Canadian Institutional Investors Help Drive Sustainable Property Management
By: Meirav Even-Har, Toronto
The buildings and houses we occupy at work and home are the topic of many annual sustainability and energy efficiency conferences around the world. Last year, Toronto, Canada was the first city outside of the U.S. to host Greenbuild, which gathered over 23,000 attendees from around the world. According to The United Nations Environment Programme - Sustainable Building and Climate Initiative (UNEP-SBCI), "buildings matter." The UNEP-SBCI website says, "Buildings use about 40% of global energy, 25% of global water, 40% of global resources, and they emit approximately 1/3 of GHG emissions." If 'buildings matter' then so does their day-to-day management - how much energy and water is used, how much waste is directed to landfill, and so on.
Many commercial buildings in Canada and around the world are managed on behalf of public and corporate pension funds. Large property management firms are responsible for the management of retail, residential and commercial buildings on behalf of institutional investors such as: Caisse de dépôt et placement du Québec (Caisse de dépôt), Ontario Municipal Employees Retirement System (OMERS), and British Columbia Investment Management Corporation (bcIMC), to name a few.
Increasingly Environmental Sustainability and Governance (ESG) considerations are employed in real estate portfolio management, also known as responsible property investment. According to Responsible Property Investing Centre (RPIC), "RPI covers multiple social and environmental dimensions of real estate investment, including: Smart Growth, Social Equity and Community Development, Urban Revitalization, Energy Conservation, Environmental Protection, Worker Well-Being, Health and Safety, Local Citizenship, [and] Corporate Citizenship."
Among Canadian institutional real estate investors, bcIMC has been at the forefront in implementing RPI principles. It is also a signatory to the United Nations-backed Principles for Responsible Investment Initiative (PRI), along with others such as Caisse de dépôt. According to the UN-PRI website, The Principles..."reflect the view that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios and therefore must be given appropriate consideration by investors if they are to fulfil their fiduciary (or equivalent) duty."
Managing properties on behalf of institutional investors are real estate firms Bentall Kennedy and GWL Realty Advisors. Bentall Kennedy, which ranked first in the Americas and fifth globally for environmental sustainability in the Global Real Estate Sustainability Benchmark (GRESB), has implemented sustainability initiatives throughout the real estate portfolio it manages on behalf of its institutional clients.
"Our commitment to responsible property investing is one that we share with our clients, and this has been a significant driver on the road to building and operating sustainable buildings with high levels of environmental performance," comments Nada Sutic, Director of Sustainability, Strategic Resources Group at Bentall Kennedy.
Andres Bernal, National Director, Sustainability and Energy Management at GWL Realty Advisors observes, "Leadership in Commercial Real Estate sustainability is the resultant of competitive and responsible property investment factors." Mr. Bernal explains that in terms of the competitive environment, it is widely understood that a building with lower consumption and better environmental conditions results in lower operational costs, and therefore more competitive rents. "As a factor of RPI, many landlords realize that their buildings are also community building blocks that contribute to local economies while creating and maintaining [financial] value."
As urban areas grow with more of the world's population moving into cities, both commercial and residential buildings can be a source of GHG emissions growth, but conversely, a great opportunity for emissions reduction. If pension funds, such as bcIMC, continue to employ ESG indicators in how their real estate portfolios are managed, perhaps buildings can continue to matter but for different reasons.
Bentall Kennedy: Responsible Property Investing
GWL Realty Advisors: Corporate Social Responsibility
UNEP Principles for Responsible Investment Initiative
Photo Credit: black office building @ king + bay (by fullyreclined)