Impact Investing in Real Estate

Returns with purpose

30/10/2019
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Impact Investing, where positive contributions to society and the planet are delivered with the aim of achieving attractive returns, is the investment model advocated by Schroders. In today’s world its important to understand and develop an investment’s social purpose as we believe it will help ensure resilient returns for the longer term.

This paper explores Impact Investing and where impact can be achieved in Real Estate.

Introduction

Impact Investing should be considered central to real estate investment. The built environment supports people in every aspect of their lives – homes, workplace, health, education and leisure. Therefore focussing on the quality of internal and external environments will provide a direct benefit to people and society and deliver both occupiers’ and landlords’ expectations.

Buildings are reliant on resources and energy for construction, refurbishment, maintenance and operation, making it crucial to understand environmental impact, particularly carbon, through every stage of their lifecycle. However, as with other sectors, investors in real estate have not given enough consideration to the impact it has on people as well as the planet.

Today, in our world of social change and climate emergency, reducing negative impact and delivering positive impact to the planet and society is necessary to support our future and our investment horizons. Impact investing is therefore beyond ESG because it seeks to proactively take action to improve situations, doing  good for society, the environment and providing the scope for attractive returns.

What is Impact Investing?

Impact investment are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.

Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending on investors' strategic goals. 

Source: The Global Impact Investing Network 2019.

Investors want Sustainable Investments

The majority of investors want sustainable investment options and people are interested in a broad range of social and environmental issues. Many have yet to recognise that their investment decisions enable them to personally contribute to a more sustainable society. The opportunity is therefore significant to present investment ideas that clearly set out and deliver  on people’s values enabling investment which  supports society, the environment and meets investment ambitions.

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Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal.