Responsible investing in Real Assets

Can integrating sustainability principles improve investments?

20 Aug 2018

The growing interest in sustainable investing over the last decade has given rise to the need for more innovative investment products that bring sustainability principles into mainstream investing. One such area of significance is sustainability in Real Estate and infrastructure investing, where responsible ownership and operation of property have been seen to have significant positive impact on the environment and on returns.

Sustainability considerations are especially important in Real Estate and infrastructure investing, amid growing fears about the environment that have caused regulators to enact new laws, putting in place regulations that can cause price fluctuations. Responsible investing addresses this, by increasing resilience, limiting the risk of regulatory non-compliance and increasing the appeal of a property to tenants and purchasers and, in many cases, reducing expenses and improving returns.

We at UBS, have long believed in integrating sustainability principles across investment products, seeing a direct link between responsible investment and long-term returns. We believe that real assets like properties and infrastructure contribute significantly to CO2 emissions and the consumption of natural resources, and recognize our responsibility towards reducing environmental impact, improving tenant wellbeing and setting high standards for corporate governance.
Thus, at UBS Asset Management, the Real Estate & Private Markets business (REPM), is committed to investing responsibly. The REPM team is dedicated to integrating sustainability considerations into investment processes, delivering superior risk-adjusted investment performance and implementing and sharing innovative sustainable practices. We also created the REPM Sustainability Workgroup, with a mission to develop a responsible investment policy and identify industry-leading strategies.

Our commitment to sustainable real estate and infrastructure investing is not an isolated effort. We have a long history of working alongside global regulators and industry bodies, adhering to the guidelines they put in place. For example, REPM is a member of GRESB, the Global Real Estate Sustainability Benchmark, an independent organization whose participants represented more than USD 3.7 trillion AUM in 20171. Our integrated team approach has resulted in consistently excellent GRESB scores across multiple global regions over several years. Additionally, UBS signed the Principles for Responsible Investment (PRI) in 2009, and scored A+ in the 2017 assessment report for both Property and Infrastructure assessments.

At UBS, we firmly believe in tangible outcomes, pursuing both quantitative and qualitative goals for properties that will benefit our investors and our tenants. Over the next five years, our REPM team seeks to reduce greenhouse gas emissions by 20% and increase our properties' recycling rate to 50%. Committed to achieving our goals, we are of the view that there is immense potential to reduce the impact on the environment while improving property value and operations.

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