Pension Funds Green Agendas Continue — You Prepared?

Are you on top of your institutional investors’ green agenda?

Today’s post focuses on a “state of SRI” article sent over by Green Journey reader and blogger, Ari Frankel.

It hints rather loudly to American real estate investors and developers that they need to step up their green investment and development programs — or else find themselves less competitive with funding from the ‘Big Money’ institutional investors.

Seems that an increasing number of pension funds worldwide are pushing for a more explicit environmental agenda within their investment holdings, according to the New York Times earlier this week. Nothing new there, for the deep green crowd, but great to know, in any event.  And the Times gets kudos for being GPC — geopolitically correct — by citing the leadership of several European and one American pension fund in green investing (such factoids hammer at the “reinvent the green wheel” bias we have here in the US).  It points to the United Nation’s Principle’s of Responsible Investment (to which we are a happy signatory) as now representing 381 members and $14 trillion in assets.

The Times also asks the necessary question of whether Big Money is really creating positive environmental and social change. For example, they point out that no one really knows if the pension funds’ efforts are really creating the impact they profess to seek.  Or if all of the funds with a green agenda as committed as they claim (gasp!) .

HOWEVER, it was pretty surprising that the usually sharp, pro-SRI NY Times failed to dedicate one pixel of ink to the corporate watchdogs like CERES or BSR — THE acknowledged leaders in pushing corporations and institutional investors to adopt ESG (environmental, social, governance) principles within their business and investing activities.  CERES has an extensive list of tools and publications documenting their efforts to educate the investment community on the value a green agenda brings.  And you can take a lookat our previous coverage of CERES’ video on their engagement work as well.

Nonetheless, good takeaways and a not-so-subtle warning are there between the lines for commercial real estate. The point? Simply, most of these Big Money investors have some amount of their funds allocated to real estate. If they haven’t tailored their real estate investment criteria towards green real estate, yet, then they are bound to do it soon.

Sooner or later,  you are going to call on your pension fund investors for your normal performance meetings and, in addition to the regular good dialogue, you are going to be handed more requests –  possibly in the form of more compliance reporting, audit checklists, risk assessments, engagement meetings, what have you.

Will you be ready?

Banks, Climate Change & Green Real Estate: Money Talks

Mindy Lubber, head of Ceres, talks about how the big US banks are taking responsibility to reduce the negative effects of climate change. You’ll notice that she mentions the banks being signatories to the Carbon Principles and changing the way they go about financing coal-fired power plants.

This is good to keep in mind because people often get confused about why some of the big banks advertise their corporate social responsibility, as if its a global policy applicable to all lines of business, but still have no committed capital, specific products or policies earmarked for green commercial real estate.

No, I’m not saying that they are greenwashing. Certainly tightening due diligence and financing guidelines for coal-fired power plants is a good thing.

The Green Journey take on it is caveat emptor**, but in a proactive, not a lazy or disaffected, sense.

Keep in mind that any company — not just banks — advertising their social responsibility can (and often do) “choose locally” and “talk about it globally”. Yes, they can pick out a few business areas to be more green, ignore the others, claim to be totally socially responsible, and then use that to enlarge their corporate reputations, win awards, and make more money. All of which keeps watchdogs like Ceres in business in the first place.

How to navigate this space? Its up to all of us to give credit where credit is due, and at the same time ask more pointed questions about their business policies regarding sustainable real estate and then vote with our wallets.

Notes:
** Means ‘you’re on your own, dog’. Thousands of years ago in Latin, it meant ‘let the buyer beware’.