Who will invest in Green Real Estate? David Wood, Director Initiative for Responsible Investment Harvard Kennedy School of Government Co-Director, Responsible Property Investing Center March 10, 2011

Responsible Investment What is it? –ESG Analysis –“interests of investors and society may converge over time? Scale? –United Nations Principles of Responsible Investment: $20+ trillion in assets under management. –Social Investment Forum: $3.7 Trillion under management –Eurosif: 5 trillion Euros under management.

In Practice Portfolio Construction Thematic investments Corporate Engagement Tackling the market Does RI have teeth?

Why real estate? Public policy – green building regulations, public subsidies, smoother entitlement, public-private partnerships Demographic trends – changing population, increased urbanization Resource constraints – energy, water, materials Changing consumer preferences – demand for green and walkable communities, global efforts to deal with inequality via built environment Reputational risk

What do Responsible Investors need to invest in real estate? Conventionally accepted strategies Resolution of investment agency issues Information on returns Benchmarks and third party targets Carrots and sticks from public sector, civil society, and consumers

Mission and Impact Investment Mission Investing: alignment of investment strategy and organizational purpose Impact Investing: solve social or environmental challenges while generating financial profit Who does it? How deep is this market?

Examples in Practice Community Development Finance –Banks –Loan Funds Off Shore Investment –Microfinance –Sustainable SMEs Environmental Investing –Clean Tech –Sustainable Land Management

Why real estate? Tangible impact –Social equity for people and place –Walkable communities, TOD, and smart growth –Climate risk mitigation Credible Value Proposition Opportunity to leverage public and private capital

What do mission investors need? Credible social impact Established or convincing intermediaries Coordination across brain damage Private and non-profit sector partners Supportive public policy ecosystem

What’s taking so long? The real estate market and its culture Risk aversion and the business case Information, categories, metrics, and standards The perfect mousetrap How convergent are those interests after all?

Responsible Property Investing Center Research into performance Vocabulary and standard setting Community of practice