Principal Adverse Impacts of Investment Decisions on ESG Sustainability
The Sub-Fund does assess the ‘Do No Significant Harm’ (DNSH) principle for each potential investment by using the mandatory Principal Adverse Impact (PAIs; PAI) indicators applicable to investments in real estate assets (No. 17, 18 of Table 1 Annex I) and three additional environmental indicators (No. 18-20 Table 2 Annex I) of commission delegated regulation (EU) 2022/1288. These indicators are addressed in the investment due diligence process and will subsequently be monitored during the holding period.
Share of investments in real estate assets involved in the extraction, storage, transport, or manufacture of fossil fuels
Share of investments in energy-inefficient real estate assets
Scope 1-3 GHG emissions generated by real estate assets
Energy consumption in GWh of owned real estate assets per square meter
Share of real estate assets not equipped with facilities for waste sorting and not covered by a waste recovery or recycling contract
Besides environmental impact, the Sub-Fund assesses each potential investment against 5 risks that can potentially arise from the acquisition and ownership of real estate.
Lack of resistance to extreme weather events (including flooding), and lack of resilience to future temperature increases in terms of internal comfort conditions.
Excessive water consumption due to inefficient water appliances.
Presence of asbestos and/or sub-stances of very high concern in the building materials.
Presence of hazardous contaminants in the soil of the building site.
Inappropriate building location and its impact on the ecosystems if built on greenfield and especially if in a conservation area or high biodiversity value area.
Integration of Sustainability Risks into Investment Decision-Making Process
The Sub-Fund seeks to prevent and control pollution of its commercial real estate investments. This involves integrating environmental sustainability considerations into the investment decision-making process and committing to their implementation consistently. Environmental sustainability criteria are integrated into the due diligence process for property acquisitions. The Sub-Fund's manager and third-party experts conduct assessments to evaluate the environmental performance of potential investments, considering factors like energy usage, water consumption, and greenhouse gas emissions.
The commitment to sustainability extends beyond acquisition to encompass ongoing asset management practices. Property managers implement sustainable building operations and maintenance practices to optimize resource efficiency and minimize environmental impacts throughout the property's lifecycle. The Sub-Fund engages with tenants, vendors, and other stakeholders to promote sustainability initiatives and foster a culture of environmental responsibility within the commercial real estate portfolio. This may involve collaborating on energy conservation measures, waste reduction strategies, and sustainability education programs.
According to the Sub-Fund’s investment strategy, all potential investees must show a positive contribution to the environmental objective “pollution prevention and control” at the time of initial investment. The attainment of the environmental investment objective is measured by featuring high green building standards, such as LEED (Leadership in Energy and Environmental Design) certification or ENERGY STAR rating. It may occur that the Sub-Fund invests in properties featuring lower level green building standards or no sustainability credentials. For the such properties the strategy includes plans to invest in energy-efficient upgrades with a view to the respective life cycle of the equipment, and to enhance the certification.