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OUR COMPANY AFFILIATES

CBRE GROUP

CBRE Group, Inc. is the world’s largest commercial real estate services and investment firm, with 2019 revenues of $23.9 billion and more than 100,000 employees (excluding affiliate offices). CBRE has been included in the Fortune 500 since 2008, ranking #128 in 2020. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.

INVESTMENT SERVICES

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers with $109.6 billion in assets under management.

Built up over more than 40 years, our unparalleled platform is focused on real assets, giving our institutional clients access to real estate and infrastructure in the Americas, Europe and Asia Pacific. Our clients benefit from a complete range of investment solutions including equity and debt, direct and indirect, and listed and unlisted strategies.

Trammell Crow Company, founded in Dallas, Texas in 1948, is one of the nation’s oldest and most prolific developers of, and investors in, commercial real estate.The CBRE Global Investors and Trammell Crow Company platforms make up the Real Estate Investments division of CBRE Group.

The Real Estate Investments division is led by
Mike Lafitte, Global CEO, Real Estate Investments.

BLOGS

Regularly released content on the state of the real estate and infrastructure industry are produced by our subject matter experts and shared on their blogs. A selection of them can be found below.

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Expert view: Hannah Marshall & Aleksandra Njagulj

REAL ESTATE: AN UNDERVALUED TOOL IN SUSTAINABLE INVESTING

Hannah Marshall

Chief Investment Officer – UK Direct Real Estate

Aleksandra (Sasha) Njagulj

Global Head of ESG

Views 416 times

The built environment contributes significantly to carbon emissions, so addressing this by investing responsibly in the sector can be a major driver for change

Click here to read the full paper including graphs: LGC article – Hannah Marshall and Aleksandra Njagulj


A
n intractable problem?

Society is increasingly coming to grips with the scale of the environmental challenges facing the planet and the urgent need for change. This is prompting increasing focus from consumers, companies and governments on environmental, social and governance (ESG) factors in every facet of public and private life. But the very scale of
the challenge can make it difficult to know where to start in tackling such a vast issue. One overlooked lever for ESG impact is real estate. From the homes we live in to the factories that produce our goods and the offices that house workers, the built environment contributes 40% of carbon emissions. Given that people can spend
between 80-90% of their time indoors, the built environment also has an enormous impact on the health and
wellbeing of our communities. The ability to make a positive contribution to ESG factors through property ownership can be underestimated. ESG factors can have a profound effect on the investment performance of an asset. At CBRE Global Investors, we take a different approach to ESG, seeing it not as a compliance issue to avoid. Instead, it’s a central tenet of how we add value across every stage of the investment lifecycle, creating a shared advantage for clients while contributing to society as a whole.

Shared responsibility
There are many ways real estate investors can contribute to sustainability through the management of their properties. It is possible to upgrade buildings to minimise their environmental footprint in simple ways, such as installing smart meters and energy-efficient lightbulbs or implementing waste management programmes. Meanwhile, improving facilities to provide gyms or cycle stores, or renovating to improve the light and space, can have a huge impact on wellbeing and social factors. However, ESG issues can sometimes be pushed to the bottom of the agenda in real estate due to confusion over whose responsibility they are. Landlords can feel it’s not appropriate to pry into their tenants’ operations, while some tenants deflect responsibility of a building’s ESG performance to their landlords. Green leases can help address this confusion by including clauses that define the responsibilities of the owner and tenant with regard to sustainability. They formalise a collaborative approach to monitoring, managing and improving the environmental impact of a building. With very long lease terms prevalent in some real estate sectors, landlords may believe their next opportunity to include green lease clauses is many years away, but often proactive engagement with tenants leads to an agreement on common sustainability goals.

A growing urgency to act
Unfortunately, delays in addressing ESG matters pose a significant, and imminent, risk to the investment performance of a property. Just as investors face pressure to meet tightening government regulations around ESG issues, their tenants face that same pressure. In coming years, buildings that underperform on ESG factors will attract a smaller pool of potential tenants and achieve lower rents. In addition, buildings with poor ESG performance could face significant discounting, or even obsolescence, when they are eventually sold. Tenants are increasingly looking for modern, smart buildings, not box-like offices with rows and rows of desks. Buildings that can offer the environment tenants desire, alongside the ESG performance they expect, will have a competitive advantage in the rental market. These expectations are likely to increase in the coming years, so it will only become more pressing to address ESG issues before they impact the value of an asset.

A tapestry of issues
ESG issues are interdependent, and efforts to address them from a holistic view are the most successful. For example, a programme to upgrade the windows of an office building might address the ‘E’ factor by reducing emissions, it could contribute to the ‘S’ factor by introducing more natural light and acoustic insulation (making it a more pleasant and productive workplace), and it will overlap with ‘G’ issues by helping both the owner and tenant meet their carbon reduction commitments. Even with growing focus from the public in recent years, ‘G’ factors can be viewed as a black and white issue of being compliant or not. Owners will need to look ahead and adapt to stay compliant as regulations change and tenant expectations rise. All ESG factors are set to become more influential as we transition to a green economy.

Leading in ESG
At CBRE Global Investors, we put ESG at the centre of our investment process. We live and breathe it every day. We believe that understanding and managing ESG factors at every stage of the property lifecycle is one of the drivers of investment’s outperformance. Our proactive approach ensures we work closely with tenants and landlords to help them reach their ESG objectives. Through green leases, on-site sustainability workshops, tenant fitout guidance and b2b collaboration, we help futureproof property investments and build mutually beneficial relationships with tenants over the long term. We can also provide look-through reporting for our clients, to monitor progress against bespoke ESG targets. For LGPS organisations looking to demonstrate their  commitment to ESG values, property investment provides an effective way to make a tangible, measurable contribution to sustainability.