Building on its report ‘What the leaders are doing', the UNEP FI programme for 2008 seeks to provide further guidance for stakeholders. Paul McNamara reports
The United Nations Environment Programme Finance Initiative (UNEP FI) is a global partnership between the UN and the private financial sector to develop and promote links between the environment, sustainability and financial performance.
Following a meeting in Toronto in late 2005, a decision was taken by UNEP FI to create a Property Working Group (PWG) to complement the work that the UN was already carrying out in the development and construction field, under its Sustainable Buildings and Construction Initiative.
After early meetings in London and Paris in 2006 and 2007, the group is now officially established and has grown in membership to nearly 20 of the foremost property investment organisations from across the world committed to improving the environmental and social performance and governance of their property portfolios. The PWG has been advised throughout by Dr Gary Pivo, Professor of Urban Planning and of Natural Resources at the University of Arizona.
The PWG's main programme of work in 2007 focused on assembling information from both academic research and business-related case studies, to illustrate the variety of ways in which property owning organisations can act positively to improve the environmental and social performance of their assets in ways that do not reduce investment performance.
Output from this work was launched at the initiative's Global Roundtable in Melbourne in October 2007. An executive summary report of the basic findings has now been published as a CEO Briefing document entitled ‘Responsible Property Investment: What the leaders are doing', accessed from the UNEP FI web site (www.unepfi.org).
The report outlines 10 strategies an investor might adopt that are environmentally or socially beneficial as well as financially prudent. The 10 approaches are listed in table
1. A fuller main report will be published shortly and will be found on the same website.
During its annual face-to face meeting in New York in late 2007, the PWG identified a number of projects it intends to deliver in 2008. The plans represent a noticeable increase in workload and, to achieve this, the PWG's budget has been augmented by the generous support of a number of its member organisations.
The expanded 2008 programme also positions the PWG to collaborate more closely with other related UN initiatives. The first of these collaborative projects involves the PWG working with the UN Principles for Responsible Investment (PRI) to develop an interpretation of the PRI for use by property investors.
The original Principles for Responsible Investment were developed in the second half of 2005 by an international group of institutional investors under a process convened by the United Nations Secretary-General. They are meant to be generic to all forms of investment and are listed in table 2.
The aim of this project is not to develop new property-related principles but, rather, to help property investors better understand how they can play their part in implementing the PRI through the management of their property investments and portfolios. The intention is to draw on evidence of existing best practice and offer suggestions and case studies to help property investors and fund managers implement the PRI.
Signatories to the UN PRI and other responsible property investors will be surveyed to discover how they are currently applying PRI to property and, with this information, the PWG will develop a brochure giving investors more specific advice on how to apply the principles to their property portfolios. The intention is to review not only their application to direct property portfolios and investments but also to investment in both listed and unlisted property securities.
The second major project for 2008 is to develop a series of toolkits to help property owning organisations or managers who have decided they would like to manage their assets in a responsible way, identify what key steps they need to take to foster and develop such practices in their organisations.
The aspiration is for PWG-established working parties to develop at least eight such toolkits over a period of two years, covering many aspects of the property investment process such as investment strategy (including funding and investing in responsible funds or starting new ones), asset appraisal, development and construction, property management, energy, water and waste management and auditing, asset and fund benchmarking, disclosure, and certification programmes such as ISO and green building programmes.
The third major project is for the PWG to work with the UN Sustainable Buildings and Construction Initiative (UN SBCI) to develop a guide to the many and growing number of green building standards now in existence (such as LEED, BREEAM, HQE, etc). The intention is to write a guide to help property investors more easily identify which standards prevail in the various national real estate markets across the globe, including developing countries.
The aim will be to provide investors with a review of existing sustainable building assessment schemes, setting out their key principles and the indicators they use to define sustainable building performance. The review will also assess the penetration that each system has in different markets, how the various standards are typically implemented and promoted (through certification, legislation, economic incentives or other means); and, the similarities and differences that exist between the current assessment systems. Finally, the review will also critically assess the extent to which the existing systems are relevant to buildings in countries, particularly developing countries, that currently lack such assessment schemes.
One further small piece of work planned for 2008 is to write a brief paper identifying why applying responsible investment practices to real estate, while following the same aims and objectives, is practically and operationally very different to applying those practices to equity portfolios.
The PWG intends to continue to grow its already multi-national membership through 2008. Any company seeking more about the work of UNEP FI or its Property Working group, should contact Regina Kessler at email@example.com.
Paul McNamara is co-chair, UNEP FI Property Working Group. He is also
head of research at Prupim
TABLE 1: 10 APPROACHES TO RESPONSIBLE PROPERTY INVESTMENT
Approach Possible actions
1 Energy Conservation green power generation and purchasing, energy efficient design, conservation retrofitting
2 Environmental Protection water conservation, solid waste recycling, habitat protection
3 Voluntary Certifications green building certification, certified sustainable wood finishes
4 Public Transport Oriented transit-oriented development, walk-able Developments communities, mixed-use development
5 Urban Revitalization infill development, flexible interiors,brown-field and Adaptability redevelopment
6 Health and Safety site security, avoidance of natural hazards, first aid readiness
7 Worker Well-Being childcare on premises, indoor environmental quality, barrier-free design
8 Corporate Citizenship regulatory compliance, sustainability disclosure and reporting, independent boards, adoption of voluntary codes of ethical conduct, stakeholder engagement
9 Social Equity and Community fair labour practices, affordable/social housing, Development community hiring and training
10 Local Citizenship: quality design, minimum neighbourhood impacts, considerate construction, community outreach, historic preservation, no undue influence on local governments
TABLE 2: SIX PRINCIPLES OF RESPONSIBLE INVESTMENT
1. We will incorporate environmental, social and governance (ESG) issues into investment analysis and decision-making processes
2. We will be active owners and incorporate ESG issues into our ownership policies and practices
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest
4. We will promote acceptance and implementation of the principles within the investment industry
5. We will work together to enhance our effectiveness in implementing the principles
6. We will each report on our activities and progress towards implementing the principles