October 27, 2014
Interviewed by: Privcap
Video Clip
Login to view full video

APG’s Sustainability Mandate

Patrick Kanters, managing director of real estate and infrastructure, talks to PrivcapRE about the role of sustainability at APG, the correlation between environmental and financial performance, and how sustainability-focused GPs need to be to get considered for investment.

Patrick Kanters, managing director of real estate and infrastructure, talks to PrivcapRE about the role of sustainability at APG, the correlation between environmental and financial performance, and how sustainability-focused GPs need to be to get considered for investment.

For APG’s GPs, Sustainability Is Compulsory
With Patrick Kanters of APG Asset Management

Zoe Hughes, PrivcapRE: I’m joined here by Patrick Kanters, Managing Director of Real Estate and Infrastructure at APG Asset Management. Patrick, thank you so much for joining me today.

Patrick Kanters, APG Asset Management:  Thank you.

Hughes: APG is at the forefront of many sustainability initiatives globally and I have one key question for you, Patrick. How do you actually monitor and benchmark your GPs, your managers, in terms of their sustainability effort and what they’re actually doing with their portfolios?

Kanters: As you probably know, we were one of the launching partners of GRESB. Before that, you could not measure the state of sustainability of companies and funds. Through this survey and these outcomes, we can truly now measure the state of sustainability and compare and contrast within certain sectors, within regions or across regions. So, it does provide us the content and the information to start engagement with our partners to see where they can improve and to learn from that. Also, of course, the information provides further evidence that being more sustainable actually adds return or at least lowers your risk.

Hughes: Do you see that correlation between environmental performance and financial performance, as an investor in these funds and in your own direct real estate as well?

Kanters: It is still difficult, but there is more and more evidence getting to the table now because GRESB, of course, has been out there enough where I think five-year or other information is also being analyzed. So, making that case is coming far more easily. Though most parties are way beyond that point that they somehow question whether sustainability will actually increase your return or lower your risk going forward.

Hughes: One thing people have said is that the real way to get sustainability, especially into the value-add, opportunistic world where they have much shorter investment periods, is to ensure that the sustainability initiative is in the C-suite. It’s with the CEO, the CIOs. Do you feel that the CEOs and CIOs have bought into the importance of sustainability in their own portfolios?

Kanters: Definitely. It’s taken extremely seriously and you can see so if you look at the outcomes of GRESB, where there’s still an increasing amount of so-called “green stars,” which are the upper-quartile performers. There, you look into hard numbers. If you look at the CO2 emissions or at water usage, it’s all improving. It’s not enough. It should improve even more. Also, if you look in our portfolio, every year, there are more green stars in our portfolio. It’s partly also due to our engagement and that we simply insist on filling in the survey. We played quite hard, so to say. If we want to invest in your fund, you have to fill in the survey. If you don’t fill in the survey, we will not invest in your fund. If the outcome, however, is not overly positive, it doesn’t immediately say that we will not invest. But, we want to have a clear commitment to improve yourself.

Hughes: What are your ambitions? When it comes to this sustainability conversation, what do you want to see over the next few years? Where have we got left to grow?

Kanters: There are still a lot of parties who are not doing overly well on the sustainability front. In further educating them, we can make quick improvements because we have seen with parties that did not score well initially two, three years ago, they can fairly easily improve themselves in a short time. That’s something we hope to see and that, yes, sustainability is becoming a common goal. It’s very important to us, but it’s equally as important as having a good governing structure and having a good operating partner.

Hughes: It’s interesting that it’s not just a checklist, then, for LPs. This is fundamental to the DNA of APG.

Kanters: Yes, absolutely. It’s fully integrated in our investment policy and, just like tax and legal internally need to sign off before we make an investment, our sustainability department will have to sign off also, importantly based on the outcomes of the GRESB survey.

Register now to watch this video and access all content.

It's FREE!

  • CHOOSE YOUR NEWSLETTERS:
  • I agree to the Privcap terms of use and privacy policy
  • Already a subscriber? Sign In

  • This field is for validation purposes and should be left unchanged.