How the multiplier effect can help drive greater sustainability

As envi­ron­men­tal, social and gov­er­nance (ESG) issues become a grow­ing pri­or­i­ty for gov­ern­ments and com­pa­nies around the world, real estate and infra­struc­ture invest­ment man­age­ment busi­ness­es are in a unique posi­tion to dri­ve change by influ­enc­ing stake­hold­ers across the built envi­ron­ment.

To put that scale of poten­tial influ­ence in con­text, with almost $150bn in assets under man­age­ment, CBRE Invest­ment Man­age­ment (CBRE IM) has a port­fo­lio that equates to the size of an aver­age city. By engag­ing and influ­enc­ing its net­work of investors, oper­a­tors and ten­ants to adopt more sus­tain­able prac­tices, CBRE IM aims for a mul­ti­pli­er effect that will sig­nif­i­cant­ly move the nee­dle on ESG and cre­ate a more sus­tain­able future. The firm believes that a focus on sus­tain­abil­i­ty can enhance returns and mit­i­gate risk for its investors.

To under­pin this goal, CBRE IM has adopt­ed a three-pronged approach that incor­po­rates cli­mate, peo­ple and influ­ence.

“As a glob­al leader in real assets invest­ing, CBRE IM has an oppor­tu­ni­ty and respon­si­bil­i­ty to help the envi­ron­ment and the com­mu­ni­ties we serve,” says Helen Gur­fel, head of sus­tain­abil­i­ty and inno­va­tion at CBRE IM. “Our oppor­tu­ni­ty lies in using our mar­ket posi­tion, scale and exper­tise to influ­ence how build­ings are built, man­aged, occu­pied and sold. We reg­u­lar­ly exert our influ­ence as a glob­al invest­ment man­ag­er through robust engage­ment with our stake­hold­ers, includ­ing ten­ants, employ­ees, clients and com­mu­ni­ties.”

Depend­ing on the invest­ment strat­e­gy, CBRE Invest­ment Man­age­ment will have dif­fer­ent approach­es for engage­ment and dri­ving change.

Ten­ants

“Since mil­lions of peo­ple use our assets every day, we strive to help improve their social and phys­i­cal well­be­ing,” Gur­fel says. “One of our many ten­ant-engage­ment pro­grammes aims to antic­i­pate and address ten­ants’ needs through next-gen­er­a­tion prop­er­ty man­age­ment and place-mak­ing prac­tices that enhance ten­ant sat­is­fac­tion and reten­tion.”

The firm is also able to part­ner with ten­ants to help them devel­op their own ESG man­dates.

Gur­fel says that with oper­a­tions in 20 coun­tries world­wide, the firm thinks cre­ative­ly as to how it can accel­er­ate decar­bon­i­sa­tion across its port­fo­lio where pos­si­ble. For exam­ple, CBRE IM has over 600 logis­tics assets span­ning 200 mil­lion square feet, and Gur­fel says the firm is estab­lish­ing a solar pro­gramme across its logis­tics assets in Europe and the US.

“Recent­ly we start­ed work­ing on four com­mu­ni­ty solar-rooftop projects, which will pro­vide renew­able ener­gy at a low­er cost to our ten­ants and also the larg­er com­mu­ni­ty, as well as accel­er­ate our decar­bon­i­sa­tion efforts,” she says. “These projects require engag­ing with ten­ants to get their buy in for imple­men­ta­tion and in some cas­es have led to fur­ther sus­tain­abil­i­ty engage­ment.”

Investors

The firm has deep rela­tion­ships with insti­tu­tion­al investors around the world and con­sid­ers these to be a sig­nif­i­cant cat­a­lyst for change. “As an investor-oper­a­tor, we strive to help our investors under­stand that dri­ving sus­tain­able oper­a­tional effi­cien­cies can improve returns and mit­i­gate risk. We also work with our clients to mea­sure these results through indus­try-recog­nised frame­works, which has fur­ther deep­ened their desire to expand their own ini­tia­tives.

