Article | The Real Assets Reality
Charting the Path to Net-zero - The Role of ESG in Real Assets
Sustainability
April 1, 2022 6 Minute Read Time

Every asset must have a roadmap to net-zero carbon in order to remain relevant, says CBRE Investment Management’s head of sustainability and innovation, Helen Gurfel
Q: How has the role of ESG in real assets evolved in recent years?
We have seen a rapid acceleration in ESG focus and interest from our stakeholders including investors, regulators, tenants and employees. This was further amplified by the commitments made by both the public and private sectors in the lead up to COP26. There is now a clear sense of urgency to decarbonize the global economy, with countries and companies from around the world setting net-zero targets and creating action plans to meet their goals.We have seen the ESG focus expand to include a stronger emphasis on climate risk mitigation and adaptation, as well as diversity, equity and inclusion. In the aftermath of the financial crisis, we continue to see a clear desire to restore trust in the capital markets, which has led to an enhanced focus on corporate governance. In order to provide transparency and guidance, governments and coalition organizations from across the globe are establishing more rigorous regulation, frameworks and reporting standards focused on ESG performance.
Q: How has CBRE Investment Management responded to this global focus on sustainability?
It has become clear that the health of our society, planet and economy is inextricably linked, which is why we take a holistic approach to sustainability, jointly considering our planet, people and long-term investment returns. Our value proposition is to deliver sustainable investment solutions, so our clients, people and communities thrive. Sustainability mitigates risk, creates long-term financial opportunities and sustains our planet for future generations.CBRE Investment Management has a long history of demonstrating sustainability leadership. We were signatories to the UN Global Compact in 2007 and UNPRI in 2009. We were also one of the first to pilot GRESB, an industry-wide benchmark for sustainability in 2009. More recently we have established our Sustainability Vision, where we seek to lead the transition to a sustainable future. Our Vision focuses on three specific areas: Climate, People and Influence.
We recognize that nearly 40 percent of greenhouse gas emissions come from the real estate sector, and an even greater percent if you include infrastructure. Therefore, we are addressing climate-related risks and opportunities by focusing on delivering physical resilience and net-zero carbon performance.
We also recognize that millions of people use our assets every day, and so we strive to improve their social and physical well-being and to be champions of diversity, equity and inclusion (DE&I). Influence represents working with our partners and encouraging them to make sustainable choices and to effect positive change which includes our tenants and supply chain.
Q: Do you think the emphasis of ESG has shifted from risk to opportunity?
Yes, investors are increasingly interested in funds with strong ESG performance, and tenants want to live and work in spaces that are environmentally and socially sound. Thus, making sure that we are acting on behalf of our stakeholders creates opportunities. We also now see more research linking high ESG performance buildings with enhanced valuations.Q: How should ESG considerations be incorporated into investment decision-making?
Over the past several years we have started integrating ESG into our investment process, from acquisitions through asset management.ESG topics are incorporated into our investment committee memos, and an ESG team member has voting rights on each regional or investment strategy investment committee. We are increasingly working on incorporating climate risk analysis into each IC memo across our investment strategies – this provides insight into potential risks and opportunities.
With regard to governance, our CEO has ultimate oversight of ESG with the strategic direction set by our Global Sustainability Council. The head of sustainability and innovation, which is my role, is on the Executive Committee and leads an in-house ESG team comprised of scientists and engineers who are supported by ESG champions across our organization.
Nearly 40 percent of greenhouse gas emissions come from real estate
Q: And how do you seek to make ESG improvements to assets over the life of an investment?
For all long-term, core assets, we are following a path to operational net-zero carbon performance that includes energy efficiency upgrades, converting to electrification and switching to renewables, either onsite or offsite.Of course, you can’t manage what you don’t measure, so it all starts with measuring and analyzing the performance of each asset. To help drive assets level performance we often undertake environmental audits and propose environmental, well-being, health and safety certifications. We also submit most of our funds to GRESB (over 60 portfolios submitted in 2021) and separately assess both physical climate risk and transition risk.
As an operator, as well as an investor, we can truly make a difference at every stage of an asset’s lifecycle – either directly or by influencing our network and end users to make positive change.
