Lunch Conference: Kick-Starting the Green Infrastructure transition and uncovering value for investors in real estate

Many investors are looking to real estate to diversify their assets and are uncovering real value in seeking out buildings designated as “green”. A second wave is looking to green infrastructure projects, through green bonds or other financial vehicles to round out their portfolios, thereby providing much needed capital to fund the transition to a low-carbon and more resilient economy for future generations.

On June 8th, FSI featured a panel of international experts on green real estate and infrastructure at a lunch conference moderated by FSI President, Vincent Felteau. The panelists included:

– Avis Devine, Assistant Professor of Real Estate Finance at the University of Guelph

– Sander Paul Van Tongeren, Managing Director of GRESB, and

– Thomas Mueller, President and CEO of the Canada Green Building Council (CaGBC)

Avis Devine started the discussion by highlighting the substantial footprint of Canadian buildings, which account for 38% of Canada’s CO2 emissions and 40% of natural resource usage. Fortunately, there are incentives to going green. Avis explained how sustainable and energy efficient real estate can provide added value for investors, for example, in the form of decreased risk for owners due to the lower impact from volatile energy prices. Avis confirmed that occupants also benefit from green buildings through improved health over time (reducing absenteeism) and productivity at work.

Sander Paul Van Tongeren joined us from Amsterdam to discuss the exciting advances of the benchmarking platform GRESB, originally the acronym for Global Real Estate Sustainability Benchmark, but now extending beyond conventional real estate to cover infrastructure. The organization assesses the ESG performance of property and infrastructure portfolios and ranks them against peers, creating a benchmark for use by property owners, management companies and investors. Sander Paul explained that this practice offers better information for investors as well as asset managers looking to improve portfolio performance. As Sander Paul put it “what gets measured, gets improved.”

Lastly, Thomas Mueller illustrated the upward trend of green certified buildings in Canada, citing commercial institutional buildings as the largest sector for growth of LEED market penetration with a 30% increase since 2010. Thomas also mentioned that green buildings like these could result in a 38% reduction in GHG emissions by 2030 (from 2005 levels), and create an estimated 260,741 annual jobs. Thomas also touched on the newly released Zero Carbon Building Standard, created by the CaGBC to help achieve Canada’s climate change commitments.

A question from the audience led Thomas to confirm that despite lower LEED penetration in the residential market due to the high cost of certification for an individual home, there was a spill over effect as building occupants expected their places of work or commerce to meet the same green standards being marketed to them for their homes.

Another question touched on the incentive for investors to favour green real estate and asked about the issuance of green bonds. Our panel noted the success of recent launches of green bonds that notably include green buildings and infrastructure and how green building certification was useful in deciding how the latter should be defined. Thomas also noted that in the past, much of the certification has been for new construction, but there is now evidence of uptake for existing building upgrades where there is much opportunity for savings despite the capital-intensive nature of retrofits, which remains an undeniable hurdle for the energy transition in real estate.

FSI sincerely thanks the panelist for their collaboration. The presentations can be downloaded below.

Avis Devine – University of Guelph

Sander Paul Van Tongeren – GRESB

Thomas Mueller – Canada Green Building Council

20170608-_MG_9852 Vincent

20170608-_MG_9879 Avis

20170608-_MG_9908 Sander Paul

20170608-_MG_9932 Thomas

20170608-_MG_9954 Panel

20170608-_MG_9957 Questions

20170608-_MG_9969 Milla

20170608-_MG_9975 Speakers