Measuring and managing sustainability effectively
Sustainability is an integral part of the investment process at Union Investment. And of key importance to its investment managers in their core function of generating sustainable, stable returns for investors.
“If you can measure it, you can manage it: responsible sustainability management at Union Investment starts with monitoring consumption data. Depending on usage type and lease structure, this is not always straightforward, but we always find a way,” says Jan von Mallinckrodt, Head of Sustainability at Union Investment Real Estate GmbH. Union Investment has set itself the target of monitoring the consumption of at least 75 per cent of its self-managed properties annually. Where data cannot be collected for various reasons (e.g. for properties leaving or joining the portfolio in the course of the year), it is extrapolated in order to ensure the entire portfolio is covered.
Sustainability also plays an important role when acquiring properties. During each due diligence process, qualitative sustainability criteria are recorded and assessed. The Asset Management and Investment teams undertake this using our proprietary Sustainable Investment Check (SI Check). The SI Check is used to capture and evaluate six sets of criteria: energy, resources, economy, user comfort, location and operation. The tool is not limited to assessing the current situation, it also ascertains the specific development potential of a building at the same time.
It was introduced in January 2009 and made compulsory for both acquisitions and existing properties. The results of the assessment carried out during the acquisition process are summarised on a separate page of the acquisition proposal and submitted to the Investment Committee (IC) for consideration at the final review meeting. In the case of existing holdings, the assessment forms part of the input for the property-specific report on sustainability Performance.
Check, measure, report – an integrated approach is crucial
Both the consumption data and the SI Check for over 350 properties across 23 countries are recorded and managed by Union Investment using its proprietary Portfolio Sustainability Management (PSM) system. On the basis of consumption data and the SI Check, the individual optimisation potential of each property is identified. This allows action to be taken precisely where it will have most impact and improves long-term sustainability performance across all of Union Investment's real estate holdings.
Union Investment contributes to the transparency and development of the sector by disclosing relevant, quality-ensured consumption data for its property portfolio annually in its CSR report. In addition, the company outlines the processes and instruments it employs for sustainability management of its real estate portfolio.
These are just some of the important milestones achieved by Union Investment as part of sustainability management. “Selective individual measures can never provide an adequate response to the complexity of this challenge,” says Jan von Mallinckrodt, “which is why sustainability is a strategic priority that is embedded in our business model.”