Ivanhoé Cambridge: Activating the ‘S’ in ‘ESG’

Stéphane Villemain and Sunita Mahant see inclusion and experience as catalysts for the industry in having social impact.

This article is sponsored by Ivanhoé Cambridge

Ivanhoé Cambridge, the real estate subsidiary of Caisse de dépôt et placement du Québec (CDPQ), invests alongside strategic partners and major real estate funds managing some C$69 billion ($50.6 billion; €51.2 billion) of real estate assets. Stéphane Villemain, head of sustainable investment, and Sunita Mahant, head of social impact and inclusion, sustainable investments, discuss the importance of inclusion and experience to social impact and how real estate investors have a responsibility to ensure properties address the needs of today and tomorrow.

What do you mean when you use the terms ‘inclusion’ and ‘experience’?

Sunita Mahant

Sunita Mahant:  When we think about the built environment and the communities in which we invest, it means putting humans at the heart of what we do when we design and operate our spaces. For us, inclusion means creating a space where people are respected, valued and able to thrive, whether in terms of accessibility or having a sense of belonging through cultural inclusion.

Experience relates to what the occupiers of any of our spaces are going to experience in terms of health and wellbeing, how they access the facilities we provide. It is not just about the buildings that we develop, but about the people who use them; how our buildings are interacting not just with tenants, but with those who visit them, and indeed with the community at large.

How can you measure whether these objectives are being achieved?

SM: Inclusion is vital for us, not least as having the best talent is our number one priority. All of our targets must have a human dimension. If you do nothing, diversity will gradually fall away. This is particularly critical in this time of labor market disruption in the wake of digitalization, the covid pandemic and the consequent ‘Great Resignation.’

We have a broad range of diversity, equity and inclusion objectives relating to gender, ethnic and cultural diversity, physical and intellectual ability and sexual orientation. At the moment, we are focusing on gender inclusivity as a strategic objective.

You just can’t tackle everything at the same time and so we have decided to prioritize gender in the short term. We will measure success by looking at gender diversity in two specific areas: our investment teams and asset managers, and our senior leadership.

Stephane Villemain

In terms of measuring what we achieve in the area of experience within the various asset classes in our portfolio, we have established design and operational guidelines with specific sustainability criteria. We are now actively pursuing the enhancement of these guidelines by placing additional emphasis on the social sustainability aspects.

There are some specific measures to turn to in this exercise including WELL, Fitwell and more recently WELL Equity, of which we are early adopters. These frameworks allow us to obtain a social impact score and benchmark our buildings against objective industry-recognized standards.

How do you ensure you involve all the appropriate stakeholders in a community?

Stéphane Villemain: The first group of stakeholders we interact with are our beneficiaries, 6 million Quebecers for whom we invest. We seek to ensure we get their views, and include them into our thinking.

When it comes to individual real estate developments, we are keen to make sure that we consult with the local communities and ensure that the products we provide to society are socially useful to them on an individual level. This also applies to local policymakers, and we work with them to understand their particular objectives and motivations.

We also consider stakeholders along the full length of the value chain, including the urban planners, architects and designers. We cannot have full control along that chain, but we can influence it and set ESG targets for our external partners. 

How do you hold asset managers accountable for these objectives? 

SV: We have built a system of accountability that we hope leads to real action. Again, it is very important to remember that we are part of a larger
value chain. We want to ensure that we have influence along that chain and, through that mechanism, on society as a whole.

This means that we must make sure our chosen partners understand our motivation and that they manage our assets in line with our values. We seek to create a system of accountability that links ESG performance with financial incentives. For example, with our lenders, we are very pleased to embrace green financing that links the level of interest which we pay to the achievement of certain ESG goals.

We also gradually apply these principles to the asset managers we work with. And in this regard, what we call ‘the promote’ (equivalent to ‘the carry’ in private equity terms) is structured in a way that rewards the achievement of agreed key performance indicators.

Overall, we want to tie financial rewards to non-financial targets. Indeed, this is something that we do across Ivanhoé Cambridge: generally linking everyone’s performance bonus to the achievement of specific ESG goals.

SM: We have been very pleased with the response from our value chain and the openness and willingness to align with our values. One recent example comes to mind. Earlier this year, we became a signatory to the Diversity in Action initiative from the Institutional Limited Partners Association.

This initiative seeks to bring together both investors and managers to commit to specific actions that advance diversity and inclusion in our industry and provides resources and actionable insights to address shared challenges. We then intentionally reached out to approximately 60 of our strategic partners to share the news and invite them to join us.

The response rate was overwhelmingly positive, and today some have already signed on and many are actively in pursuit of becoming signatories themselves. This represents concrete action and influence for us.

We know that we are driving social impact progress as an organization, but we have a strong conviction that together with our partners and industry peers we can have an even greater impact.  I think this is because everyone understands that today’s ‘nice-to-haves’ will become tomorrow’s ‘must-haves’ for all parties involved.

What are some real-world examples of these concepts in action?

SV: For the Haleco project in Montreal, we have created a project with easy access to green spaces. It is a project built on an existing brownfield site, so that there is no new artificialization of land. 

It is a mixed-use development, combining office, retail and leisure space with residential accommodation. On the social impact side, it is well thought through so that each of these elements is in harmony with each other, and we have been able to incorporate specific features, including an urban farm and urban forest.

We also introduced some interesting new ideas to the development. Our ‘fab lab’ is a community space where there is significant interaction between the different elements in the communities to create an exchange, or “hub”, of ideas.

Our overall objective is to establish a sense of belonging in these spaces. We are not just designing a space for tenants. It is a place focused on wellbeing, where people can enjoy an inclusive experience.

To this end, it is important for this development, as it is for all our real estate, to consider how it interacts with the existing infrastructure. This is also essential from the sustainable development point of view; we have to think about how people come and go. This means looking at transport links with a focus on public transport and “soft transportation” such as cycling and walking.

The Haleco project is a very good example of how we are working to ensure that we have a positive social impact. It has won a C40 Cities Reinventing Cities prize, and I think it is likely that it will be a model for what not only we can do elsewhere, but what others can too. 

Easy access: CIBC SQUARE has been designed with accessibility for all in mind

How does the concept of the ‘ville du quart d’heure’ (the 15-minute city) form part of your thinking on social impact? 

Stéphane Villemain: It is a key part of achieving social impact. The concept of the ville du quart d’heure is central to the way that we see the city of the future, ensuring that people are no more than 15 minutes away from every aspect of their urban lives, whether that is work, education, leisure or shopping.

Sunita Mahant: Indeed, one of our prime motivations is to improve the wellbeing of all the people who interact with our buildings and core to this is access.

This is certainly the case in one of the projects we have developed in Toronto: CIBC SQUARE. We have invested in a variety of aspects with a particular emphasis on accessibility, whether this means ensuring wheelchair access to all parts of the building or installing prayer rooms. Cities – and city spaces – need to be designed for everyone.

Equity and social inclusion must be built into the values of any asset, ensuring that all the people who interact with it have a sense of belonging. We have a particular focus on arts, culture and educational projects in our developments. We work with local artists to curate their art in important new developments.