One of the key market trends that we are educating our clients on is that relating to strengthening investor expectations in relation to "ESG" (Environmental, Social & Governance) issues.
BlackRock, the world's largest asset manager ($5.1 trillion of Assets Under Management) has just added further fuel to the fire. It has announced that it will be engaging with and demanding more of the companies it invests in with respect to ESG factors including climate change and board diversity.
The implications for the real estate industry of this heightened investor engagement are very real. We are seeing, for example, some fund managers lose out on capital raising efforts where they are found wanting with inadequate ESG programmes. Others are being put on notice by investors that their capital will be withdrawn unless more rigorous and coherent 'responsible investment' strategies are in place.
We expect to see more and more evidence emerge of institutional and private investors shifting their capital to reduce their exposure to climate risk and poor corporate governance. Many organisations within our sector remain weak in these areas, but the pressure on them to up their game is only going to get stronger.
The question is, are real estate companies and funds prepared? Time will tell...
BlackRock Inc(BLK.N), which wields outsized clout as the world's largest asset manager, planned on Monday to put new pressure on companies to explain themselves on issues including how climate change could affect their business as well as boardroom diversity.
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