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by David Wood, Senior Research Associate, The Institute for Responsible Investment
October 2006
Responsible Property Investing (RPI) is a growing field that focuses on investment in real estate projects that deliver financial, social and environmental returns.
Generally, responsible property investing can be defined as voluntary actions by property owners, managers, and insurers that go beyond minimum legal requirements to increase the positive and reduce the negative social and environmental effects of real property, consistent with their fiduciary responsibilities.
Examples of these actions include land-conservation projects, brownfield redevelopment, green buildings, smart growth, urban reinvestment, affordable housing, transit oriented development, Energy Star properties, and full-scale sustainable master planned communities.
The field offers opportunities for responsible investors to find new value through a more sophisticated understanding of the materiality of social and environmental performance; it also offers responsible investors an opportunity to align their financial decisions with their social and environmental values.
Still relatively young, the field faces a number of challenges:
- How can investors measure economic, social, and environmental impacts?
- What role do these impacts play in measuring financial returns?
- How can new tools be developed to enhance work in the responsible investment field?
The Responsible Property Investing Project
To address these questions, The Center's Institute for Responsible Investment has created the Responsible Property Investing Project (RPIP) in collaboration with Professor Gary Pivo of the University of Arizona. RPIP is a forum for the interchange of ideas and the promotion of research that broadens and deepens responsible property investment opportunities.
RPIP grew out of a February 2006 convening held in Tucson that brought together key players in the real estate and responsible investment sectors to discuss ways to catalyze developments in the field. It was, as far as we know, the first such meeting in the United States. [Read the conference report.]
The goal of the gathering was to open communication among those interested in real estate projects that deliver financial, social and environmental returns. During the meetings, participants discussed:
- the current state of responsible property development and investing
- ways to measure and report their financial, social, and environmental dimensions
- new investment products focused on responsible real estate
- how to develop this field through new research, standards and vocabulary
One conclusion from the meeting was that the field would benefit from an ongoing institutional forum which could promote research and the interchange of ideas and best practices in responsible property investment.
RPIP was formed in part to address these questions. In its first year, RPIP is focusing on three key areas:
- a field report on the state of responsible investing, including the development of coordinating vocabulary that covers the range of activities in the field
- assessment of the social and environmental profile of publicly held REIT portfolios
- assessment of the social and environmental profile of U.S. home builders
RPIP also supports continued dialogue and interaction between key players in the dynamic field of responsible property investment; to that end, a second convening will take place in January 2007. For more information about this project please contact David Wood [David.Wood.4@bc.edu].
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