Hamburg, 18 September 2018
Union Investment develops new Manage to Green strategy for commercial properties
How can the building stock be made virtually climate neutral by 2050? That is the issue long-term investment managers are currently grappling with. The Paris Agreement has now been ratified by 179 countries.
In light of this, Union Investment has revised the Sustainable Investment Check (SI Check) it first introduced in 2009, thereby laying the foundation for its new Manage to Green strategy.
Limits and target values for each use type
Going forward, the redesigned SI Check will be used to determine limits for each use type. Properties and development projects that are being considered for acquisition will need to comply with these limits. Additionally, the check will make it possible to define the target values a property must achieve in future in order to meet the German government’s climate protection goals by 2050.
The investment necessary to achieve these target values is factored into the due diligence process and is therefore included in the profitability analysis. Union Investment will use these limits and target values to formulate specific CO2 savings targets and other goals for its real estate portfolio at the beginning of 2020 as the core element of its Manage to Green strategy.
“The redesigned SI Check is having a significant impact on the strategic direction of our portfolio, which shows we are taking the aims of the German Climate Protection Plan very seriously and are considering the increasing sustainability requirements at an early stage. In doing so, we are safeguarding the quality of our portfolio in the long term and making proactive decisions in the interests of our Investors.”
Dr. Reinhard Kutscher, Chairman of the Management Board of Union Investment Real Estate GmbH
Annual assessment per property
Union Investment conducts the SI Check prior to every purchase of a commercial property. The tool is also used to analyse existing holdings on an annual basis in order to identify potential for continuous improvement in the sustainability performance of office, retail, hotel and logistics properties. Properties can achieve a score of between 1.0 and 5.0. The EMPORIO office building in Hamburg currently holds the top score in the Union Investment portfolio at 4.3.
Potential equivalent to the ESG score
“The results of the SI Check are already an important point of reference for our fund managers and our institutional customers. By updating the evaluation procedure, we are aiming to establish the SI score even more firmly as a property-specific equivalent to the ESG scores widely used for securities.”
The revised SI-Check
The revised SI Check evaluates criteria across seven categories: energy, economy, resources, user comfort, operational measures, location and building automation. The “building automation” category has been added to the revised check to enable the extent of digitisation within a property to be captured more accurately.
In addition, the former “operation” category has been redefined as “operational measures” so that it now covers smaller-scale energy-saving measures as well as major redevelopment projects such as façade renovation. The importance of green leases is also given more weight in this revised category. The overall aim of the updated SI Check is also to ensure that greater account is taken of the specific features of the different use types. Union Investment started using the revised evaluation procedure at the beginning of September 2018.