How we integrate ESG+R at Invesco Real Estate

At Invesco Real Estate, we often speak about how important ESG+R (environmental, social, governance and resilience) is to us and how we integrate it into our investment processes.

The next step is to show you what we mean when we talk about ESG+R and how we apply it as a real estate investment leader.

Environmental

As part of our efforts to identify and implement efficiency measures, we track and monitor property-level energy, emissions, water, and waste data. This allows us to assess the environmental performance of our assets and constantly make improvements.

Each year, we also identify buildings as candidates for green building certifications such as LEED, BREEAM, HQE, Green Star, CASBEE, and IREM Certified Sustainable Property. Currently, 261 of our properties around the world are certified, including more than half our properties in North America and Europe.

One example is, an iconic 64-story office tower in Houston, Texas constructed in 1982. The building is LEED Gold certified since 2009 and has achieved ENERGY STAR certification for 13 years in a row. Since Invesco Real Estate took ownership in 2013, the building’s energy use intensity per square foot has improved by 23% and overall energy costs have reduced by 13% -- saving more than $415,000.

We’re also taking action on water conservation. In our two distribution centres in Las Vegas, Nevada we have seen a 17.6% and 20.6% reduction in water usage between Q4 2019 and Q2 2020. These reductions were achieved by using irrigation timers as part of a strict onsite watering programme and regular maintenance to reduce leaks– the latter having generated water savings of around 836,300 gallons since June 2020.

Our Peterborough shopping centre in the UK contains more than 100 stores and attracts almost 15 million shoppers annually. Here we have focused on reducing waste and increasing diversion rates, winning a prestigious international Green Apple Environmental Award for Environmental Best Practice in 2018 in the process and being singled out as a ‘Green Champion’ – the only property in its peer group. Our robust recycling programme and innovative technology saw approximately 99.6% of materials diverted from landfill between 2019 and 2020.

Social

Good social outcomes are important to us. We want to give back to the communities we operate in, and our buildings can help improve the environment in which people live and work.

At our office building in Seattle, Washington we’re undertaking several initiatives with tenant Facebook to promote health, wellness and comfort. Annual IAQ audits measure levels of carbon dioxide and volatile organic compounds in the air, and there are designated quiet areas providing occupants with spaces to relax. Strategies to reduce noise pollution have been implemented, and the building also provides secure bike and kayak storage, with shower and locker facilities to encourage healthy transportation options.

Our 84,873sq ft office building in Milan, Italy was built in 1960 and redeveloped to bring it up to modern standards, earning a prestigious LEED Platinum certification. To help achieve this, we implemented and strengthened health and wellbeing practices. These included improving indoor air quality and ensuring direct line-of-sight views to the exterior were available to 100% of regularly occupied spaces in the building.

Governance

At Invesco Real Estate, we’re committed to maintaining the highest standards of integrity and accountability and recognise proper and effective corporate governance is important to stakeholders.

We work directly with our property management teams and third parties to ensure all of our assets comply with current regulations and monitor the regulatory landscape for potential new requirements that may impact them.

As a signatory to the UN’s Principles for Responsible Investment (PRI) through Invesco, we scored an ‘A+’ rating for our overall approach to responsible investment (strategy and governance) for the fourth consecutive year in 2020 and an ‘A’ rating in the direct property module for the fifth year running.

Last year, we submitted 13 portfolios representing 60% of our global assets under management for annual GRESB assessments – the evaluation of real estate portfolios ESG performance. They received a score of 29.6 out of 30 in the management component, reflecting strong ESG leadership, policies, reporting, risk management, and stakeholder engagement practices across the platform.

Furthermore, we directly engage with investors by including ESG+R updates within our quarterly investor reports and annual sustainability reports. We also and report overall ESG+R matters at our annual investor conferences.

Resilience

Resilience is a key part of our responsible investment approach. Our TCFD reporting is critical in determining our assets' resilience and the two distinct types of risks they face: physical and transition. Additionally, we recognise the potential impact of shock risks, which include individual catastrophic events such as hurricanes, flooding, and wildfires, and chronic risks, which are long-term and include rising sea levels, reduction in water supply, and more extreme heat days.

In 2019, we engaged climate risk analytics firm Four Twenty Seven to assess potential physical risks to our assets over the next 20 years. We also work closely with insurers to identify physical risks and prioritise assets that may need to implement risk mitigation strategies.

A recent example is our office and industrial warehouse property in Boston, Massachusetts. Located at the end of a pier in the south-east portion of the Boston Seaport District, we decided to evaluate the risk of a future sea-level rise. However, third-party analysis of the site found the elevation of the building was above future sea-level rise predictions under multiple scenarios and timeframes and was not deemed at a high risk of loss of value.

We have many more examples of our ESG+R approach, so why not talk to us about how we can help you integrate ESG and add resilience to your real estate allocation?