Investing responsibly in real estate with SCPIs
SRI, Socially Responsible Investment, consists in taking into account the notion of sustainable and responsible development in the financial sector. The SRI approach is becoming increasingly attractive to investors wishing to give meaning to their investments. The real estate sector is particularly concerned by the challenge of climate change.
SRI, taking into account extra-financial criteria
Responsible investing is commonly understood to mean investing in companies that integrate extra-financial criteria into their development, such as environmental protection, respect for social rights and good corporate governance (ESG criteria). These companies must be "citizens", attentive to working conditions, climate change and business ethics....
SRI for real estate consists of integrating environmental, social and governance issues into the acquisition and management processes of buildings, and ensuring regular reporting to investors.
SRI makes it possible to better anticipate and manage risks (climatic, reputational, etc.) with the aim of preserving or even increasing the value of real estate assets over the long term*.
In other words, a responsible investment is an investment that can reconcile performance with social and environmental impact.
SRI, a priority issue for SCPIs
The building sector is very energy-intensive. According to the Ministry of Ecological Transition and Solidarity, it accounts for 44% of the energy consumed in France and emits more than 123 million tons of CO2 per year, or nearly a quarter of national emissions, in 2019. In other words, it is one of the most energy-intensive sectors. Reducing the environmental impact of buildings is therefore a priority. This is why, for the past ten years, the public authorities have adopted strict regulations aimed at making new constructions more energy efficient and imposing a massive renovation of existing buildings.
As a major player in the real estate sector, SCPIs (solution d’épargne immobilière) ave a role to play in the energy transition. They are at the forefront of integrating ESG criteria into their choice of investments and the management of their real estate assets. Aware of their responsibilities, SCPI managers adopted a Charter of Commitment in 2016 to promote the development of SRI management in real estate. They also actively participated in the development of the SRI label of real estate funds in force since October 2020, a label designed to give greater visibility to SCPIs committed to a socially responsible investment approach.
Key figures for SRI
Socially Responsible Investments (SRI) are steadily increasing year after year, proof that savers are increasingly attentive to the virtuous nature of their investments. According to figures published by the Association Française de la Gestion Financière, responsible investment assets amounted to €1,861 billion at the end of 2019, including €546 billion in SRI assets. This represents a 32% increase in one year. SRI management now represents around 15% of total assets under management in France.
The SRI approach of the management company Primonial REIM
Primonial REIM, the leader in the SCPI market, has enabled you to invest in socially useful real estate sectors that have a positive impact on society, such as healthcare/education real estate and intermediate housing.
Primonial REIM has developed a proprietary methodology to integrate ESG criteria into its real estate acquisitions and asset portfolio management. For example, 100% of the real estate acquisitions of the SCPI Primopierre, which is mainly invested in office real estate in the Paris region, are subject to an extra-financial rating based on 90 ESG criteria. The objective of the SRI strategy of SCPI Primopierre is to ensure that its portfolio continuously improves its extra-financial performance. This policy allows the fund to maintain or increase the quality of its assets over time and to strengthen ties with tenants by optimizing the use and quality of life within the buildings.
According to Stéphanie Lacroix, Managing Director of Primonial REIM, the choice of SRI in real estate should provide investors with attractive financial performance over the long term because ESG criteria increase the life and value of real estate assets over time. On the contrary, properties that cannot demonstrate ESG performance will be less liquid over time and therefore less valuable.
*As with any real estate investment, there is a risk of capital loss due to changes in the real estate market and currency exchange rates. Income is not guaranteed and may go up or down depending on the performance of the fund. The value of a real estate asset is not guaranteed and may go up or down depending on market conditions. SCPI is a long-term investment with a recommended investment horizon of 10 years. Liquidity is limited, the management company does not guarantee the resale of units. And as with any investment, past performance is no guarantee of future performance.