Gilles Bouteloup, you are Sustainable Development and Safety Director of AXA Real Estate Investment Managers. Please, could you tell us in a few words what is AXA REIM? AXA REIM is a subsidiary of AXA Investment Managers, which manages a 38 billions € (55 billions US $) real estate portfolio. In the company, 515 employees work in 21 countries. Our portfolio is very diversified: offices, retail, logistics, hotels and housing. We are the first property investment manager in Europe and the fourth in the world.
What is your sustainable development approach?
Sustainable development is an essential part of our strategy. At the beginning was the introduction of the “citizen company” concept in AXA group in 1986. Then we introduced sustainability into our practice through several commitments. In 2003, we signed the UN Global Compact Chart. In UNEP Finance Initiative, we co-chair the Insurance groups representation. In 2007, AXA IM signed the UN Responsible Investment Principles. I am the AXA representative in the UNEP-FI Property Working Group.
We define our policy in our Responsible Property Investment Guideline. The Guideline specifies six types of practical action to be taken in three main fields (environment, social, governance). Examples of these actions are the progressive implementation of an energy efficiency and water consumption management system or the promotion of an environmental rating index for our buildings.
For all new buildings, we now achieve the usual environmental accreditations, BREEAM in the UK, Haute Qualité Environnementale (HQE®) in France, Minergie in Switzerland.
How do you mix profit and sustainability ?
Profit and sustainability are closely aligned. The three key words are: risk, return and obsolescence. We are convinced that non efficient buildings in terms of energy, environment and health will have more rapid obsolescence.
The first obsolescence risk is regulatory, with the requirement for increased energy and environmental performance. The second risk is market led, with occupiers increasingly seeking greener buildings, especially in the non residential sectors.
Improving the energy and environmental efficiency decreases the property obsolescence risk for our clients. Future returns and rental values will be higher for green buildings than for standard buildings.
For global client presentations we have observed that investors and their consultants have a clear preference for asset managers with a clear expertise in sustainable property.
What is this expertise ?
Our practices will change significantly. As asset managers, we use a lot of quantitative data. We will have to be as rigorous in gathering data for a building’s environmental indicators as we are with financial data.
Environmental performance must be mesurable via international standards and verifiable by independent and competent bodies.
It is the reason why we work with three other investors, AEW Europe, ING REIM, General Electric Real Estate, in commisionning Veritas to build a Green Rating tool. We are implementing this in more than 120 buildings in Europe.
The cost of the rating system has to be reasonable. The initial audit cost should not exceed 5 000 € (7 200 US $) for an ordinary office building, with a c. 1 500 € (2 200 US $) annual review cost.
As a pan-European investor, we need consistent international standards. So far all accreditation systems have been country-specific, with differing criteria and performance measurements. This situation does not meet our requirements.
We are very interested in the differences between BREEAM, LEED, HQE and Green Star (1). We need a rating system which is simple, clear, internationally relevant, with quantitative assessment – at a reasonable cost.
Gilles Bouteloup, thank you for this very interesting presentation of your vision of sustainable real estate.
(1) See on that topic the editorial in the present blog.