Sustainability is one of the major challenges facing humanity, given the ever expanding numbers of people occupying the finite land available on our planet. The building sector contributes some 30% of annual global greenhouse gas emissions according to the Principles for Responsible Investment (PRI), the UN agency which advocates responsible investment. Therefore real estate investors have a significant role to play in supporting sustainability objectives. As a result the implications encapsulated by environmental, social and governance (ESG) factors are rightly gaining importance within the property investment industry.
Sustainability and ESG are central to the management of our business and our property portfolios at Mayfair Capital. Whilst we developed our own principles of responsible property investment a number of years ago in January of this year we became a signatory to the UN PRI. As an investor, prioritising ESG factors enables us both to achieve our sustainability goals and our investment objectives. By targeting quality assets in accessible locations with low energy usage and high sustainability credentials, we are also acquiring assets that are likely to prove most attractive to occupiers. Because buildings with high sustainability standards can attract price premiums compared to those with poor credentials though, we must have a strong conviction in our philosophy through our investment approach. We also improve the buildings that we acquire, making them better aligned to sustainability objectives and enabling them to contribute more to ESG principles.
One of our Funds, the Property Income Trust for Charities (PITCH), has strong ethical investment principles embedded in the Trust documentation. It will not, for example, acquire property whose occupiers business turnover depends primarily on alcohol, tobacco, armaments, gambling or the sex industry. Our other Funds do not have such stringent parameters. Nevertheless all of our Funds seek to create portfolios that meet the needs of tomorrow’s occupiers. To achieve this we focus on best-in-class real estate which brings with it a requirement for modern, well maintained and efficient buildings - the type that also align to sound environmental principles.
Our UN PRI signature, then, reflects in part where we are already. But it also reflects our commitment to ensure that ESG principles are central to our investment decisions. Environmental considerations are likely to be most relevant to our role as investors in physical buildings, however social and governance factors have a role to play. Such factors include, for example, our willingness to spend capital to ensure disabled access to our properties or maintaining strong ethical standards in dealing with clients and contractors. It also means giving back to the community through means such as our annual charity quiz night or the work experience students that we take in every year.
In summary, we believe our ESG principles already speak for themselves in the way our business is run and the way Mayfair Capital invests. Given the importance of ESG to the way in which our world develops, we believe that we have plenty more to offer. Our signature on the UN PRI is a statement of this intent, and a firm commitment, to one of our five principles of ‘continuous improvement’.
Senior Analyst - Investment Strategy and Risk