An Introduction to Responsible Investment: Real Estate
This starter guide provides a quick summary of approaches to responsible investment for direct and indirect real estate investors.
Investing in real estate presents two key ESG considerations when compared with many other asset classes. Firstly, real estate is usually a long-term investment, allowing more time for material ESG issues to play out in ways that affect investors, the environment and society. Secondly, many ESG issues play out at a local level, for example extreme weather, water stress, legislative and/or regulatory requirements and community relations.
When an investor chooses to invest in a fund managed by an external investment manager, a different approach to responsible investment is required. The investor cannot make, or materially influence, specific investment decisions, but it can still influence a decision-making process through fulfilment of its fiduciary duties and, where applicable, ESG policy.