It is now important for the private real estate sector to set environmental and social targets and “stick to it,” stated Sylvain Fortier, chief investment and innovation officer at Ivanhoé Cambridge, at the inaugural PERE Global Summit this week.
During his keynote interview on day one of the all-virtual conference, he said the investor had emerged from the pandemic crisis with more solid targets than it had going in. Last month, the property business of Canadian pension Caisse de dépôt et placement du Québec announced it had set a target of achieving a net-zero carbon status for its international portfolio by 2040.
The investor, which currently manages more than C$60 billion ($49.4 billion; €40.9 billion) and is ranked 13th on PERE’s Global Investor 100 ranking, said in the announcement it was accelerating its decarbonizing strategy because 40 percent of global greenhouse gases emanated from the built environment.
In 2017, the firm set a 25 percent reduction target by 2025 before increasing that target to 35 percent by the same timeframe after achieving a reduction of almost 20 percent by 2020. “We realized we were outpacing that target,” said Fortier. “To get to net zero, we need to reduce by about 5 percent per year.”
When asked about the growing trend of self-imposed targets, Fortier replied: “I very much believe in giving yourself specific targets.” He said this was critical for “something that important and yet very long term.”
“Ultimately, just pick a number and stick to it and build a plan to achieve it. You don’t now want to be window dressing. Walking the talk requires you to take steps to actually get there. If everyone picks a year and it becomes a bit of competition, then good. People like to win.”
Fortier described Ivanhoé Cambridge’s 2040 target as “aggressive” but attainable.
The scope of the commitment by Ivanhoé Cambridge covers approximately 800 properties across all five continents. According to its announcement, C$14.6 billion of ‘low-carbon’ investments have occurred since the initial 2017 target was set. It expects to meet its 2040 target by continuing to buy low-carbon-emitting assets and committing capital to only net-zero developments.
Fortier said this mission will undoubtedly impact what properties the firm now buys and sells. On developments, he said: “Every new development project we’re doing needs to be net-zero by 2025. Ultimately, everyone who owns a building can do better on consumption and the types of energy they’re using. It’s quite simple: you take the cleanest energy possible, then consume less and less of it. And you renew it. That’s the game plan.”
During the hour-long interview, Fortier said the pandemic had forced an introspection by Ivanhoé Cambridge on its social responsibilities too. “As a real estate owner, we must think about safety, sanitary [conditions] and security,” he said. “We must think about communities and connections.”
For the investor, one outcome was a greater commitment to affordable housing. Earlier this month, the firm announced a $151 million commitment to a consortium planning to build 1,500 homes in the city of Quebec. “As an investor of public pension money, do we feel we have a role to play here? The answer is yes.”
“Once you start defining what ‘S’ means to you as a company, then you need to get going and tackle those things.”