“Every company, investor, and bank that screens new and existing investments for climate risk is simply being pragmatic."
In 2014, 634 real estate investment firms submitted data on their environmental, social and governance (ESG) policies and performance to GRESB, a data and benchmark-setting ESG platform for the real estate industry. Last year it was nearly four times that, covering 210,000 assets. ESG, or “sustainability” more broadly, remains a headline priority for a growing number of investment firms. And yet, most investors we know remain unconvinced that ESG actually drives real estate returns.
Well, research says ESG drives alpha: Core-focused Real estate private equity funds that report to GRESB see an average 124-basis-point higher annual total return vs. those that do not. That’s meaningful, especially given that the average fund in the study returned just 1.9% annually.1
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