Real estate is part of everyday life for all of us, and thus it also has a role to play in meeting global sustainability goals. Today, we see that the emphasis is primarily on managing environmental risks, because real estate has a clear footprint that can be reduced in a targeted way.
In order to ensure that sustainability risks are considered appropriately, we have integrated environmental, social and corporate governance (in short ESG) risk criteria in our investment decision-making process. For us it is crucial that investment decisions take into account relevant risks that have measurable and noticeable impact, which we can identify, assess and mitigate accordingly. This process starts prior to the investment as part of a systematic due diligence process.
After investment the sustainability risk areas identified for the relevant property will be managed and monitored during the holding period. For every new property we will develop an ESG roadmap, marking potential improvement possibilities and priority risks to be monitored. We engage the stakeholders of every property to ensure awareness and co-operation opportunities that benefit all sides.
For us it is of upmost importance to approach sustainability in a sensible way, targeting change in risk aspects that provide the most impact without sacrificing the goals of our investors, our tenants, and partners, and of EfTEN.
Consideration of adverse sustainability impacts
We acknowledge that real-estate carries potential negative effects towards global sustainability goals, and we believe this impact can be managed. Setting sustainability goals has become increasingly important for investors but has not always been explicit. We manage funds that have been established at different times and have different investment mandates and ESG ambitions. Therefore, in the context of SFDR (2019/2088 EU) we are unable to formally confirm that we consider adverse impacts of investment decisions on sustainability for all our funds.
This is due to two reasons: i) quantifying adverse effects at this stage is difficult due to shortage of relevant sustainability data; ii) the regulation package for management of adverse impacts is very new and best practice is yet to develop.
Due to the above, we take potential adverse sustainability effects into account at a qualitative level. Should any adverse impacts occur during the holding period, we will evaluate the issue and take necessary action to mitigate it. Funds that have set clear sustainability goals regularly evaluate their performance, impact, and progress.
As regulation matures and best practices emerge, we will continue to evaluate our approach and update it accordingly. We are forward-looking in our activities, and we collect data and refine our processes to find the most accurate and effective data-driven actions to take our sustainability goals one step closer. Where possible, we apply the same principles to the management of funds that have not set themselves green targets.
Remuneration and sustainability
EfTEN does not apply specific remuneration policy towards activities related to the integration of sustainability risks. We consider sustainability risk management as part of our commitment to our investors and do not put emphasis on any specific activity.