New Developments And Major Renovations
An investor can aim to achieve higher ESG standards during new construction or major renovations than through incremental work done to operational assets. The ESG issues to consider are largely the same as with the management of operational buildings but some issues become more important, e.g. supply chain, health and safety and waste management.
To be effective, ESG factors need to be included as early in the process as possible. During the design phase, the investor can request components that have better ESG performance e.g. high-efficiency insulation. There is also more chance to add optional sustainability features, e.g. rainwater harvesting, renewable energy.
PRI resources:
Consider Investing Your Conscience With The New Schwab Ariel Esg Etf
The Schwab Ariel ESG ETF invests primarily in exchange-traded equity securities of U.S. companies that have been evaluated based on specific environmental, social, and governance criteria. The Schwab Ariel ESG ETF may serve as a building block for those seeking investments that combine the potential benefits of an ESG focused investment strategy with long-term investing.
The Schwab Ariel ESG ETF is different from traditional ETFs.Traditional ETFs tell the public what assets they hold each day. This fund will not. This may create additional risks for your investment. For example:
- You may have to pay more money to trade the fund’s shares. This fund will provide less information to traders, who tend to charge more for trades when they have less information.
- The price you pay to buy fund shares on an exchange may not match the value of the fund’s portfolio. The same is true when you sell shares. These price differences may be greater for this fund compared to other ETFs because it provides less information to traders.
- These additional risks may be even greater in bad or uncertain market conditions.
- The ETF will publish on its website each day a “Proxy Portfolio” designed to help trading in shares of the ETF. While the Proxy Portfolio includes some of the ETF’s holdings, it is not the ETF’s actual portfolio.
Esg Trends And Performance
Trends showing capital inflows and investor activity across ESG investments have accelerated. Morningstar reported ESG funds drew $51.1Bn of net new money in 2020, double from 2019 and achieving the fifth consecutive annual record.Furthermore, the amount of ESG funds available to U.S. investors reached over 400 in 2020, an increase of 30% from the previous year.2
The movement to decarbonize investors portfolios is being made from large investors to small. In late 2020, BlackRock, the worlds largest investment manager, announced that it would consider ESG impact for 100% of its investments going forward. Also joining the movement, Fidelity, one of the most established providers of index investment products, launched its first two Sustainability Focused Index Funds in 2017, and since then have added 4 additional funds that provide investors the opportunity to invest in alignment with their specific values and interests.3
Furthermore, as the next generation of investors, millennials are leading the charge as trillions of dollars of wealth are expected to be transferred over the next few decades. While investors are primarily focused on profits, studies show millennials, who make up close to 80 million people in the U.S. alone, are considering investing strategies that align with personal values.
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Understanding Socially Responsible Investment
Socially responsible investments include eschewing investments in companies that produce or sell addictive substances in favor of seeking out companies that are engaged in social justice, environmental sustainability, and alternative energy/clean technology efforts.
In recent history, socially conscious” investing has been growing into a widely-followed practice, as there are dozens of new funds and pooled investment vehicles available for retail investors. Mutual funds and ETFs provide an added advantage in that investors can gain exposure to multiple companies across many sectors with a single investment. However, investors should read carefully through-fund prospectuses in order to determine the exact philosophies being employed by fund managers, along with the potential profitability of these investments.
There are two inherent goals of socially responsible investing: social impact and financial gain. The two do not necessarily have to go hand in hand just because an investment touts itself as socially responsible doesn’t mean that it will provide investors with a good return, and the promise of a good return is far from an assurance that the nature of the company involved is socially conscious. An investor must still assess the financial outlook of the investment while trying to gauge its social value.
How Are Companies Prioritizing Health & Safety
REITs are committed to creating healthy and safe working environments for their employees. A large majority of REITs surveyed reported having active health and safety programs, and a growing number have begun extending such programs to tenants as well. The COVID-19 pandemic has illustrated the strength of these programs as well as opportunities to adapt current practices to meet evolving health and safety standards for employees, tenants, and their communities.
A critical aspect of developing successful health and safety initiatives is instituting good governance practices. With 96% of Nareit Member Survey respondents reporting that their organization identifies and/or assesses work-related employee health and safety risks8 REITs have demonstrated their commitment to exercising strong governance of health and safety issues. Furthermore, of the top 100 REITs by equity market cap, 64% disclosed information on established occupational health and safety policies, an improvement of 30% over 2018 figures.
Case Study:Ventas, Inc.: Investing in Employee Health and Safety
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Esg Real Estate And The Six Stages Of Grief
Last week I spent a couple of days in sunny Vermont with our great IT partner Greenriver, who together with the GRESB Data Analytics team have been working hard on building out the GRESB Portal for the 2016 data collection on real estate, debt and infrastructure. One of the exciting developments is that GRESB is
Articles
Webinar: Investing In Sustainable Real Estate
This webinar dives into Sonens latest framework on investing in sustainable real estate. Also, see the expanded Q& A below where we respond to questions we did not get to during the live webinar:
Q& A Continued
- Do you have a stat for just residential buildings GHG emissions and energy use?
