The Board recognises the fund’s principle aim of achieving consistent and superior investment returns and believes that accomplishing this goal requires thoughtful and strategic consideration of environmental, social and governance (ESG) related factors. By integrating a meaningful responsible property investment approach into its real estate investment and management activities, the Board is determined to deliver a sustainable portfolio of property assets that meets today’s and tomorrow’s needs, one that minimises negative environmental impacts, creates social value and benefits for all its stakeholders, and operates with authenticity and transparency.
The Board has appointed BMO Investment Business Limited (BIBL) as the Company’s investment managers and BMO Real Estate Partners Asset Management plc (BMOREP) as the Company’s property managers. The Board has engaged with BMOREP and with its strategic ESG advisor to ensure that the approach to integrating ESG factors into investment and property management activities is both appropriate to and consistent with the Company’s investment strategy.
Responsible Property Investment approach
Through its investment and property managers, the Company integrates ESG factors into its business practice across a number of core mechanisms:
An ESG framework provides the structure around which various property teams operate, reinforcing the concept that every individual engaged on the fund has a contribution to make towards the successful integration of ESG factors. An appraisal tool supports integration by capturing a range of key ESG related metrics to produce an assessment of risk and opportunity that is reflected in individual asset business plans. ESG guidance and training is regularly provided whilst the dedicated in-house team of two full-time specialists are supported by external specialist resources as required. Control is exercised through distinct ESG gateways that feed into acquisition, capital expenditure and operational activities.
Through its investment and property managers, the Company adopts a policy to prevent exposure, arising from real estate lease contracts, to tenant organisations that undertake activities associated with controversial weapons or other controversial activities such as gambling, alcohol or pornography. Whilst the fund does not actively apply negative vetting methodologies, it does exercise discretion when considering entering into new lease contracts with organisations, recognising commercial drivers and the need to balance a well-let portfolio with ethical drivers and screening practices.
Standards and Codes
The Company seeks to align its ESG activities and associated reporting to the 3rd edition of the European Public Real-estate Association’s (EPRA) best practice sustainability recommendations. The fund has received a gold award from EPRA for its latest annual ESG Report indicating the highest standard of disclosure and transparency.
The Company also includes a comprehensive statement aligned to the recommendations of the Task-force for Climate-related Financial Disclosures (TCFD) within the latest annual ESG Report.
The Company has participated in the widely recognised and industry specific GRESB (Global Real Estate Sustainability Benchmark) since 2017 and considers the annual survey as an effective means of measuring its maturing approach to ESG. The fund’s ambition is to achieve an improvement in overall score in each subsequent year of participation.
The future of investor engagement
Whilst our manager has influenced for good over the past 20 years, they also recognise that much more needs to be done to secure a sustainable future for us all. In the decade ahead, BMO will continue to focus on the achievement of the SDGs, stepping up engagement to tackle key systemic risks such as climate change, biodiversity and social inequality.