At CBRE's Sustainability Breakfast, IPD launched a set of questions which is an industry-backed initiative aimed to support the measurement of sustainable property investment. The answers to the questions will provide the industry with a new & improved index of sustainable properties (ISPI - IPD Sustainable Property Index version 2.0) and a benchmarking service (EcoPAS).
Alongside the usual considerations of "quality", covenant strength, and lease length, the sustainability characteristics of properties are now beginning to impact asset value and investment performance.
To fulfill their fiduciary responsibilities, investors have to understand these impacts and the extent to which their investments and funds are at hazard as a result, in both absolute terms and relative to their peers.
To understand properly and manage the risks they face, investors need this information at asset level and this is one of the reasons why valuers are coming under increasing pressure to reflect the relevance of environmental characteristics of buildings in their valuations.
By including the collection of data on a limited set of variables relevant to asset value and investment performance in the work they do on their regular site visits, it will prove straightforward for valuers to send investment-related environmental data to clients and IPD along with the other investment related information they send currently.
Once gathered, IPD will be able to analyse these investment relevant environmental variables at asset and portfolio level to augment the many services they already deliver on investment performance. This new service is to be called EcoPAS, shorthand for the Eco-Portfolio Analysis Service.
The limited subset of investment relevant environmental variables which will initially underpin EcoPAS was agreed in late 2011 by representatives from five of the UK's largest property investing institutions (AVIVA, Henderson Global Investors, HERMES, L&G and PRUPIM), IPD and the UK's largest valuation practice (CBRE). Discussions have now begun with RICS to determine how this initiative might be implemented more widely across the valuation community to grow significantly the amounts of environmental data collected.
Ian Cullen, Founding Director, IPD said : "At IPD we have been working to bring sustainability questions into the core framework of investment performance measurement, now for more than five years. It is most gratifying that all sides of the industry are at this crucial moment acting together to give this initiative a real chance of success."
John Symes-Thompson, Senior Director, CBRE said: "As valuers we already appreciate the need to be fully aware of these sustainability factors, and we have been delighted both to sponsor IPD and work with them, our clients and the RICS on producing this upgraded data-collecting initiative which we hope will become an industry standard."
Bill Hughes, Managing Director, Legal & General Property noted that "Current metrics systems are designed to look at all aspects of 'sustainability' rather than the different and more narrow issue of 'the investment implications of sustainability'. As such, they cannot do this very necessary job for investors in the way that EcoPAS can. In time, this critical project will bring the impact of sustainability upon investment performance into the Boardroom."
Richard Jones, Managing Director UK Real Estate, AVIVA said that "This is an investor and valuer-led initiative aimed at solving a common problem, namely, capturing investment-relevant environmental data at asset level for every property in an investment portfolio in a meaningful but pragmatic way."
Ben Elder, Global Director of Valuation, RICS said "The role of the valuer is to reflect market value and this is an opportunity to improve market information. The open and enthusiastic engagement of all parties in this project emphasizes its importance and relevance."
Paul McNamara, Head of Research, PRUPIM said that "The EcoPAS concept offers an exciting route to gaining muc