February 07, 2008
Making a Real Difference with Real Estate
by Anne Moore Odell
The Responsible Property Investment movement gathers momentum with the help of the Responsible
Property Investment Center and the backing of UNEP FI.
Investing in property is more than just buying land or buildings. It is investing in the people and
the organizations that use the space to conduct business, to learn and to live. Responsible
Property Investing (RPI) offers investors a way to create long-term growth in real estate while
also accounting for non-financial returns.
The Responsible Property Investing Center (RPIC) was formed in 2007 as a joint
project of the Boston College Institute for
Responsible Investment and the University of
Arizona to create a forum for investors, lenders, fund managers, developers and others to
connect and create best practices around real estate development.
The RPIC website and
the new publication, "RPI Quarterly" are two new resources for those interested in learning more
about this field. RPIC is also hosting the 3rd Annual Responsible Property Investing Forum at the
Fairmont Copley Plaza in Boston on March 25-26.
"There is a great deal of overlap in RPI
and community development investing," said David Wood, Director of The Institute for Responsible
Investment and Boston College Center for Corporate Citizenship (BCCCC). "RPI looks just at real
estate, but tends to cover a range of investments in property, from direct ownership and
development, private equity funds, to bank loans, fixed-income investments, REITs, etc," Wood
Wood continued, "Many of the concerns of RPI - the creation of good jobs,
affordable and workforce housing, mixed-income, urban revitalization - all are long-standing
elements of the community investment world."
Additionally, RPI also covers other concerns
like energy efficiency, transit-oriented and smart-growth development, fair labor standards,
community and corporate citizenship, and land conservation.
"For our part, we have found
that focusing on real estate as an asset class has helped begin the creation of a community of
practice that brings together mainstream institutional investors, fund managers, social and
mission-related investors, developers, banks, consultants, etc., around a set of real estate
investments that offer both market-rate returns and tangible social and/or environmental benefits,"
The United Nations Environmental Programme Finance Initiative's Property
Working Group (UNEP FI) conducted a survey of
key markets in RPI. Gary Pivo, a professor at the University of Arizona and one of the founders of
the RPIC, created for UNEP FI an RPI overview survey, "Responsible Property Investing: What the
leaders are doing" which was released in October 2007. The briefing lists the ways in which various
real estate investors around the world are using sound fiduciary strategies that create social
and/or environmental value.
Ten elements of PRI are presented in the briefing: Energy
Conservation, Environmental Protection, Voluntary Certifications, Public Transport Oriented
Developments, Urban Revitalization and Adaptability, Health and Safety, Worker Well-Being,
Corporate Citizenship, Social Equity and Community Development, and Local Citizenship.
briefing further separates two types of RPI investments: no-cost and value-added approaches.
No-cost investments include ways to increase social and/or environmental performances of properties
that don't require any money, for example, turning off lights in unused areas. Value-added
investments create long-term returns, for instance, installing energy-efficient windows.
"One of the key issues here is that RPI is a moving target - changing demographic patterns,
consumer preferences, environmental regulations, carbon constraints, and infrastructure investment
patterns will have considerable influence on how various RPI investments perform in the future,"
said Wood. "One of the benefits of an RPI focus for investors, we think, is an enhanced attention
to these future trends when making their investment decisions."
The UNEP FI Briefing also
makes the point that constructing new green buildings is not enough to address current climate
change concerns and environmental impact. Existing buildings need RPI investors to update energy
use patterns and social usage concerns.
As the RPI field starts to gain momentum, both
Wood and Pivo see exciting room for growth.
"We need to know more about what institutional
investors are doing in this area and more about the economics of RPI," Pivo told Socialfunds.com.
"The field is relatively new, and there is frequently no set of standards that allow for
apples-to-apples comparisons," said Wood. "In the environmental arena, the success of green
building standards such as the US Green Building Council's (USGBC) LEED ratings systems, and the Energy Star Program, will
likely lead to better and better research on green building performance. Some of the social
attributes of property investment may be harder to track, but there is still plenty of room for
research into performance across the triple bottom line."
Wood concluded: "Social
investing has traditionally focused on public equities investment and community investing, and
quite well too. RPI is a way to translate some of the successes in creating a rigorous evaluation
of environmental, social, and governance criteria into an asset class which hasn't necessarily
received the same amount of attention."
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