Impact Investing in Real Estate

impact investing is the investment model advocated by Schroders. In doing so, it makes positive contributions to society and the planet in order to generate attractive returns. Nowadays, it is important to understand and develop the social purpose of an investment, as we believe this helps to ensure robust returns over the long term.

This paper examines impact investing and where change can be achieved in real estate.

Introduction

Impact investing should be seen as a central part of real estate investing. The emergence of a living environment that supports people in every area of their lives such as home, workplace, health, education and leisure. The focus on the quality of the internal and external environment will have a benefit for people and society so that the expectations of both tenants and landlords are met.

Buildings depend on resources and energy for construction, renovation, maintenance and operation. Therefore, it is crucial to understand the environmental impacts, especially carbon, at every stage of their life cycle. However, as in other sectors, real estate investors have not sufficiently considered the impact on people and planet.

In today's world of social upheaval and climate change, reducing the negative impacts and the positive impacts on the planet and society is important to support our future and investment horizon. Impact investing therefore goes beyond ESG. Its goal is to take proactive measures to improve the situation, do good for society and the environment, and provide the scope for attractive returns.

What is Impact Investing?

Impact investments are investments with the intention of achieving positive, measurable social and environmental impacts in addition to a financial return.

Impact investments can be made in both emerging and developed markets and aim for a return range that is below the market price, depending on investors' strategic goals.

Source: The Global Impact Investing Network 2019.

Investors want sustainable investments

The majority of investors are looking for sustainable investment opportunities and are interested in a wide range of social and environmental issues. Many people have yet to realize that they could personally contribute to a more sustainable society with their investment decisions. It is therefore important to present investment ideas that clearly set out and implement people's values. In this way, investments can support society and the environment and meet the investment objectives.