ESG stands for Environmental, Social and Governance, the key factors at the centre of Socially Responsible Investing (SRI) which pursue the typical objectives of sound financial management while considering positive environmental and social outcomes as well as good governance practices.
The current economic landscape is naturally evolving towards a more ethical and multidisciplinary approach to property investment, as confirmed by the stakeholders’ own growing interest in real assets and the emergence of new investment instruments such as Social Impact Bonds..
The EU is making important strides in advancing ESG policies through regulations and reports:
Over the last few years, and especially now, in the wake of the Covid-19 pandemic, sustainable stocks have shown better overall performance in the market compared to traditional stocks, and companies with higher ESG ratings have been generating higher yield spreads, especially over the long term.(Investment news.com_aprile 2020)
Organisations which adopt good sustainability practices operate according to a long-term vision. The market appears to particularly reward Organisations who pursue good practices globally, across the three aspects of sustainable environmental, social, and governance practices, rather than channelling their efforts in a single direction. (ESG rating and market performance: a study of
Stoxx® Europe 600, research paper by Banor SIM in partnership with the School of Management, Polytechnic University of Milan, 2018)
Integrating ESG considerations in the Asset Management Company’s corporate procedures, from analysis to decision-making processes for sustainable investing:
RINA takes an active part in the main research initiatives financed by the European Community in the fields of Sustainability, Circular Economy, and Energy Efficiency for Buildings.
ESG Principle Application for AMCs
ESG Principle Application For REITs and support for GRESB Certification
The ESG assessment process becomes an integral part of the asset portfolio’s value examination.
An ESG-compliant Fund combines the achievement of financial performance goals with environmental, social, and governance objectives through a series of corporate ethics and
transparency policies and practices. The Global Real Estate Sustainability Benchmark (GRESB) allows managers and operators to monitor the sustainability performance of their portfolios or assets.
ESG Due diligence
Alongside the traditional DD which evaluates the quality and degree of compliance of a property under the administrative-regulatory, technical-utility, and environmental perspectives, the ESG DD provides a an all-encompassing assessment aimed to estimate the investment’s sustainability in the Environmental, Social, and Governance frames of reference.
Amongst the main indicators, the ESG Due Diligence provides a reporting and breakdown on the following topics: