Linden Toll
Property fund managers that take environmental, social and corporate governance (ESG) issues into account when investing client funds are likely to outperform those who don’t, particularly over the long-term, according to keynote speakers at a recent conference for the property investment sector.
In a session entitled ‘Turning Green for Growth’ at the Australian Direct Property Investment Association (ADPIA) conference in Tasmania, speakers emphasised the importance of achieving sustainable and responsible investment (SRI) accreditation for property funds. They said more and more investors are demanding proof that fund managers consider ESG issues when making investment decisions.
AMP Capital Investors’ Angus Denis said that being more ESG-aware, for example, by making buildings more environmentally sustainable, could also reduce running costs, add about 10 per cent to market value and enable rent rises of between 5 and 10 per cent.
He pointed to research by the Green Building Council of Australia that found environmentally-sustainable buildings were also more like to attract and retain tenants.
Ethical Investment Association executive director Louise O’Halloran said there are mounting pressures on the property sector to improve energy efficiency and reduce water waste and an increasing number of investors are looking to invest in properties that perform well in this area.
She stressed that considering ESG issues was increasingly being seen as part of running a business well.
Recent research suggests the property sector still has a long way to go in regards to reducing its negative impacts on the environment, particularly in relation to stabilising the world’s CO2 levels. According to the Deacon University Built Environment Research Group’s three-year survey, the urban environment uses between 40 and 50 per cent of global energy, consumes 40 per cent of non-renewable resources and 30 per cent of fresh water reserves.
ADPIA president Linden Toll said he hoped those businesses and fund managers that had adopted an ESG-approach and subsequently increased their bottom line would inspire others to do so.
“As a collective, we see environmental and sustainable issues as key items on the current business agenda.”
