GPIF leads Asia-Pacific in property decarbonisation drive
A senior executive from the Carbon Risk Real Estate Monitor (CRREM), a toolkit that provides investors with frameworks to help them to de-carbonise their property assets, has said that Asian investors are finally beginning to embrace the resource in numbers this year.
Instrumental to Asia Pacific investors’ growing interest is CRREM’s adoption by Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, according to Julia Wein, project lead for CRREM, and consultant at the Institute for Real Estate Economics in Austria.
“It is a great supporter: it sits on the investors committee and has been using [CRREM] intensively for the last couple of years and feeding back on [improvements],” she said, adding that the world's biggest pension fund mentioned the toolkit prominently in its publications.
NEED FOR GRANULAR DATA
Wein said the growing adoption reflected the global trend to more granular analysis of building emissions and how to reduce them.
“Investors today are international, with portfolios across multiple countries: they want to get coverage up for their entire portfolio and that means ensuring the Asia Pacific portfolio is also on track,” she
Other members of the investment committee of CRREM include Dutch pension funds APG and PGGM, Zurich Insurance Group and Nordea Bank.
Explicit mention of CRREM by asset owners has grown in recent months. In December, Dutch pension ABP included reference of CRREM for the first time, in the publication of its climate strategy to 2030.
Wein pointed to an 8-month pilot study of 80 buildings across Asia, in 2022, led by APG Asset Management Asia and the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV), and supported by a number of APAC’s leading real estate investors, developers, and managers, including Queensland Investment Corporation (QIC), CBRE, ESR, and Macquarie.
“Following the publication of that pilot we saw more and more interest from Asia,” she said.
A particular focus of CRREM’s recent efforts has been China. In May, CRREM released its first Chinese-language version of its guidelines for setting decarbonisation targets, How to Apply the CRREM Pathways for China & Hong Kong, via its website.
“Our next aim is to get more data partners and outreach in China so we can create city-level pathways for China to increase the granularity,” said Wein.
CRREM provides a global standard for developing long-term decarbonisation pathways in the real estate sector in line with the Paris Agreement of limiting global warming to below 1.5°C or 2°C until 2050.
In January, it released a new set of pathways, that aligned with the new Science Based Targets initiative (SBTi), a partnership between CDP (CDP (formerly the Carbon Disclosure Project), the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF).
In June, Sarita Gosrani, director of ESG and responsible investment for bfinance, a consultant with a large number of Asian asset owner clients, told AsianInvestor that wider uptake of CRREM would be a vital means to help Asian investors provide transparent road maps to emissions reductions targets.
“A lot of the time [in Asia] you get ambitions and commitments, but detailed quantification is lagging,” she said at the time.
GRESB PROGRESS
Growing uptake of CRREM is part of wider progress on adoption of emissions reduction efforts on the part of Asian investors, according to Ruben Langbroek, head of Asia Pacific for the Global Real Estate Sustainability Board (GRESB).
“In Asia, the Industrial sector is strongly represented, as well as (to a lower extent) the mixed-use sector. And although relatively small, we’ve seen continuous growth in the participation of hotels and healthcare portfolios over the last years. Further, we’ve seen a strong increase in interest from data centre portfolios recently,” he said.
Assets managed by Asian real estate companies and fund managers participating in GRESB’s benchmark assessment grew from $1.80 trillion in the 2021 benchmark to $2.01 trillion in the most recent 2022 benchmark.
Asia ranked second, behind Oceania but ahead of Europe and the Americas, in GRESB’s measures. Across leadership, reporting, risk management and stakeholder engagement, average scores for Asian companies all improved; the only category where scores fell was policies.
Five out of the seven best performing countries on GRESB scores were from Asia Pacific, led by Australia ;the second highest performer behind the Netherlands, followed by Singapore, Japan, Hong Kong and India in positions’ fourth to seventh respectively.
In March, APG and PGGM told Asian Investor that they placed strong emphasis on GRESB reporting internally and from managers.
“In all new investments we require our managers to participate in GRESB and to commit themselves to achieve an above-average rating within a period of 3 years,” said Robert-Jan Foortse, head of European property investments at APG asset management, which manages €541bn on behalf of several pension funds, collectively comprising 4.8 million participants, including the government employee fund ABP.
Wein said the growing adoption reflected the global trend to more granular analysis of building emissions and how to reduce them.
“Investors today are international, with portfolios across multiple countries: they want to get coverage up for their entire portfolio and that means ensuring the Asia Pacific portfolio is also on track,” she