Com­pa­nies

When CBRE IM invests in list­ed secu­ri­ties, they active­ly engage with those com­pa­nies to under­stand their ESG strat­e­gy and risk fac­tors; con­vey the respon­si­ble prac­tices which are most impor­tant; and influ­ence them to apply best prac­tices and a dis­ci­plined proxy vot­ing process.

Sim­i­lar­ly, when CBRE IM invests with oth­er man­agers, they require the oth­er man­agers to either have in place or agree to imple­ment cer­tain ESG com­mit­ments. CBRE IM also engages with part­ners on an ongo­ing basis to con­tin­u­ous­ly improve their port­fo­lios. As an exam­ple, they ran a phys­i­cal risk assess­ment for all 8,000 assets in their indi­rect­ly man­aged port­fo­lio and asked man­agers to cre­ate plans to mit­i­gate any iden­ti­fied phys­i­cal cli­mate risk.

In their infra­struc­ture port­fo­lio, CBRE IM’s sus­tain­abil­i­ty com­mit­ments include invest­ments in renew­able ener­gy and sus­tain­able trans­porta­tion. Their infra­struc­ture team now owns a com­pa­ny called Norled, a leader in inno­v­a­tive and envi­ron­men­tal­ly friend­ly trans­porta­tion solu­tions, which has invest­ed sig­nif­i­cant­ly in new types of ves­sels and eco-friend­ly tech­nol­o­gy, includ­ing hybrid and bat­tery-dri­ven ves­sels. Since the ini­tial acqui­si­tion, Norled has launched the world’s first hydro­gen-elec­tric fer­ry. While this is a clear win for the envi­ron­ment, the sector’s resilience also makes it an attrac­tive investor propo­si­tion.

Com­mu­ni­ties

“Our assets are the build­ing blocks of com­mu­ni­ties, and we want to have a pos­i­tive impact in mak­ing these com­mu­ni­ties stronger,” says Gur­fel.

The firm recent­ly worked across sev­er­al stake­hold­er groups on a new life sci­ence devel­op­ment in Atlanta, part­ner­ing with a devel­op­er, a client and a new ten­ant to cre­ate an edu­ca­tion­al fund that helped estab­lish a life sci­ence ini­tia­tive to train teach­ers and stu­dents in the sur­round­ing neigh­bour­hood in careers in biotech. “We want to make sure that we’re cre­at­ing com­mu­ni­ties that are gen­uine­ly giv­ing peo­ple the oppor­tu­ni­ty to thrive,” Gur­fel notes.

Employ­ee upskilling

Gur­fel believes that change must begin with the firm’s own peo­ple. “They are a crit­i­cal com­po­nent of our ecosys­tem,” she says.

“A vital aspect of inte­grat­ing sus­tain­abil­i­ty across our glob­al busi­ness is knowl­edge and edu­ca­tion, which is why one of our key objec­tives is to cre­ate greater sus­tain­abil­i­ty flu­en­cy across our organ­i­sa­tion,” she says. “Edu­ca­tion dri­ves empow­er­ment, so we’re upskilling our entire organ­i­sa­tion to pos­i­tive­ly influ­ence oth­ers across our net­work.”

CBRE IM’s employ­ee engage­ment pro­gramme start­ed with an inter­nal sus­tain­abil­i­ty knowl­edge hub, which pro­vides edu­ca­tion­al tools and resources, includ­ing a gam­i­fied learn­ing plat­form, that has helped employ­ees fur­ther embrace sus­tain­abil­i­ty efforts.

To fur­ther inte­grate sus­tain­abil­i­ty across the organ­i­sa­tion, the firm launched an ESG ambas­sador pro­gramme com­pris­ing 80 inter­nal cham­pi­ons who will embark on a for­mal learn­ing pro­gramme cen­tred on sus­tain­abil­i­ty.

Gur­fel con­cludes: “If you’re not embrac­ing sus­tain­abil­i­ty then you are miss­ing an oppor­tu­ni­ty. Stand­ing still is no longer an option. The more peo­ple have a sus­tain­abil­i­ty mind­set, the bet­ter off we are as a soci­ety.”

For more infor­ma­tion please vis­it cbreim.com

Pro­mot­ed by CBRE