UN urges institutions to push property managers towards sustainable building

Investors can end the ‘circle of blame’ says UNEPFI Property Working Group.

The United Nations is urging institutional investors to push their property fund managers to sign up to the six environmental, social and governance principles of the UN Principles for Responsible Investment to end what it calls the ‘circle of blame’ about how the multi-trillion dollar property industry can be made sustainable. Buildings and their location in relation to public transport are estimated to contribute over half of all global CO2 emissions.
However, the UN says the property industry has been slow to adopt sustainability practices because of poor incentives in the industry to make environmental and efficiency improvements.
Paul McNamara, co-chair of the UN Environmental Programme Finance Initiative Property Working Group, said: “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.”
A report launched by the group, whose members manage $300bn in property assets, said institutional investor pressure on real estate fund managers to adopt the PRI could be the catalyst for change.The report, titled: “Building Responsible Property Portfolios”, highlights pioneering improvements in the property sector, which it claims are likely to create better profits by combining lower operating costs of environment-friendly buildings and a willingness of tenants to pay more for renting ‘sustainable spaces’.
Many institutional investors have up to 10% of their total investment portfolios invested in property, which would swing a significant weight of capital behind the UN initiative.
A UN report last year said investors and asset managers could achieve lower operating expenses, higher net operating incomes, improved tenant retention and satisfaction and higher property values from responsible investment strategies such as energy conservation, water
conservation, recycling and fair wages and benefits for janitors and other service workers. It cited a 2007 survey of corporate real estate professionals in London, Melbourne, Denver and Singapore, which found that nearly 80% thought sustainability would be critical to corporate real estate within two years and they would pay at least 1% more in rent for sustainable premises.