GES Newsletter
December 9, 2009

Despite the obvious economic advantages of sustainable property management, the majority of the largest real estate companies in Europe have minimal climate change management measures in place. A recent analysis by GES Investment Services on the MSCI Europe Real Estate companies and some of the largest listed real estate companies from Northern and Central Europe shows that only a few companies are well prepared for climate change impacts and regulations.

“The real estate sector is identified as a key sector for climate change impacts, both because the sector is a major contributor and because there are major opportunities for reductions. The fact that the majority of companies are not managing risks and opportunities should be a worry for long term investors”, says Magnus Furugård, President and Managing Director of GES Investment Services.

“We have analyzed the companies’ publicly available information against six criteria which cover the most important areas in relation to climate change management”, explains Flemming Hedén, Product Manager of GES Risk Rating. “The French Unibail-Rodamco has been identified as an industry leader in the GES report. Apart from Unibail-Rodamco, the British Hammerson and Segro have also integrated climate change impacts into strategic business planning, unlike most others.”

The Nordic and Central European real estate companies outside of MSCI Europe Real Estate fall into the lowest classification in the GES analysis. Two companies separate themselves from the rest of the group: the Finnish Citycon for having basic climate change governance, impact assessment, and action plans; and the Swedish Hufvudsstaden, which has very good carbon disclosure and reduction plans in place. The following companies have not disclosed any relevant climate change management information: Gant Development S.A., Globe Trade Centre, Immoeast AG, IMMOFINANZ Immobilien, IVG Immobilien AG, Jeudan A/S, PSP Swiss Property, Swiss Prime Site AG, and Technopolis Oyj.

Based on the relatively poor scores for most companies, GES Investment Services sees a need for increased investor engagement. Firstly, investors should require increased transparency. Risk exposures, management systems and performance should be reported by using well established and standardized transparency systems. Secondly, companies should improve their governance by managing climate change and carbon emissions in a systematic way. A number of management tools could be applied, such as the generic ISO 14001 environmental management systems standard, and industry specific tools, such as BREEAM, LEED and the EU’s GreenBuilding Programme. Thirdly, real estate companies could strengthen their integration and cooperation, and actively seek cooperation on climate change management with stakeholders, such as local communities, tenants and suppliers. Lastly, quantified and time set goals should be applied by the companies.

Read the report: Chilling Out or Taking On the Heat? A study of climate change management leaders and laggers in the European real estate sector.