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The state of ESG investing in Canada’s commercial real estate market : Opportunities and risks
Corporate Real Estate Journal,
12
(3),
289-295
(2023)
Abstract
In recent years, sustainability and resilience have become a priority for commercial real estate investors. The brown discount for unsustainable buildings has gradually become larger than ‘green premiums’ we see today for buildings leading on sustainability and resiliency. Financial market participants are increasingly under pressure from stakeholders to emphasise environmental, social and governance (ESG) factors in the investment decision criteria. The development of resilient assets, regulatory pressure and customer preference are compelling many investors to integrate ESG into the way they conduct business; however, putting strategy and action behind the work and finding a suitable market for ESG investments is no easy task. Across all real estate sectors, people are looking for truly sustainable assets and products. Real estate owners must consider what that means for tenants, investors and other stakeholders. Canada is emerging as a leader in a marketplace where investors are increasingly focused on ESG and are increasingly willing to divest from companies for not taking significant ESG action. In this paper, we discuss reasons presenting a compelling investment thesis for commercial real estate investors in Canada, including ESG-friendly regulations, population growth, market opportunities, demographic diversity, access to clean electricity and market stability. Moreover, it is discussed that investors require to overcome the data and technology selection barriers to measure, monitor and manage progress toward net-zero operation.
Keywords: Canada; commercial real estate; ESG; investment; net zero carbon; population growth; electricity; regulation; sustianability; GHG emissions
The full article is available to subscribers to the journal.
Author's Biography
Ali Hoss is Triovest’s Vice President, Innovation and Sustainability, responsible for advancing environmental, social and governance (ESG) performance and innovation for a portfolio of CAN$15bn of commercial properties. The recipient of Canada Energy Innovator Award of 2020 and Young Energy Professional Award of 2017 from the Association of Energy Engineer’s (AEE), with over 20 years’ work experience, Ali is well regarded as a strategic builder of unique products and services for design and implementation of energy conservation and greenhouse gas (GHG) emission mitigation projects. Prior to joining Triovest, Ali has led design and implementation of Canada Infrastructure Bank’s public building retrofit financing program with a budget of CAN$1bn, created energy and GHG reduction standards and technical requirements for deep retrofit projects. He has also led the development of the City of Toronto`s comprehensive policy strategy that will drive the city’s existing buildings to net zero emissions by 2050. In 2016, Ali led the implementation and delivery of the first full-scale pay-for-performance energy conservation programme in North America, the IESO’s Energy Performance Program, with a budget of CAN$25m, for large commercial and institutional customers. He is a board member of the Ontario Society of Professional Engineers (OSPE) Energy Task Force, REALPAC’s ESG Committee, and member of the Leadership Advisory Board for Center for Active Design (Fitwel platform). Ali is a professional engineer with a PhD degree in mechanical engineering, a Certified Energy Manager, a published author of book chapters and peer-reviewed scientific journal papers, a public speaker and a university guest lecturer for energy and sustainability courses.
Luigi Luppi is Triovest’s Vice President, Investor Relations. He has more than 20 years’ capital structuring, client relationship management, capital raising and structured finance experience in Canada and internationally. Before joining Triovest, Luigi worked at Kilgour Williams Capital as a Vice President of Business Development, where he grew the institutional and family offices’ investment platforms. Before this, he was at Morguard Investments, where he managed a portfolio of domestic and international institutional clients and increased capital under management by over 30 per cent to CAN$8bn. Before 2011, Luigi had positions of increasing responsibility at Westdeusche Immobilien Bank, CIBC World Markets, NIB Capital and Mizuho Corporate Bank in the UK. He holds an MSc in international banking and financial studies from the Southampton University and a BA in banking and economics from Siena University.
