Understanding Responsible Investment #13 - Focus on sustainable real estate
Dorothée Chapuis: Hello everyone and welcome to the thirteenth episode of our podcast "Understanding Responsible Investment". I am Dorothée Chapuis, Head of CSR for SGPB Europe. To explore today's topic I am very pleased to be with Matthieu Degli Innocenti, Head of Real Estate at Societe Generale Private Banking.
Dorothée Chapuis: Hello Matthieu!
Matthieu Degli Innocenti: Good morning Dorothée, good morning everyone and thank you for inviting me to your podcast.
Dorothée Chapuis: Matthieu, the reason I invited you today is because I would like us to discuss how to integrate sustainability into real estate..
Matthieu Degli Innocenti: It's a paradoxical question for real estate professionals because real estate is essentially a lasting asset! But more seriously, Dorothée, you're right, the real estate sector is very concerned by sustainable development, particularly in terms of the environment, and the stakes are considerable.
Dorothée Chapuis: Indeed Matthieu. Before discussing the question of investments with you, let's look at the environmental challenges of real estate. Citepa (“Centre interprofessionnel technique d’études de la pollution atmosphérique” - the Interprofessional Technical Centre for the Study of Atmospheric Pollution) has calculated that in 2019, residential and tertiary buildings were responsible for 20% of Co2 emissions in France, which is the second most important sector after transport. And of this 20%, 2/3 are attributable to residential real estate. In your opinion, what are the challenges to be met in order to reduce the impact of real estate on our environment?
Matthieu Degli Innocenti: Real estate plays an important role in our lives - as a place to live, to consume, to work and to trade.. - and it is at the heart of our economies. Long perceived as dusty, the transformation of this sector is now underway! Indeed, I have observed an incredible collective awareness, particularly since Covid, which should accelerate the "greening" of real estate and improve its impact on the environment. Sustainable real estate requires us to think differently about the life of a building, from its design phase to its use and even its "recycling" - including its construction, consumption, management and renovation. The city of tomorrow will be more sustainable and greener, so real estate is a key sector in the energy transformation. The government has recently put in place measures and regulations that should accelerate the emergence of sustainable real estate.
Dorothée Chapuis: So, Matthieu, let's say I'm about to make a real estate investment, how can I take the climate issue into account?
Matthieu Degli Innocenti: It all depends, Dorothée, whether you invest directly in a property or through a paper-based investment vehicle (SCPI - "Société civile de placement immobilier" - and OPCI - "Organismes de placement collectif immobilier" investment schemes). If you opt for the first solution, the first thing you need to take into account is the energy performance diagnosis which measures the impact of the property on the environment. You can also decide to invest in a property to be renovated (insulation, change of technical installation, windows...) to improve its energy footprint. And you can also check which tax incentives you could benefit from as a homeowner.
Dorothée Chapuis: And you, Matthieu, can you help me with all these steps?
Matthieu Degli Innocenti: Yes, Dorothée, via our selection platform, SGIP - Société Générale Immobilier Patrimonial - you will be able to invest in properties to be renovated or new from an offer of more than four thousand lots proposed by more than forty developers.
Dorothée Chapuis: Very well. Let's see now how I can integrate the fight against global warming if I'm about to invest in paper property…
Matthieu Degli Innocenti: That's quite easy, Dorothée, and you're sensitive to this subject, which you mentioned in episode #3 of this podcast series. Since the end of 2020, the French government's real estate SRI label has served as a benchmark to distinguish funds that invest in the best performing assets in terms of environmental, social and good governance. This label integrates numerous criteria such as the health and comfort of occupants, mobility, supply chain management. These elements are scrutinized by the supervisory authority at the time of acquisition, but also during the management phase of the real estate assets and throughout their holding in the portfolio. This label is very demanding and it encourages management companies to change their strategy in depth. This new standard aims to offer a common vision of real estate SRI in order to inspire confidence and direct savings towards sustainable real estate. As in the case of securities management, investment strategies can be different, such as the choice of a theme: investment in the retirement housing sector for example, the choice of a "best in class" approach: preference for real estate with the best ESG (Environment, Social, Governance) performance, or the "best effort" approach: this consists of investing in a real estate asset with a potential for improving its extra-financial performance.
Dorothée Chapuis: Well, Matthieu, I understand that it is quite possible, if I consider making a real estate investment, to study its financial performance expectation, its risks, particularly of capital loss, and its environmental and social performance. Thank you very much for these insights!
Matthieu Degli Innocenti: Thank you Dorothée and see you soon!
This podcast is part of a series of episodes proposed by Societe Generale Private Banking to understand responsible investment. It is available on the Spotify and Apple Podcasts streaming platforms via the "#Private Talk by Societe Generale Private Banking" program and on our website www.privatebanking.societegenerale.com. Feel free to subscribe to be notified when the next episode is released and to spread the word.
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