How one extra letter makes ESG different at Invesco Real Estate

Many investors are increasingly concerned about their impact on the world around them and are turning to strategies that produce positive environmental, social & governance (ESG) outcomes while also delivering sustainable returns.

The appeal of ESG has only grown during the Covid-19 pandemic as more investors have sought to put their money to good use.

While mainstream asset classes – such as bonds and equities – have been the main focus of this trend, there have been a growing number of institutions considering the ESG credentials of their real estate allocations, too.

At Invesco Real Estate, ESG+R (environmental, social, governance & resilience) has been a fundamental commitment for many years. Our philosophy is based on the belief that ESG can deliver competitive financial returns and opportunities for business growth and innovation. That’s why we formed our Global ESG+R Committee in 2019, as well as regional sustainability committees, to oversee all aspects of ESG+R for real estate assets.

Our ESG+R objectives

Our environmental goals and objectives include measuring and regularly reporting building energy usage, emissions, water and waste within our control, and improving performance across our managed portfolios.

We have three targets to help us meet these objectives.¹ A 3% annual reduction in energy and emissions by 2030 (from a 2018 baseline). This will align us with the Paris Accord goal of limiting global warming to 2 degrees Celsius above pre-industrial levels and help us meet our aim to reach net-zero carbon emissions by 2050. We are targeting a 1% annual reduction in water consumption and a 1% annual increase in waste diversion rates by implementing low-cost measures, capital improvements and new technologies.

On the social aspects, we are investigating different ways to meet our objectives. For example, we’re encouraging sustainable practices to our tenants through engagement tools and providing services and amenities at our properties – such as gyms and bicycle storage – that encourage healthier lifestyles.

Our employees also help us meet our social objectives, and we are encouraging them to be active in the growth and development of their own communities.

Finally, we’re supporting diversity and inclusion in our workforce through training and communications and creating a work environment that optimises our employees' full potential.

Our governance objectives include integrating ESG into our decision-making and due diligence processes. Furthermore, we’re disclosing our ESG performance to stakeholders through internationally recognised reporting frameworks and ensuring both our assets and employees adhere to the highest ESG and ethical standards.

As far as resilience is concerned, we’re evaluating the physical risks our assets may face through climate change. These include single catastrophic events like hurricanes and extreme flooding, or changes over time like higher temperatures or rising sea levels. Additionally, we will monitor our properties’ exposure to transition risk as the shift towards a low-carbon economy continues.

How we align ESG+R with investing

It’s possible to be good stewards of the environment in a way that is consistent with our fiduciary responsibilities as an asset manager. But don’t just take our word for it: we’ve been signatories and members of some of the industry's key ESG initiatives for some time.

Since 2012, we’ve reported to GRESB – an international assessment of ESG+R performance of real estate portfolios – and been a member of the body since 2014. Last year, it ranked 10 of our portfolios four out of five ‘green stars’ or higher, but we continue efforts to improve our scores across the board.²

We also provide annual reports as part of the Global Reporting Initiative – a global standard for sustainability reporting – and the European Association for Investors in Non-Listed Real Estate Vehicles (INREV), which aims to improve transparency, professionalism and best practices across the sector.

As an international real estate manager, we’re aware of our global responsibilities and have taken action to align our ESG+R initiatives with the United Nations Sustainable Development Goals.

As part of Invesco, we’ve also been a signatory to the UN’s Principles for Responsible Investment since 2013, scoring an ‘A+’ rating for our overall approach to responsible investment in 2020 and an ‘A’ rating in the direct property module for the fifth consecutive year.²

A supporter of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures for stakeholders, Invesco also released its first climate change report last year, guiding our approach at a corporate level and as an investor.

We have many more examples of how we implement our ESG+R investment approach at Invesco Real Estate. Let us show you how we can help align your allocation with your stakeholders’ ESG expectations, too.