ULI UK Capital Markets Forum: The Rise of ESG

On 6th December, the ULI held a seminar to debate the efficacy of current approaches to ESG in real estate capital markets, and the expectations of leading figures about the way ahead and the implications for the custodians of capital. Managers and REITs are having to respond to the demands of investors by integrating ESG into their investment processes, improving the performance and risk profile of their assets, and participating in benchmarking and disclosure initiatives, notably GRESB. The audience heard from a highly qualified panel:


  • David Hirst, Executive Director, Head of Operations – UK, Real Estate & Private Markets, UBS Asset Management
  • Anne Breen, Global Head of Investment Process & Strategy (Real Estate), Aberdeen Standard Investments
  • Basil Demeroutis, Managing Partner, Fore Partnership
  • Louise Ellison,Group Head of Sustainability, Hammerson plc


  • Jon Lovell, Co-Founder & Director, Hillbreak

The seminar opened with an outline of the current state of paly by Jon Lovell. This mixed the profoundly depressing in terms of global progress on the underlying issues, coupled with more positive news from within the industry. From a real estate capital markets perspective, the agenda has moved from policy driven to stakeholder driven as investors have become more sophisticated. A gradual shift over the last decade has achieved real momentum in the last two years.

Over the last ten years, the number of signatories to the United Nations “Principles of Responsible Investment” has grown tenfold from 200 to over 2,000. The annual Global Real Estate Sustainability Benchmark now has 900 participants.

All the panellists agreed that the biggest change has been the attitude of investors. Although not all investors are at the same point on this agenda, they are all moving in the same direction – it is just the speed of travel that varies. Tenants also are at significantly different points. Investment managers sit in between, pushing the agenda upwards and downwards.

All of the panellists represented organisations that invest in and have investors internationally. This provided an opportunity for a discussion on differences between countries. Dutch and Australian investors have always been in the vanguard, but investors from other locations are becoming more vocal.  There are also significant differences between countries on the investment side. There are significant practical difficulties in some locations on finding service providers, particularly property managers, who are capable of providing the support needed.

There was a lively discussion on the use of benchmarks. How accurate, clear and robust are the indices, and is the effort involved in complying reflected in the resulting output? There was also a concern about the amount of focus on certification. However, there was a consensus view that benchmarks are needed, progress is being made and there will always be trade off between over dependence on certification and the need for an audit trail to provide confidence in the data. This is undoubtedly a discussion that will continue.

There was also an interesting discussion about impact investing. The boundary between impact investing and “normal” investing is blurring. In many aspects, it is now becoming part of the mainstream investment considerations. Some investment managers are also trying to make impact investing more mainstream by launching much larger impact funds. This is creating challenges for investors in determining from which of their pools of capital to allocate cash. In terms of the blurring of the boundaries, the same could be said of ESG more generally. It is now becoming embedded as part of all of the investment and business processes.

In response to one of the questions from the audience as to what the Government is doing, the comments from the panel were variations on the theme of “not a lot”. Governments set minimum hurdles to clear, but the industry is now moving further and faster.

Also reacting to an audience question, there was a brief discussion on which side of investment management businesses had the greater impact on the ESG agenda – direct or indirect investment teams. The conclusion was that direct investment has more operational control and so can implement change more quickly and more deeply. Indirect deals with a large number of managers so can have a broader impact.

In hindsight, an hour was not long enough for the event, and the discussion had to be brought to a close in mid flow. A show of hands at the end provided unanimous support for a follow-up event in the Spring, so watch this space.

Words by John Forbes, John Forbes Consulting, ULI UK Vice Chair & Chairman of the Capital Markets Committee

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