Blackstone, Starwood among real estate managers lacking net-zero commitments – ShareAction

Several of the world’s largest real estate investment managers are “failing to take even basic steps to tackle climate change”, according to a report by ShareAction, which names Blackstone and Starwood Capital Group as failing to establish net-zero commitments of any kind.

ShareAction’s analysis of 16 of the world’s biggest real estate investment managers, overseeing $1.66trn (€1.43trn) in property assets, found that most are falling short on climate action.

The research set 12 key standards that investment managers were expected to achieve, including making a public commitment to achieve net-zero emissions by 2050, and setting interim carbon reduction targets.

The ShareAction report, published today, stated that neither Blackstone nor Starwood Capital Group, which oversee €419bn, have indicated any plans to adopt a portfolio-wide net-zero commitment in the future. Furthermore, the report said that neither reported that, in the absence of a portfolio-wide commitment, any funds or assets were being managed in line with net-zero emissions on any scale.

Blackstone and Starwood Capital have disputed the report’s findings. Speaking to IPE Real Assets, a Blackstone spokesperson said: “This flawed report uses a subjective methodology that fails to capture the breadth and depth of Blackstone’s long-standing decarbonisation strategies that seek to create value for our investors.” 

Blackstone ranks first in the Top 150 Real Estate Investment Managers 2024 rankings. 

A Starwood Capital spokesperson said: “The report contains several factual inaccuracies and misrepresents the rigour and intentionality of Starwood’s approach to responsible investment. We remain committed to embedding sustainability considerations throughout the investment lifecycle to both mitigate risk and unlock long-term value for our investors.” 

Starwood Capital ranks 12th in the Top 150 Real Estate Investment Managers 2024 rankings.

Greystar was also given an F ranking alongside Blackstone and Starwood Capital, based on it failing to meet any of the key standards of the report.

A spokesperson for Greystar told IPE Real Assets: “We have committed to achieving net-zero operational carbon emissions by 2040 for landlord-controlled areas, supported by a 25% reduction in energy intensity and a 20% reduction in on-site water usage by 2030. The underlying data for the targets are externally assured and reflect our long-term approach to environmental performance.

“We continue to evolve our strategy in line with global best practice and work with others across the sector to improve data quality and transparency. However, we believe ESG assessments should reflect not only disclosure but also delivery and the structural differences between asset classes, ownership models and regulatory frameworks.” 

Greystar ranks 24th in the Top 150 Real Estate Investment Managers 2024 rankings.  

According to the report, most investment managers did not set portfolio-wide energy-efficiency targets covering both landlord and tenant consumption, while even fewer managers appeared to account for the decarbonisation strategies of external stakeholders, such as municipal transition plans. ShareAction said this revealed a lack of transparency from firms about their approaches to tackling climate change.

Nordic firm Nrep landing the top spot in ShareAction’s benchmark, having achieved every key standard. Managers in the top half of the ranking had set science-based targets and are making plans to meet them, and transparently disclosed their emissions, according to the report – including Savills Investment Management, Patrizia, Heimstaden and Prologis, which were awarded B grades. Hines and CBRE Investment Management received C grades.

Aidan Shilson-Thomas, senior research manager at ShareAction, said: “Some of the world’s largest real estate investment managers are failing to act on climate change at a time when rapid action is needed.

“The construction and operation of buildings account for a staggering third of global emissions, creating financial risks that managers must take seriously. The asset owners they act on behalf of, including pension funds, are relying on them to do so,” he added.

Seven of the 16 managers either did not have a net-zero commitment or excluded material scope 3 emissions from their commitments’ scope. Furthermore, just nine of the 16 managers had long-term climate commitments assessed as “comprehensive” aligned with frameworks such as the Science Based Targets initiative.

Four managers set long-term net-zero goals without disclosing interim carbon-reduction targets. Of the 12 with interim targets, six did not specify the proportion of assets covered, limiting visibility for external stakeholders on which assets are managed in line with their stated net-zero objectives. Eleven of the 16 managers did not explicitly confirm that their targets include emissions from construction.

Shilson-Thomas added: “A few investment managers demonstrate commitment to climate action, but continued inaction by their peers is pulling the real estate sector further off track from net zero, with devastating consequences for people and planet. Given the size of this sector, we need managers to step up and take responsibility for their impacts, while ensuring workers, tenants and communities are at the centre of plans to tackle climate change.” 

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