The Global Real Estate Engagement Network (GREEN) is expanding its pool of asset owners while also pushing for more group engagement to align the sector with net zero carbon targets.
GREEN was officially launched in 2021 with six mid-sized Dutch pension funds as founding members. The network has grown to include asset owners ABP, PME and PMT, as well as asset managers APG, Wellington Management, MN, Robeco and Neuberger Berman. It now represents €2 trillion in assets under management.
Vincent van Bijleveld, managing director of GREEN, says real estate has seen less collective shareholder engagement than other sectors. Although the sector is estimated to be responsible for 30-40 percent of worldwide carbon emissions, it is not covered by initiatives such as Climate Action 100+.
GREEN has already had conversations with the top 60 REITs and 20 non-listed funds, and wants to intensify group engagement to generate more influence and have a bigger impact. So far, discussions have been very open and welcoming, according to Bijleveld, partly because companies see the value of more in-depth conversations with their investors.
The group is working on dividing up tasks between lead and co-lead engagers, following a similar format to that of CA100+.
“We would like to implement the good ideas of CA100+ and make use of their learnings,” says Bijleveld. Plans include providing proper staffing to assist members, making clear demands to target companies and tracking progress through a dashboard.
“We are also looking at setting up a technical advisory board, with scientists and potentially NGOs, to make sure we keep challenging our network and keep structural ambition high on the agenda,” adds Bijleveld.
GREEN’s investor statement commits members to taking action in four areas: enhancing disclosure on the robustness of companies’ business plans in different climate scenarios, implementing a strong governance framework for climate change and sustainability, developing science-based transition pathways, and promoting certified and standardised green building certifications across portfolios.
The filing of shareholder resolutions is seen as a tool of last resort and for now GREEN is prioritising expanding its engagements to more companies.
In terms of geographical footprint, GREEN focuses on Europe, the US and developed markets in Asia. “The latter region is sometimes assumed to be lagging but in reality many of these governments have pledged net zero, which also encourages real estate funds to adopt such targets,” says Bijleveld.
Despite significant improvement, however, the sector is “definitely not on track” to reach net zero, he adds.
“Too many participants think they can reach their climate goals by using only green energy, through offsets, or by only looking at assets in their direct control (in some cases that is just their headquarters) – but that is nowhere near enough to reduce their transition risks and to contribute to the Paris agreement.”
Bijleveld also points to a lack of technical insight regarding asset-level characteristics and potential measures to reduce energy and carbon intensity in real estate portfolios. Even the funds that have set targets often lack a detailed implementation plan, he notes. “Many funds have case studies showcasing sustainability measures, but we ultimately need an implementation roadmap for the whole portfolio level.”
One of the key challenges for sustainability-minded real estate funds is data, which currently varies widely in quality and quantity across different types of asset.
According to Bijleveld, office buildings often provide good data, but there is a “huge difference” in data availability for retail and residential buildings. He says funds need to be proactive about addressing this discrepancy. “True leaders put a lot of effort in dialogue and data-sharing with tenants, and are able to reach much higher data availability, but more importantly, a much better cooperation with tenants to take actual reduction measures.”