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Africa’s largest pension fund endorses sustainable investment in the property sector

Posted On Tuesday, 26 March 2013 10:38 Published by eProp@News
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The Green Building Council of South Africa (GBCSA) applauds Africa’s largest pension fund - the Government Employees Pension Fund (GEPF) – on joining the Global Real Estate Sustainability Benchmark (GRESB).

"This is a huge boost for responsible investment in the property sector in South Africa, and shows that asset managers will prioritise investment into companies with sustainable environmental management. Sustainability is slowly taking its rightful place at the boardroom table," said GBCSA CEO Brian Wilkinson.

GRESB membership gives the GEPF access to a transparent and comparable measure on the environmental performance of its real estate investments, which enables the fund to make more informed decisions on investments, with a focus on environmental sustainability.

The GEPF's significant property investment portfolio (managed by the Public Investment Corporation Properties) includes shares in South African property funds and directly owned South African property, including office buildings, retail centres and other real estate assets.

By assessing where its property portfolio ranks on the global benchmark, the GEPF will be able to recognise which buildings, or property funds are excelling in terms of environmental sustainability. It will also be able to recognize where improvements are required and push for efficiencies to be implemented.

Responsible investment means better risk-adjusted returns
The GEPF's Responsible Investment Policy commits it to integrating environmental, social and governance (ESG) issues within all GEPF's investment decisions and ownership practices. GEPF ESG Manager Adrian Bertrand notes that this integration will deliver better risk-adjusted returns through improving energy efficiency and reducing operational costs.

"Increasing demand for green and efficient buildings by blue chip corporate tenants' positions owners of green and efficient buildings to be able to attract and retain a better quality tenant and in turn attract higher rentals," he said.

Indeed, research on green buildings has shown that not only do they have better environmental footprints, but also have health and productivity benefits for building users; save on operational costs; and fetch higher rents on average for building owners. The benefits of 'greening' properties have proven to outweigh the costs.

The GBCSA is well placed to assist those looking for resources and information on green buildings. The GBCSA is also set to release the Green Star SA Performance Rating Tool, for existing buildings in Q4 2013, which will provide existing buildings the opportunity to achieve Green Star SA certification.

First South African GRESB Member
The GEPF is the first South African member of the GRESB, and Wilkinson noted that it is encouraging so see such a significant player in the real estate sector leading with responsible investing. He hopes to see more South African pension funds, and asset managers follow suit with commitment to sustainable growth.

The GEPF also believes that benchmarking through GRESB will serve as a catalyst for increased environmental engagement with the SA property sector.

"We trust that GEPF's endorsement of GRESB will encourage the property sector to align itself against global best practice for addressing sustainability issues and in turn make SA property stocks increasingly attractive to international institutional investors," added Bertrand.

The GBCSA's principles are aligned with those of the GRESB, which looks at a number of sustainability indicators among its membership. Its range of green building rating tools provide a tangible way for property owners to demonstrate the green credentials of a building and are rapidly becoming differentiators in the marketability of space. Wilkinson forecasts that with the increasing focus on sustainability in the built environment, a Green Star rating will be a must have for any "A" grade building.

The GRESB's global survey includes the collection of environmental performance data such as energy consumption, greenhouse gas emissions and water usage, but also goes beyond those parameters and includes policies, risk assessments and social indicators, which are relevant for almost all property companies and funds.

The built environment contributes one third of the world's greenhouse gas emissions, and buildings are estimate to consume over 40% of electricity generated globally - showing that there is huge scope for improvements and efficiencies in the sector. These would in turn have positive environmental effects. By signing up to this global sustainability benchmark, the GEPF has put South Africa on the sustainable real estate monitoring map.

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