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Responsible Property Investment

A world class portfolio stressing sustainable real estate investments

Home / Capabilities / Real Estate / Responsible Property Investment

Our investment style and philosophy

“Responsible investment requires a leap of faith on the part of institutional investors. They need to anticipate change. A big hurdle here lies in the fact that the conventional fund manager’s approach to investment involves looking back on past performance. But if we are to think about the future, rather than benchmark against the past, then as an industry we need to change our approach to investment. The demand from clients is there: as an industry we need to meet this.”
“Responsible Capitalism”, Hermes Oct 2015.

Chris Taylor, CEO Real Estate and Head Private Markets

chris-taylor

In Hermes Real Estate we are committed to act consistently and clearly as stewards of the assets in which we invest, with the aim to deliver investment excellence. With a strong focus on the income component of total returns and a disciplined approach to risk, we seek to consistently out-perform on a risk adjusted basis to deliver robust and repeatable performance in line with our fiduciary responsibility to our clients. We see environmental, social and governance (ESG) risks as business critical to our funds and are committed to embedding responsible investment principles across our investment practices.

'Responsible Property Investment has been a long-term priority for Hermes Investment Management, including mitigating the risks of carbon over the next 20 to 30 years. We have explored and developed a range of decarbonisation activities across the asset classes we invest in, which would be applicable for the wider investment community.

Beyond the medium to long term impacts of climate risks and opportunities, we work to deliver continuous performance today. At Hermes we believe that in addition to delivering excellent performance returns to our clients and beneficiaries, we must equally aim to invest for the benefit of the broader society in which we operate. We have these additional responsibilities because our activities will have impacts on the world in which our beneficiaries live and work today as well as the one in which they will retire into tomorrow. A principle which guides our actions is therefore the aim to deliver holistic returns.

For real estate this means that as well as achieving a nominal financial return we also seek to deliver and manage sustainable cities, communities and buildings, communities which have positive social impact through education and job opportunities and energy efficiency and low carbon buildings.

See our 'Responsible Property Investment Strategy and Policy'

See 'Turning down the heat: Hermes approach to managing carbon risks and opportunities

See: ‘Responsible Capitalism & Sustainability'

Responsible Property Investment in Practice

We have achieved Responsible Property Investment (RPI) integration across our processes by developing dedicated tools and linking our corporate strategy and strategic investment targets with our portfolio strategies and the management of our buildings.

See 'Responsibility in practice', RPI Report 2015

We have developed our "Responsible Property Development and Refurbishment Guide" to promote the implementation of our RPD programme and achieve our target BREEAM and EPC ratings, for all our new build and refurbishment projects.

See our 'Responsible Property Development and Refurbishment Guide'

We also have an active programme of internal and sector wide initiatives to develop the tools, benchmarks and knowledge required for an effective integration and comparison of performance at fund and market level.

In the last few years we have contributed to the following sector publications:

Institutional Investors Group on Climate Change (IIGCC)

Transforming the sustainability of Europe’s building stock, March 2016 

Driving New Finance for Energy Efficiency Investments: Summary for Institutional Investors of the work of the Energy Efficiency Financial Institutions Group (EEFIG), May 15

Climate Change Investment Solutions: A Guide for Asset Owners, May 2015 

Protecting value in Real Estate: Managing investment risks from climate change, March 2014 

Protecting value from climate change risks – Trustees Guide, 2013 

UN Environnent Programme Finance Initiative (UNEP FI)

Sustainable Real Estate Investment -Implementing the Paris Climate Agreement: An Action Framework, February 2016 

G20 energy efficiency investor statement, October 2015 

Fiduciary Duty in the 21th Century, September 2015 

Sustainability metrics – translation and impact on property investment and management, May 2014 

Energy efficiency business case, Feb 2014 

Energy Efficiency Finance Institutions Group (EEFIG)

Energy Efficiency – the first fuel for the EU Economy How to drive new finance for energy efficiency investments. FINAL REPORT covering Buildings, Industry and SMEs, February 2015

BTPS Family

In the interests of good practice sharing, we are very much engaged and co-operate with the property companies in the BTPS family, Argent and MEPC with regards to RPI.

From climate risks to positive impacts:
Time for action.

rpi-2016

Responsibility in practice
Integrating responsible property investment

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