Majority of CRE managers are investing up to 10% of AUM in ESG due diligence

Almost two thirds (63%) of European commercial real estate asset management firms are investing the equivalent of 7-10% of the value of their assets under management in due diligence to help them understand the ESG performance of their commercial property portfolios as they strive to meet net zero targets, while benefiting from the enhanced value of ‘green’ buildings.

This is according to new research by data intelligence firm, Deepki, which surveyed 250 European commercial real estate asset managers in the UK, Germany, France, Spain and Italy. The majority (70%) of respondents work for an institution with over €500 mln.

The significant investment being made in understanding how assets are performing is also reflected by the majority (78%) of asset management professionals who believe their organisation is investing enough to improve ESG performance. However, 18% did not think this was the case.

One fifth (21%) felt that their organisation lacked the internal expertise to assess their assets’ ESG performance and develop a net zero strategy. This is despite widespread recognition of the importance of a comprehensive ESG strategy, with the majority (80%) saying that a comprehensive ESG strategy is important when it comes to managing financial risk in their organisations.

Among other findings, Deepki said 77% were training employees to improve their ESG expertise; 75% were working with specialist ESG consultancies; 38% were making ESG a board level and investment committee priority; and 30% were recruiting ESG data analysts.

Vincent Bryant, CEO and co-founder of Deepki, said: ‘It is clear that asset managers are taking ESG extremely seriously and are prepared to make significant investments to get on a path to net zero and manage financial risk. However, it is a complex task and requires significant expertise, particularly when it comes to due diligence and collecting the right data.

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