAG ESG (Luxembourg) and FNG Siegel (Germany, Austria, Switzerland).
7. Impact investing is a growing trend in ESG
Impact investing is the ultimate commitment to responsible investment. It refers to funds whose objective is to generate a positive and measurable environmental and social impact, in addition to its profitability objectives. Impact real estate funds tend to target existing buildings with low ESG performance but a high potential for improvement.
8. The integration of ESG criteria in a real estate fund responds to the ambitious challenge of limiting global greenhouse gas emissions
Adopted in 2015 at COP 21, the Paris Agreement aims to limit global warming to well below 2°C. Faced with this global climate challenge, the real estate sector is mobilising, as it is responsible for almost 40% of greenhouse gas emissions and accounts for more than a third of final energy consumption worldwide1. Aware of the role it has to play in the energy transition, the real estate sector is mobilising to improve the energy performance of the existing building stock.