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ESG Investing – How real estate gets it done

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This is the first blog post in a series where we at Brunswick Real Estate will explain examples of concrete ESG initiatives in real estate. But first, let us ask ourselves why do we need the examples?  

“ESG investing” relates to the deployment of capital in ESG investment products with the goal to create a positive impact for the environment and/or social improvements as well as improving governance through investments, thus the acronym. For retail customers, the most common ESG investing is made through ESG funds marketed with a promise to deliver on ESG goals for a minor management fee, straightforward right?

The problem is, there isn’t one sole definition of what “ESG” is. Hence it is difficult to benchmark and compare achieved impact, yet there is an ever growing pull to create more ESG investment products. This does not mean ESG investment products are misleading, there are good ones, but it is hard for consumers to evaluate what impact their money is creating. The same goes for various real estate sustainability certifications.

Another reason ESG impact investing is hard to track is that it’s indirect by nature, for example how do you measure improvement when buying shares in unsustainable companies with the ambition to nudge the business practice through voting rights? Whilst this is an applaudable effort, it does not guarantee results. Ultimately, how can you be sure your money is truly working for ESG goals?

Real Estate however, has a significant role both in climate change as well as social wellbeing through several factors. Real estate stands for 40 % of global CO2-emissions (36 % in the EU) through the construction and operation of buildings and buildings consume 40 % of all energy produced. That’s tangible and direct improvement potential.

Socially, we consume 90 % of our time indoors which is easy for everyone to relate to. In addition, buildings shape communities for both better and worse which is why real estate owners need to look beyond the individual building and focus on the surrounding areas to achieve a sense of security, belongingness and improved look and feel to positively impact the community.

We can conclude that real estate presents a very concrete environmental and social improvement potential, here are four concrete examples how we work with it:

1. Remarkable Energy Projects

In 2022 We will have reduced yearly CO2 emissions by 11,500 tonnes of carbon dioxide growing to 22,000 tonnes in 2023 disregarding projects not developed yet. At Brunswick we model these and many other ESG initiatives already when acquiring properties together with our investors. For the informed reader it is worth mentioning that these reference figures do not include biogenic CO2 emitted when burning biomaterial for energy, which is a hot potato in the industry. More on energy projects and their future potential in an upcoming post by Max Nybondas & Christian Lingehall Lundholm.

2. Climate Declarations & climate risk analysis

We are establishing a carbon emission baseline in the majority of our mandates through a yearly carbon emission declaration according to GHG Protocol that will allow us to eventually show the specific CO2 emission/m2 for the spaces we lease. The practice is far from developed and we find ourselves with questions like: How do you report on CO2 emission improvement when every acquired property adds to the portfolio CO2 baseline with its full historical figures? And what’s your real impact if you only buy ‘’green certified’’ energy? We have also recently included climate risk analysis as part of our due diligence process. More on how to climate-adapt your buildings in an upcoming posts by Simon Iaffa Nylen.

3. Social sustainability in Real Estate

Hemmaplan, for example, is a new property company we established together with Bonnier Fastigheter where the overall goal is to buy centrally located regional commercial centers in socially challenged areas in Sweden. This means getting into the most challenging suburbs and bringing together the municipality and authorities to create measurable change in the community. This isn’t only a socially remarkable feat but also makes business sense and pioneers the concept of what social sustainability actually can be. More on our work with social sustainability in the upcoming post by Atusa Rezai.

4. Sustainable Data Centers

In Impeo properties, founded together with Pictet Alternative Advisors, we invest in properties with energy intensive data centers. Data centers are obviously technology intensive and thus the sustainability strategy is heavy on energy and carbon savings. To date we have developed a district heat exporting facility together with Nokia in Tampere that will produce 42 GWh of heating within this year contributing to mind boggling 7.000 tonnes CO2-emission reductions yearly. We are currently developing similar solutions in our newly acquired Vanda 3 property where InterXion is already exporting district heat to the city of Stockholm.

Other topics

The mentioned topics are just a few examples of the most impactful work we feel we are doing. Do you find this article interesting or useful? Are you a potential business partner, collaborator or future colleague who would like to join us to make change for the better real? Get in touch! And, thank you for reading.