Ethical Performance
inside intelligence for responsible business


socially responsible investors set sights on real estate

January 2007

The United Nations has established a working group to bring socially responsible business principles into the sphere of property investment.

The Working Group on Responsible Property Investment, set up by the UN Environment Programme Finance Initiative last month, will work with institutional investors to help them manage property with greater regard to areas such as energy consumption and the use of premises by local communities. Paul Clements-Hunt, head of Unepfi, said institutions that invest in real estate ‘need to follow the same trend’ on social responsibility as found in other investment classes.

The group will be co-chaired by Jean-Pierre Sicard, head of sustainable development at the French state bank Caisse des Depots and Paul McNamara, director of real estate company Pruprim. Its members will include AXA, Calvert, F&C, Hermes, Land Securities, Lend Lease and Morley Fund Management.

In a separate move in the US, a group of investors and property specialists are to meet in New Orleans this month to discuss how to increase investment in responsible real estate. They will do so as part of the Responsible Property Investing Project set up by Boston College in February 2006, in which Calpers, Calvert and Domini Social Investments are involved.

David Wood, senior research associate at Boston College’s Institute for Responsible Investment, who co-ordinates the project, said SRI funds are often underweight in real estate. The opportunities for institutional investors have also been overlooked, he said, even though energy-efficient and affordable housing, for example, represents a ‘natural investment prospect’ for socially-mandated state pension funds. Two such funds – Calpers and the California State Teachers Retirement System – recently set a goal of reducing energy use in their 200 million square feet of real estate holdings by a fifth over five years. Calpers’ investments policy covers low-income housing.

Wood said one priority will be to develop performance indicators on the social and environmental impacts of real estate applicable to all investors.

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