A report issued Tuesday by a United Nations agency -- and authored by a University of Arizona professor -- urges institutional investors worldwide to engage with property fund managers to embrace U.N.-backed guidelines for developing sustainable real estate.
The United Nations Environment Programme Finance Initiative Property Working Group, whose members manage $300 billion in property assets, collaborated with the Secretariat to produce the report "Building Responsible Property Portfolios." The report highlights leading examples of responsible property investing, categorized according to its six "Principles for Responsible Investment."
The principles were developed by a group of leading institutional investors in a process convened by the U.N. secretary-general and implemented by the U.N. Global Compact and the UNEP Finance Initiative. The principles suggest actions for incorporating environmental, social and governance issues into mainstream investment decision-making and ownership practices. The set of principles has more than 360 signatories, representing in excess of U.S. $14 trillion in assets.
The author of the report, Gary Pivo, a professor of urban planning and natural resources at the UA, said that embedding these six principles into this sector could play a key role in ending conflicts over who precisely should manage a transition to more sustainably managed real estate investments.
The report singles out buildings as being either directly or indirectly responsible for about half of the world's carbon dioxide emissions, both from their operation and the energy consumed by people traveling between them. It expressed concern that the property industry is moving too slowly to address its environmental footprint, including greenhouse gas emissions, and called for investors and managers to incorporate the six principles in their decision-making processes.
"This report documents how some of the world's largest real estate investors are blending principles from urban planning, real estate finance, environmental engineering and resource conservation to help create more environmentally sustainable and socially responsible cities." Pivo said.
"Itï¿½s a fascinating example of interdisciplinarity in practice and demonstrates how new solutions can be found by integrating traditionally separate disciplines. A new research field is also evolving here, with colleagues from all around the world coming together to better understand how social, environmental and financial goals can be simultaneously achieved through what's come to be called responsible property investing."
Paul McNamara, co-chair of the UNEP FI Property Working Group, said, "Ultimately, responsible investors can play a critical role in breaking down what has been termed the "circle of blame" that characterizes the property industry's slowness to address its environmental impact.
"We operate in an industry where investors, occupiers, constructors and developers each blame the other for the lack of positive action in improving the environmental footprint of new and existing buildings. Our report highlights the wide range of opportunities that exist for institutional investors who want to take positive action and apply the Principles for Responsible Investment to their property assets."
The report, "Building Responsible Property Portfolios," including the six Principles for Responsible Investment, is available online at http://www.unepfi.org.
The United Nations Environment Programme Finance Initiative is a global partnership between UNEP and the financial services sector. UNEP FI works with more than 170 financial institutions, such as banks, insurers, asset managers and pension funds, to develop and promote linkages between sustainability and financial performance. UNEP FI is the oldest and largest partnership between the UN and the global financial sector, and promotes the adoption of best environmental and sustainability practice at all levels of financial institution operations.
The Property Working Group is a platform of financial institutions that collaborate to drive sustainable development to the heart of mainstream property finance. Pivo is the group's adviser.