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How Sustainable Is Swiss Real Estate? Evidence from Institutional Property Portfolios

Author

Listed:
  • Fabio Alessandrini

    (University of Lausanne; Banque Cantonale Vaudoise)

  • Eric Jondeau

    (University of Lausanne - Faculty of Business and Economics (HEC Lausanne); Swiss Finance Institute; Swiss Finance Institute)

  • Ghislaine Lang

    (University of Lausanne)

  • Evert Reins

    (University of Lausanne)

Abstract

We evaluate the sustainability of real estate investment vehicles in Switzerland according to the three Environmental, Social, and Governance (ESG) pillars. For this purpose, we conducted a survey of direct investors (real estate investment companies, funds, and foundations) inquiring about their sustainability practices. Based on the data of this survey, we assess the ESG profile of their real estate investment portfolios. A methodology is proposed to build an ESG score and subscores on the three pillars of sustainability. We find that, in the aggregate, the performance of real estate investment vehicles is relatively good on energy issues, whereas it is less developed on environmental issues outside of energy. Social policies seem to be less of a priority for investment vehicles than environmental and governance policies. Large entities tend to perform better than small ones. Regarding the various categories of investment vehicles, foundations tend to have more advanced ESG practices than funds and companies. We do not find any significant impact of ESG scores on the financial performance of the portfolios. This research also highlights the need for the industry to establish reporting and technical standards on sustainability matters.

Suggested Citation

  • Fabio Alessandrini & Eric Jondeau & Ghislaine Lang & Evert Reins, 2022. "How Sustainable Is Swiss Real Estate? Evidence from Institutional Property Portfolios," Swiss Finance Institute Research Paper Series 22-46, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2246
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    More about this item

    Keywords

    Sustainable investment; ESG ratings; Real estate;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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