Sustainability requires effective management and a clear strategy
Managing real estate portfolios in a sustainable manner is a complex task. The priorities of the various stakeholders are varied and often conflicting. Active sustainability management with clearly defined objectives and methods is therefore crucially important.
Long-term reconciliation of ecological, economic and social factors is only possible if objectives and priorities are clearly understood and agreed at the outset. Investors’ objectives, occupier requirements and environmental demands all need to be considered and weighed.
Planning and achieving objectives
Selective individual measures can never provide an adequate response to the complexity of this challenge. Effective sustainability management requires a coherent strategy, which in turn means that objectives and conflicting interests must be identified and prioritised. Measures must then be planned and implemented in accordance with these objectives. Ongoing monitoring of success is also vital. This has the additional advantage of enabling subsequent adjustments and adaptation to changing conditions.
For international fund managers, evaluating the sustainability of their entire global portfolio represents a huge challenge. The individual buildings, location factors and technologies vary widely, as do comfort expectations in the various regions worldwide. Companies are still getting to grips with these issues.
Harnessing multiple expertise
Details apart, an interdisciplinary approach to sustainable management is likely to work best for a real estate investment manager. In addition to commercial managers, for example, in-house architects and engineers have a major role to play. Sustainability needs to be lived at every level of the company hierarchy so that it becomes the default mindset. It is also important to incorporate supply chains into sustainability management and ensure they make their contribution.
Transparency as standard
Internal and external reporting is an indispensable element of any sustainability management system. Employees, investors and tenants all now expect active communication and maximum transparency. Reporting should go beyond the sustainability performance of individual properties and the overall portfolio, though. Providing additional evidence of effective sustainability management helps to build trust and add value. Various rating agencies can provide investors with useful pointers since they not only evaluate building-related aspects but also look at sustainability management criteria.
Actively embracing and shaping the future
Sustainability management also encompasses the ongoing development of tools and standards both within companies and for use across the sector. Active asset managers such as Union Investment regularly share ideas with other portfolio managers and contribute their insights to working groups and expert panels.
To take one example, Union Investment has been a member of the German Property Federation (ZIA) since 2008 and has made a significant contribution to the development of an industry code for sustainability. In view of the huge importance of this issue, actively shaping the future should be a priority for all stakeholders in the sector.