GLOBAL - A study conducted on behalf of three major European pension investors has led to the launch of a global Environmental Real Estate index, after evidence showed few property managers meet the global standards pension funds expect when it comes to tackling environmental issues.

Research commissioned by asset managers APG and PGGM and the Universities Superannuation Scheme found many property companies and fund managers are not actively managing environmental issues in their real estate portfolios, even though research suggests environmental performance is "significantly and positively related with return on assets".

Moreover, the European Centre for Corporate Engagement at Masstricht University which produced the survey - headed by Assistant Professor Nils Kok but with substantial assistance from Sander Paul von Tongeren, senior sustainability specialist at APG - acknowledged the findings may actually be more positive than the true status of property companies environmental performance as it is feared only the better property managers responded to the survey.

Standards across the globe could therefore be worse than pensions investors would like to see, according to a summary of the findings as "the sample of respondents may provide an overly optimistic view on the current environmental performance of the global universe".

An environmental benchmark has been created to score companies and managers on two levels - their environmental practices and their implementation of them - in the hope that the highest scoring property investments then serve as a best practice standard for all other investments to aspire to. The best performers in each region and asset group lead this benchmark but listed companies in Australia, Sweden and the UK were seen as the best performers.

Of the 700 listed property companies and private property funds surveyed, just 198 responded: 72 listed companies and 126 private funds. And within these results, there were "substantial variations in response rates between regions and types of property funds", said the 2,000-word Environmental Performance report summary.

In particular, listed companies were seen as the best performers on the benchmark, ahead of private funds, suggesting "non-responding property funds are likely to lag behind in environmental management", according to the study.

"It is clear that property managers from all over the world can learn from the Australian best practices in environmental management," it continued.

The gap between listed firms and private funds may in part be down to limited disclosure among property funds, along with short-term horizons which "may hinder investments in energy efficiency", said the authors.

Companies invested in residential or non-core property types "score substantially lower on the implementation measurement index of environmental practices", the study found. At the same time, dedicated office funds have the highest scores as many of the environmental metrics and technology on the market is targeted at that sector. Yet industrial buildings significantly lag other sectors.

Just 20 of the respondents as described by the benchmark study as "green stars" who both "walk the walk" and talk the talk" in the performance map presented within the summary, as many of those firms who talk of making efforts on environmental issues do not necessarily fulfil them, according to the report.

Findings revealed just 19% of property company respondents report actual numbers of energy consumption, while 16% report water consumption and 14% report carbon emissions.

The criteria for assessment were related to the presence of environmental management policies, the integration of issues in property management and their disclosure, and asked for evidence on water and energy consumption, waste collection and recycling, CO2 emissions as well as on employee environmental training programmes and remuneration policies.

Further information and a summary of the report can be found at

Nils Kok is Assistant Professor at Maastricht University and visiting scholar at UC Berkeley.