Institutional real estate industry bodies have updated their recommendations to regulators for the creation of environmental and social metrics for real estate.
In 2022, the organisations urged UK regulators to adopt tailored and fit-for-purpose ESG metrics and product labels for the UK’s forthcoming sustainability disclosure requirements (SDR) regime, and have now updated their proposals following an announcement in November setting out the Financial Conduct Authority’s (FCA) plans for SDR, including product labels.
The Association of Real Estate Funds (AREF), British Property Federation, Commercial Real Estate Finance Council Europe, European Association for Investors in Non-Listed Real Estate (INREV), Investment Property Forum, Pensions for Purpose and The Good Economy (TGE), have submitted the updated proposals to the FCA, International Sustainability Standards Board, and Secretariat to the UK Transition Plan Taskforce.
In the submission, the organisations state that they welcome the FCA’s proposals on SDR, including the establishment of social metrics, and the FCA’s expression of readiness to work with European regulators on their review of the EU’s Sustainable Finance Disclosure Regulation (SFDR), including product labels.
Lonneke Löwik, CEO of INREV, said: “The updated ESG metrics are a great step forward for the real estate investment industry to measure our environmental and social impact. Importantly, these metrics also help policy makers determine how to develop quantifiable standards for compliance with ESG disclosure regulations and labels.
“We’re pleased that so many different parts of the industry continue to work together to develop aligned views on these important measures; we will work with our global partners to encourage them to adopt these metrics in their regions as well.”
Helen Newman, director of sustainable investing at Fabrix, said: “Through cross-industry collaboration, the sector has united around a set of comparable ESG reporting metrics that communicate in-use performance of real estate portfolios and the underlying assets and progress towards net zero.
“The group welcomes the opportunity to work with policy makers to harmonise disclosure instruments and get these right for the real estate sector.”
Vivienne King, head of real estate social impact at TGE, said: “I welcome the SDR, which introduce far reaching improvements in consistency, clarity and transparency across the market for sustainable investment products. The anti-greenwashing measures and naming and marketing rules will play an important role in preventing unsubstantiated sustainability claims.
“The FCA feedback exercise carried out by the real estate working group convened by Melville Rodrigues has demonstrated the value that is derived from collaborative working, to the benefit of all sectors within the real estate industry.”
Melville Rodrigues, head of real assets advisory at Apex Group and AREF public policy committee member, said: “Our real estate sector’s credibility depends on working from transparent, consistent and verifiable ESG metrics.
“It has been a privilege leading this submission initiative with insightful contributions from sector stakeholders that take into account the welcomed FCA SDR policy statement.”
The ESG metrics for real estate proposals can be downloaded here.
To read the latest IPE Real Assets magazine click here.
