Real Estate

UK property themes to watch in 2021: E is for Engagement

Discover why, in Real Estate, the E in ESG stands for Engagement.
March 2021
Share
Subscribe to our Insights

Risk warnings

Past performance is not a guide to future performance.

The value of your investments and any income from them can go down as well as up and you may not get back the original amount invested.

The value of directly-held property reflects the opinion of valuers and is reviewed periodically. These assets can also be illiquid and significant or persistent redemptions may require the manager to sell properties at a lower market value adversely affecting the value of your investment.

BMO UK Property Fund invests in assets that may at times be hard to sell. This means that there may be occasions when you experience a delay or receive less than you might otherwise expect when selling your investment. For more information on risks, see the prospectus and key investor information document.

The ‘E’ in ESG stands for ‘Environment’. But in real estate, it’s plain that Engagement, especially with our occupiers, is a prerequisite if net zero carbon targets and wider social initiatives are to be delivered.

As mentioned in our note on delivering our net zero target, scope 1 & 2 emissions, being the gas and electricity controlled by an owner, are relatively easy to reduce. Scope 3 – emissions in relation to the occupier’s (as opposed to the owner’s) gas and electricity usage, as well as supply chain emissions from internal or external works on the property – provides far greater challenges for owners. For a typical fund, scope 3 emissions represent a far greater level (typically 80%+) than scope 1 and 2 combined.

Ultimately, a greater understanding of scope 3 emissions should help to increase its influence on business decision-making, such as refurbishment initiatives, redevelopment timescales and wider day-to-day interventions to drive emissions reductions. Positive engagement between the owner and occupier working together will deliver the greatest impact as both have a role to play in the emissions during the life cycle of an asset.

Collaboration is essential to achieve mutual aims and ambitions to reduce emissions, provide efficiencies and to work to deliver a cleaner environment. But the first step is to foster and deepen this engagement.

A simple example of fostering and deepening engagement would be working together at early design stages of a building to maximise occupational efficiency, environmental credentials, wellness criteria, and seeking to remove future obsolescence by building in flexibility to the accommodation created. This provides long-term benefits, with an occupier having a fit-for-purpose building and reduced running costs, and the owner having a more resilient asset by reducing transitional and obsolescence risk.

Risk warnings

Past performance is not a guide to future performance.

The value of your investments and any income from them can go down as well as up and you may not get back the original amount invested.

The value of directly-held property reflects the opinion of valuers and is reviewed periodically. These assets can also be illiquid and significant or persistent redemptions may require the manager to sell properties at a lower market value adversely affecting the value of your investment.

BMO UK Property Fund invests in assets that may at times be hard to sell. This means that there may be occasions when you experience a delay or receive less than you might otherwise expect when selling your investment. For more information on risks, see the prospectus and key investor information document.

Interested in learning more? Download the viewpoint to discover the importance of engaging occupiers to achieve net zero emissions, and details of our engagement within the BMO UK Property Fund.

Subscribe to our Insights

Related articles

No posts matching your criteria