- We rely on related information from the Energy Information Agency. The information youre looking for is located here:
- In general, would you say that real estate investments in green development projects are more expensive than more traditional development?
- It depends. For investors, up-front costs related to green building can be higher due to additional expenses related to greening a building . But these up-front costs result in on-going cost savings due to increased efficiencies . In addition, green development can demand higher rents due to tenants interest and such amenities often correlate to higher loyalty among tenants. As a result, the initial higher investments pays off in a few years and increases the overall value of the property.
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Vanguard Ftse Social Index
This fund tracks a benchmark of large and mid-capitalization stocks that have been screened for certain social, human rights, and environmental criteria.
- Top 5 holdings: Apple, Microsoft, Facebook, JPMorgan Chase, Alphabet Inc
- Expense ratio: 0.20%
- 5-year annualized return : +14.75%
- Versus the S& P 500 during that same period: +0.83%
Impact At Uscs Price School Of Social Innovation Annual Summit
USCs Price School of Social Innovation’s Annual Summit Sponsored by Eddie and Jane Lorin https://www.uscsocialinnovationsummit.comEddie and Jane Lorin sponsored USCs Price School of Social Innovation’s Annual Summit held Friday, April 27, 2018. Over 150 people in attendance included city agencies and key stakeholders in Los Angeles covering non-profits providing
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Environment Social And Governance Funds
The next class is Environment, Social, and Governance funds . Where socially responsible investing funds tend to focus on excluding industries that dont use ethical practices or products, ERG funds concentrate on including ones that do. Theres a big difference here. Because a fund excludes a company that produces a product like tobacco, it doesnt mean there arent some unethical practices in the companies that are included in the fundit tows the line in some cases. So ERG funds focus on companies that do function in entirely ethical ways.
The Cost Of Socially Responsible Investing
By Jason Heath on July 22, 2020
Are there enough options available for Canadians who want to invest according to their valuesand do you have to compromise on performance or fees to be a socially responsible investor?
Socially responsible investing has seen increasing attention in recent years from investors who value the environmental, social, and corporate governance factors of the investments they purchase.
Factors like the environmental conservation or impact of a companys processes, and its employment equality, human rights and labour relations practices can be assessed. Companies affiliated with alcohol, gambling, tobacco, or weapons can be avoided. Religious principles may also require investments to be made based on certain principles, like Halal investing that complies with Islamic law.
But how well do SRIs perform compared with a broader portfolio? There are some studies that show outperformance as well as underperformance for socially responsible investors relative to other benchmarks. One of the broader studies was by Michael Schröder of the Leibniz Centre for European Economic Research. He looked at 29 global SRI indices and found that SRI stock indices do not exhibit a different level of risk-adjusted return than conventional benchmarks.
In Canada, the MSCI Canada ESG Leaders Index has outperformed the MSCI Canada Index since it was introduced in 2007 by about 2% per year.
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How Does Esg Fit Into Real Estate Investing
As mentioned, environmental, social, and governance factors are the main criteria used when evaluating whether an investment is socially responsible or ethical. And while ESG investing is most commonly used by stock investors, it certainly can be applied to real estate investing as well.
Obviously, not all of the possible ESG criteria apply to every type of real estate investment. For example, if you’re simply buying a single-family rental property, there aren’t really any governance concerns to take into account. However, here are just a few of the possible ways to make sure different types of real estate investments are ESG-friendly.
How To Find An Esg Fund
Two funds that both insist theyre investing on ESG principles can wind up with radically different portfolios. But the discrepancies are not a reason to stop trying to invest responsibly. Rather, they are a reason to drill down and find a strategy that fits your own goals. The Globes Ian McGugan offers four starting points for anybody thinking of investing in an ESG fund.
Labels arent everything
In theory, an ESG rating offers a definitive, objective guide to a companys environmental, social and governance prowess. In practice? Opinions can differ. A company that has a dismal history of polluting offences may also have a stellar record on gender representation. There is no obviously correct ESG grade to put on such a mixed bag of achievement. Bottom line: An ESG label by itself says little about a fund.
Fossil fuels divide opinion
Investors who are primarily concerned about climate change may be surprised to discover that many ESG indexes are fine with companies that produce oil and gas or are otherwise involved with fossil fuels. The iShares ESG MSCI Canada Index ETF, for instance, has 16 per cent of its money in the energy sector. It lists Enbridge Inc. and Suncor Energy Inc. among its top 10 holdings.
But those concerned about climate change should still take a close look at Desjardins Funds suite of low-carbon funds. They should also consider CI First Assets MSCI World ESG Impact ETFs, which exclude fossil-fuel companies.
Research individual holdings
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You May Be Leaving A Lot Of Great Investments On The Table
Building off of the point above, if you focus solely on socially responsible stocks and funds, you could be leaving strong investments on the table. Lets say you find a new company with below average performance regarding social responsibility, but a history of creating innovative products and services that improve lives and generate jobs. If you pass on this attractive investment opportunity because of the social responsibility factor, you may lose out.
