Who will invest in Green Real Estate? David Wood, Director Initiative for Responsible Investment Harvard Kennedy School of Government Co-Director, Responsible Property Investing Center March 10, 2011
Responsible Investment • What is it? • ESG Analysis • “interests of investors and society may converge over time? • Scale? • United Nations Principles of Responsible Investment: $20+ trillion in assets under management. • Social Investment Forum: $3.7 Trillion under management • Eurosif: 5 trillion Euros under management.
In Practice • Portfolio Construction • Thematic investments • Corporate Engagement • Tackling the market • Does RI have teeth?
Why real estate? • Public policy – green building regulations, public subsidies, smoother entitlement, public-private partnerships • Demographic trends – changing population, increased urbanization • Resource constraints – energy, water, materials • Changing consumer preferences – demand for green and walkable communities, global efforts to deal with inequality via built environment • Reputational risk
What do Responsible Investors need to invest in real estate? • Conventionally accepted strategies • Resolution of investment agency issues • Information on returns • Benchmarks and third party targets • Carrots and sticks from public sector, civil society, and consumers
Mission and Impact Investment • Mission Investing: alignment of investment strategy and organizational purpose • Impact Investing: solve social or environmental challenges while generating financial profit • Who does it? How deep is this market?
Examples in Practice • Community Development Finance • Banks • Loan Funds • Off Shore Investment • Microfinance • Sustainable SMEs • Environmental Investing • Clean Tech • Sustainable Land Management
Why real estate? • Tangible impact • Social equity for people and place • Walkable communities, TOD, and smart growth • Climate risk mitigation • Credible Value Proposition • Opportunity to leverage public and private capital
What do mission investors need? • Credible social impact • Established or convincing intermediaries • Coordination across brain damage • Private and non-profit sector partners • Supportive public policy ecosystem
What’s taking so long? • The real estate market and its culture • Risk aversion and the business case • Information, categories, metrics, and standards • The perfect mousetrap • How convergent are those interests after all?
Responsible Property Investing Center • Research into performance • Vocabulary and standard setting • Community of practice • www.responsibleproperty.net