Pension Funds Pushing to Improve ESG Standards in Real Estate

European pension funds investing in commercial real estate are increasingly focused on improving the ESG-related performance and standards of the asset class, according to new research by ESG data intelligence firm Deepki. Surveying 250 European pension fund managers across the UK, Germany, France, Spain and Italy, managing a combined €402 billion in assets, the research noted that just under half have allocated 21%-25% of their funds to domestic commercial real estate, while a further 24% have 16%-20% allocated. Deepki said pension funds are adjusting investment strategies and bolstering internal and trustee ESG expertise, with 33% looking to sell, 36% to repurpose and 37% to refurbish property not meeting their ESG-related standards. Just under a fifth (18%) of pension fund managers rated their domestic commercial real estate sector’s ESG performance as “very good” and 57% as “quite good” over the past three years. Vincent Bryant, Deepki’s CEO and Co-founder, said: “Our findings show that commercial real estate is no different and that they are proactively taking steps to improve compliance of their funds. Measuring performance and developing strategies to ensure they meet the 2050 net zero target has never been important for the sector.” 

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