The converse of this is true as well. If you choose not to invest in a company because you dont consider them ethically responsible, you might be missing out on a perfect investment. An excellent example of this is Microsoft, which isnt included in one of the largest and most successful socially responsible fundsthe Parnassus Core Equity Fund. Todd Ahlsten, one of managers of the fund, said in an interview that they dont invest in Microsoft because of its competitive dynamics.
Many Companies Claim To Be Socially Responsible But They Arent
Putting a marketing spin on anything for sale is part of a modern business culture. In many cases, its more important to craft the image of being socially responsible than to actually be socially responsible. As the saying goes, its not the truth, but what the people believe that counts. With the right marketing campaign, people will believe nearly anything.
Volkswagen is an excellent example of this. Their commercials and general image portray social responsibility. For a long time, they put a hefty amount of marketing into their clean diesel carsmarketing them as safer for the environment. This lead to a scandal, which later began to unravel Volkswagens image of being an ethical company. Even recently, Audi CEO Rupert Stadler resigned amid criminal investigations related to the scandal.
The lesson here is that just because a company says its socially or ethically responsible, doesnt mean it is. This can be blatant or, as Ill discuss below, much more subjective.
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Sip01: Eddie Lorin On Socially Responsible Real Estate Investing
Todays conversation is with Eddie Lorin, the Founder of Strategic Realty Holdings& Impact Housing REIT, and the co-founder of the HAPI Foundation. During his 30-year career, Eddie has been responsible for the acquisition of more than $3.7 billion in office, industrial, and apartment community assets nationwide. Since 2001, he has successfully purchased and transformed more than $3 billion worth of multifamily real estate amount to more than 180 thriving communities with approximately 40,000 apartment units nationwide.
In this conversation, we talk about the merits of socially responsible investing, the workforce housing crisis in the United States, and how Impact Housing REIT is different from the major real estate players. Please enjoy this conversation with Eddie Lorin.
What Opportunities Exist Related To Supply Chain Management
Management and oversight of supply chains is a subject of growing interest among REITs, with more entities establishing ESG requirements in their procurement processes. An increasing number of REITs report having a publicly disclosed screening policy or procedure to evaluate compliance with human rights standards and social practices among suppliers.
REITs on the leading edge of ESG-related supply chain management have written and implemented supplier codes of conduct, and incorporated them into procurement mandates. In 2019, 84% of REITs reporting to GRESB indicated they monitored sustainability requirements for external suppliers and/or service providers.
Managing supply chain ESG efforts can be complex, as supply chains can extend through multiple tiers and across multiple continents. In an effort to improve global supply chain management and transparency, 58% of the top 100 REITs by equity market cap reported on their supplier screening policies, up from 22% in just the past year.
Nareit members are also working to integrate company diversity efforts into their supply chains, with 7% reporting having formal initiatives to track and promote the use of diverse suppliers and 25% indicating plans to formally implement initiatives in 2020.
Case Study:
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Health & Wellness Is Influencing Building Design And Operation
While workplace wellness had already been high on office investors and landlords agenda because of its role in attracting tenants, the COVID pandemic has led to increased demand for workplace wellness features by office occupiers. Meanwhile, the health and safety of construction workers are increasingly important to asset development and management.
Proper air ventilation and filtration are emerging as a key focus, not only to prevent the spread of illness but also to increase employees energy levels and overall mental health. Actionable items to improve airflow include higher ceilings for better air circulation, allocation of at least 50 sq. ft. of space per person and measurement of air flow and pressure rates.
The pandemic has also heightened awareness around hygiene, prompting landlords and facilities managers to conduct more intensive and regular cleaning, especially of shared equipment and amenities such as elevators provide protective products such as hand sanitizer, disinfectant and masks and install signs and other information points advising building occupants on how to maintain cleanliness.
Other short-term and low-cost steps to enhance workplace wellness include ensuring natural light at workstations, offering healthy food options, providing exercise opportunities and organizing counseling sessions for employees.
10 Key Areas of WELL
- Air
These Etfs Can Boost Both Your Happiness And Investment Returns
My wife and I have been nomadic for about eight years: Weve lived in a camper van exploring Mexico and Central America, backpacked and rented homes across Asia and cycled around Europe. We built an eclectic network of friends in our travels everyone from bohemians raising their children in RVs, to C-suite executives and wealthy entrepreneurs.
One thing Ive learned from meeting and talking to so many different people worldwide is that we humans have a lot in common, especially when it comes to what makes us genuinely happy. After our basic needs are met, our incomes have little impact on life satisfaction. Other factors are far more important such as doing right by others, our communities and the planet.
But dont take my word for it. Researchers have also discovered that happiness and ecological well-being go hand in hand.
Its something more investors have also realized in recent years, which has fuelled the demand for socially responsible investing . Research from the Responsible Investment Association shows 78 per cent of respondents want a portion of their portfolio to be put into companies that are providing solutions to reduce carbon emissions, for instance.
Consider some of the ETFs in the space, such as the Jantzi Social Index ETF , the oldest on the market having launched in 2007. With a management expense ratio of 0.55 per cent, it charges higher fees than most ETFs. But that hasnt hurt its performance.
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