PREA takes on social sustainability
The Pension Real Estate Association has published a social sustainability primer for real estate investors.
The US institutional real estate investor body released What Is the S in ESG?A Guide for Real Estate Investors in order to clarify the topic of social sustainability and provide constructive guidance for integrating such considerations into the investment management process.
PREA says: “Although decisions on how to address social factors within real estate investment activities and which social factors to address are up to specific organizations, we believe that simply ignoring the ‘S’ of ESG could ultimately impede investment performance, potentially reducing returns and/or increasing risk.”
Developed by PREA's social impact committee, the guide identifies common misconceptions about social factors in investments, including the primary one that these are not a matter for real estate investors.
Social sustainability does not necessarily require investors to sacrifice performance to achieve social or environmental goals, the guide says, citing a 2023 survey by the Global Impact Investing Network, which found that 74% of impact investors target market-rate financial performance and 79% performed in line with expectations.
The guide suggests three main categories under which to consider social sustainability:
- Community impact
- Health and wellness
- Human capital
It also suggests how to create a framework for socially-aware investing and provides guidelines for implementing social sustainability measures.
The guide “shows how socially responsible strategies can be implemented in a programmatic way with measurable outcomes that are consistent with fiduciary responsibilities", said Jacques Gordon, co-chair of PREA's social impact committee and executive in residence at the MIT Centre for Real Estate.
The report can be found here.