Q:Is it challenging to access the data you need at that asset level?
It’s easier than it was several years ago, but it can still be challenging depending on the type of lease, tenant engagement and property type. What I will say, is that there is a sense of momentum today, and we are using that momentum to engage with our stakeholders. We are in the process of creating a knowledge hub to help our asset managers, property managers and investment professionals understand the ESG information that they need to engage with tenants, investors and other stakeholders. Part of that education process will emphasize the importance of capturing this data. The next frontier on data capture includes social and embodied carbon.Q: In addition to being the head of sustainability, you are also head of innovation. Why do you believe the two roles are complementary?
Many of the innovations and technologies that will be necessary to establish a low-carbon economy have yet to be developed, tested or brought to scale. Over the coming years more innovations will come online, whether it’s green steel, low-carbon solutions, credible global carbon exchanges or energy storage technologies.Robust product assessment and adoption will be important for the industry to reach our climate mitigation and adaptation goals. Close alignment between sustainability and innovation makes all the difference in the pace of change. We want to be at the forefront of innovation and invest in and integrate new processes and technologies on an ongoing basis.
Q: So, what does the future hold?
Over the next five years, I believe our fund and portfolio managers will become as comfortable speaking about ESG factors as they are their financial performance.All of our funds will ultimately have to demonstrate strong ESG performance as part of the standard course of business. Exemplary ESG performance will be essential to be considered by investors in the future.
Contact Us
The Real Assets Reality
-
Article | The Real Assets Reality, Macro Trends
The Case for U.S. and European Residential Real Estate
Due to the sector’s strong fundamentals and inflation hedging characteristics, many investors are betting on the resilience of residential real estate.
-
Article | The Real Assets Reality
Investing in a Brave New World
The novelty of rising interest rates, the prospect of proliferating macros shocks and a profound demographic shift all have serious consequences for real assets.
-
Article | The Real Assets Reality
The Case for Listed Real Assets
Learn how listed real assets exposure can provide an important complement to private markets.
-
Article | The Real Assets Reality
The Evolution of Real Assets
With the rise of infrastructure & inclusion of listed equities & private credit, investors must now take more holistic approach to their real assets portfolios.
-
Article | The Real Assets Reality
Credit Where Credit's Due - The Role of Real Estate Credit
Real estate debt is playing an increasingly important role in real assets portfolios with investors expanding from real estate equity into credit.
-
Article | The Real Assets Reality
Charting the Path to Net-zero - The Role of ESG in Real Assets
With the rapid acceleration in ESG focus in real assets, every asset must have a roadmap to net-zero carbon in order to remain relevant.
-
Article | The Real Assets Reality
The Changing Face of Asset Management
The focus in asset management has now evolved into identifying and meeting shifting tenant demands and not just on collecting rent.
-
Article | The Real Assets Reality
Fit for the Future - Why it is the Right Time for Infrastructure
Structurally resilient, Infrastructure is a perfect fit for low-growth, high-inflation environment that investors may soon be facing.
-
Article | The Real Assets Reality
The Courage of Convictions in Global Real Estate
Placing informed bets on the structural demand drivers of tomorrow will determine the winners and losers of global real estate.
-
Article | The Real Assets Reality
Roundtable: The Investor Perspective
Three major institutional investors in real assets join CBRE Investment Management CEO Chuck Leitner to debate the opportunity set of today.
-
Article | Infrastructure, The Real Assets Reality, Listed
As the world slows, infrastructure grows 2022 Listed Infrastructure Outlook
Many of the headwinds facing today’s investors—moderating global growth and persistent inflation—are tailwinds for the Listed Infrastructure asset class. Within, we review the setu
-
Article | Macro Trends, The Real Assets Reality, Listed
Global Real Asset Investment Leadership: A Holistic Grail for Modern Markets
Public and private global real assets are essential to solve the challenges of modern markets. In an environment of moderating growth, they can provide durable returns despite risi
-
Article | Macro Trends, The Real Assets Reality
The Case for Core Real Estate In HNW Portfolio (November 2020)
Private real estate plays a significant role in institutional investor portfolios. On average, institutions hold 10% in private real estate – with the majority in core real estate.