LaSalle Publishes Global Real Estate Investor ESG Survey Findings

LaSalle Investment Management (“LaSalle”) today published the findings of a comprehensive survey that examines how environmental, social and governance (“ESG”) concerns factor into institutional real estate investors’ decisions. The survey was administered by Private Equity Real Estate (“PERE”), to 60 institutional investors between March and June 2019. While the majority of respondents confirm that ESG plays a role in their investment decision making, the findings reflect clear regional differences in ESG attitudes.

The full report can be downloaded at: http://lasalle.com/impact

On a global level, more than one-third of respondents expressed that ESG plays a major role in their capital allocation decisions. Europe continues to build upon its track record for being the most sustainable-focused region, with 45 percent of respondents admitting that ESG plays a major role in their investment decisions. Conversely, in North America, nearly one-third of respondents consider ESG principles a factor of secondary or tertiary importance, while 25 percent of respondents assert that it plays a major role. Asia-Pacific respondents demonstrated mixed feelings about ESG policy, displaying a nearly balanced sentiment.

Eric Duchon, Global Head of Sustainability at LaSalle, commented, “This report shows that ESG is not simply a buzzword or passing trend. ESG initiatives have become more central to real estate investment strategies, and these policies are increasingly driving institutional investors’ decisions. We believe that it is essential for investment managers to have a well-constructed and properly implemented ESG policy in place in order to raise capital. While some of the geographic and sector-specific disparities uncovered in the report demonstrate that there is still much work to be done, the bottom line is that ESG is no longer a ‘nice-to-have.’ It is a moral imperative and fiduciary duty for private investment managers.”

Reflecting an increased focus on ESG factors, 70 percent of the survey’s respondents professed to having an explicit ESG policy in place while 86 percent deemed it important for managers to evidence a clear ESG policy at due diligence. Interestingly, however, many respondents admit that it is difficult to correlate a manager’s ESG policy to actual investment returns. In fact, only 6 percent find this an easy exercise, while 45 percent do not bother with this analysis at all. These findings suggest that more needs to be done to develop a clear methodology that allows investors to assess the value ESG delivers to the bottom line.

The survey also found disparity toward ESG commitment relating to different real estate sectors. For instance, investments into office space have made the greatest strides, with 80 percent of respondents reporting moderate or significant progress. On the other hand, 48 percent of respondents have experienced little or no progress with retail investments. Importantly, investors are optimistic about the value versus cost of ESG policy implementation: 43 percent believe the value of ESG is greater than the cost of implementation, with a further 12 percent stating that the value is on par. Just 6 percent of investors consider the cost of implementation to outweigh the value.

About LaSalle Investment Management 

LaSalle Investment Management is one of the world’s leading real estate investment managers. On a global basis, we manage approximately $77 billion of assets in private equity, debt and public real estate investments as of Q4 2021. The firm sponsors a complete range of investment vehicles including open- and closed-end funds, separate accounts and indirect investments. Our diverse client base includes public and private pension funds, insurance companies, governments, corporations, endowments and private individuals from across the globe. For more information please visit www.lasalle.com and LinkedIn.

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