Global Real Estate Engagement Network
“Together with other Institutional investors we join forces in the Global Real Estate Engagement Network (GREEN) to accelerate sustainability in the real estate sector and thus reduce our financial risk and contribute to the Paris-agreement” -Pensioenfonds Detailhandel-
What is GREEN?
GREEN is a not for profit engagement network of global institutional investors in the real estate industry. The network aims to ensure that the industry reaches the Paris goals on climate change. The members of the network have set out their call for action in an investor statement which is endorsed by all members. Through the power of coalition the institutional investors aim to steer real estate companies to improve their sustainability performance, and reduce their exposure to financial and non-financial climate risk. Currently the network targets listed and non listed real estate companies.
GREEN currently represents over EUR 2 trillion Assets under Management, representing asset managers as well as asset owners.
Why GREEN?
The sector is responsible for 30-40% of global carbon emissions. Environmental factors are becoming increasingly important in real estate. Legislative and regulatory requirements for curbing emissions to ensure net-zero compliance by 2050 at corporate level are ever more likely, while at the other end of the spectrum there is increasing focus on measures that target tenants and owners. Real estate investors too are increasingly required to demonstrate and report on the sustainability of their investments. These developments coupled with the physical risks associated with global warming mean that real-estate portfolios are becoming increasingly vulnerable to climate change on a range of levels.
Even though, it is relatively easier to decarbonize real estate, without major impact on business models and with many profitable or risk reducing sustainability measures available as compared to other sectors; the sector is not on track to reach net zero in 2050.
While these factors contribute to the likelihood of successful investor engagement, the sector remains largely under-engaged. GREEN allows its members to improve the before. The members share their call for action in an investor statement and join forces through engagement.
Global share of energy consumption by sector
What are GREEN’s ambitions?
GREEN’s ultimate goal is to encourage the real estate sector to effectively reduce its carbon emissions and manage progress against science-based 1.5° targets, such as the Carbon Risk Real Estate Monitor (CRREM) pathways. The members of GREEN see it as their fiduciary responsibility to take ESG and climate risk factors into account in their investment policies. GREEN outlines four actions on climate change and sustainability for real estate funds and companies:
- Enhanced disclosure on the robustness of companies business plans in different climate scenario’s.
- Implement a strong governance framework for climate change and sustainability, including ambitious target setting aiming for 1,5 degrees pathway.
- Develop science based transition pathways to help meet Paris Agreement goals.
- Promote certified and standardized green building certifications across the portfolio.
More detail on the call for action can be found in the investors statement.
Joining GREEN
What do I need to do to become a member of GREEN?
All institutional investors joining GREEN have to sign the investor statement. A member contributes to the ambitions of GREEN by joining forces in collaborative engagement. Only by working together we can achieve GREEN’s ultimate goal of getting the real estate industry back on track to reach Paris.
To do’s:
- Signing the investor statement
- Contributing in kind to the network by performing engagements. If you don’t have your own engagement capabilities or capacity to contribute in kind to the network, nor a fiduciary manager who can do this for you, GREEN can bring you into contact with one of its engagement service provider members which can engage on your behalf.
What can you expect from GREEN
GREEN helps to increase your influence by strengthening your voice as a member of a global collaboration network. The network coordinates and expands the coalition and helps its members with collective investor statements, defining common interest and (if required) assistance with the engagement efforts. GREEN also represents collective investor interest in industry bodies and data/benchmark organizations. Members open to sharing their own engagement efforts within the network will also receive a report on the combined engagement activity of all such members.
Benefits?
- More effective engagement through collaboration
- Combine activities for cost efficiency
- Efficiency of scale
- Power of collaboration
- Membership of a global coalition
Yes, please send me more information about GREEN
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The story of GREEN
It all started with the academics Professor Piet Eichholtz from Maastricht University and professor Kees Koedijk from Utrecht University, who recognised that real estate is presently one of the most polluting industries, and even though engagement has a positive impact on business performance, very little enagement is taking place in the sector on this topic.
Piet Eichholtz and Kees Koedijk are also founders of Finance Ideas, a company which focuses on societal capital, and together with Finance Ideas they initially set up GREEN, and developed it to its current form.
“Research shows that real estate presently is one of the most polluting industries worldwide, responsible for 30%-40% of total emisisons. Coupled with physical risks, such as floods, fires, and other natural hazards, investors in real estate run significant unmanaged and unrewarded financial risks and contribute to negative impact.”
-Piet Eichholtz-
GREEN was formally launched in september 2021 backed by seven smaller to medium sized Dutch pension funds. Funding from the Laudes foundation has ensured that the network quickly grew with some of the largest global investors joining by the beginning of 2022.
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