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Cromwell achieves new highs results in Global Real Estate ESG Assessment

Home Sustainability
November 28, 2023

Cromwell achieves new highs results in Global Real Estate ESG Assessment

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell) has delivered record high company benchmarks in the annual Global Real Estate Sustainability Benchmark (GRESB) global rankings.

GRESB is an independent organisation that provides validated ESG performance data and peer benchmarks for investors and managers to improve business intelligence, industry engagement, and strategic decision-making.

The 2023 GRESB ESG Benchmark has become increasingly competitive, growing to cover more than USD$ 8.8 trillion of gross asset value across 2,084 real estate entities. GRESB data is utilised as an investment decision-making tool by over 170 institutional investors with more than US$51 trillion AUM.

Group Head of ESG, Lara Young, said Cromwell Property Group our longstanding participation in the assessment is a good opportunity for the organisation to demonstrate its ongoing commitment to enhance its ESG performance and test itself against the worldwide market.

Participation in GRESB is Cromwell’s opportunity to measure our ESG performance against our peers, and this year’s efforts have not disappointed.
Lara Young – Group Head of ESG, Cromwell Property Group

“Participation in GRESB is Cromwell’s opportunity to measure our ESG performance against our peers, and this year’s efforts have not disappointed.” said Ms. Young.

  • The Singapore-based Cromwell European Real Estate Investment Trust (CEREIT) achieved a record-high overall score of 85 points in the 2023 GRESB Real Estate Assessment, with full marks for social and governance aspects. CEREIT was awarded a four-star rating – up from a three-star rating last year – and achieved a public disclosure score of a perfect 100, placing first out of its five peers.
  • The Cromwell Diversified Property Trust (DPT) maintained its score of 87 points, ranking 28th out of 41 participating listed Australian office portfolios and achieving 95 out of 100 (A Grade) for public disclosure. With Australia’s real estate sector leading the world in sustainability, ranking first in GRESB for the last 12 consecutive years, DPT has consistently performed well against the hyper-competitive local market.
  • Cromwell Polish Retail Fund (CPRF) achieved a five-star rating and a record-high overall score of 90 points, ranking 11th out of 32 European retail non-listed peer funds and 17th out of 87 in the European Retail category.

 

“Not only have we exceeded our previous overall scores, but for all three disclosing portfolios -CEREIT, CPRF, and Cromwell’s investment portfolio, DPT – we have increased our scores across all categories, placing them well above global and industry peer averages,” said Ms. Young.

“These results would not be possible without a huge team effort and collaboration from our investors, tenants, supply chain partners, and the broader Cromwell team, and we would once again like to share our thanks to everyone involved.”

Cromwell will publish its FY23 ESG report in early December 2023.

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Research and Insights

Home Sustainability
June 30, 2021

Engineered timber and the drive for more sustainable buildings

Alex Dunn

 

Climate change continues to shape the values, choices and investment decisions of the real estate industry.

In this article Senior Research Analyst, Alex Dunn, discusses how advances in engineered timber and construction are allowing asset owners to substantially improve the environmental performance of their buildings, while simultaneously, also meeting investors requirements for capital to be deployed in a more sustainable way.

Real estate positioned to reduce carbon emissions

Real estate accounts for approximately 36% of global energy consumption and 40% of total direct and indirect CO2 emissions, according to JLL. Left unchanged, the global trend towards urbanisation and the ever-increasing demand for new building stock will see these numbers continue to rise.

Unsurprisingly, the United Nations Environment Programme (UNEP) estimates that the real estate sector has the greatest opportunity to reduce greenhouse gas emissions compared to other industries, with potential energy savings estimated to be as much as 50% or more by 2050.

Government policies regulating the energy performance of new buildings are a powerful way of reducing emissions and are being introduced by an increasing number of countries. Leading cities are also introducing city-level regulation at a fast rate. Paris has a net zero carbon goal for 2050 and Amsterdam plans on being fully electric by the same time. The European Union has also established the ‘Green Deal’ in order to make the Eurozone climate neutral in 2050.

Legislation is increasingly likely to support sustainable assets with future regulatory and tax changes favouring sustainable investments and disadvantaging assets that cannot demonstrate compliance. It is notable that a survey carried out by Macquarie Infrastructure and Real Assets in 2020 found that 91% of global institutional investors expected to increase their level of investment into ‘sustainable’ real assets over the next five years.

 

Engineered timber buildings are becoming increasingly popular

In many countries, construction is a way to accelerate the economic recovery from the pandemic but it’s also a major source of carbon emissions. One way to bridge this issue is to increase the construction of more sustainable buildings.

Engineered timber buildings tick this box, and a combination of technological innovation, greater sustainability and reduced costs has seen the number of such developments increase globally.

Construction using concrete and steel is highly carbon-intensive, compared to trees which capture and store carbon dioxide as they grow, making timber a far greater climate-friendly building material. Timber construction also uses materials derived solely from managed fast growth plantations meaning construction is sustainable and does not rely on harvesting old-growth forests.

The rapid development in the market has been made possible by the technological breakthroughs of new engineered wood products, such as Glue-laminated Timber (Glulam), Cross-laminated Timber (CLT), and Laminated Veneer Lumber (LVL).

These engineered timber products are all versatile and support innovative flexible design and architecture approaches. It is this flexibility, combined with their increasing popularity and reduced construction time that has made engineered timber competitive with more traditional concrete and steel structures.

In Europe, the market for engineered timber construction has been growing by roughly 8% (€5 billion) a year and is expected to accelerate to €10 billion a year by 2030. These figures concern primarily multi-storey buildings, however, and with the inclusion and addition of wooden frame buildings and/or detached houses, the size of the investible market increases significantly.

The engineered timber market in Europe is concentrated, with the top five markets comprising more than 80% of activity. Germany is the market leader, accounting for 22% of construction, followed by France and UK, both with 16%, the Nordics (Finland, Norway, Sweden) collectively account for another 16% and then Austria with 12%.

Conclusion

The ongoing development of timber-based construction creates an attractive and expanding investment opportunity. Whilst these developments broadly maintain all the well-established features of a real asset in terms of return and risk, they also provide additional sustainability benefits.

Engineered timber buildings are also often perceived as superior by the people living or working in them. There are several studies which reference the health benefits of timber looking at both measured and perceived indoor environment quality. There is also evidence of human health and wellbeing benefits based on wood’s biophilic properties, according to Dasos Capital.

These benefits will help drive greater tenant retention and income resilience, as buildings increasingly need to reflect the ethos of the brands that operate within them. Perhaps more importantly to remain ‘investable’, the buildings must be able to demonstrate their sustainability credentials in order to maintain their value over the investment and asset lifecycle.

Our ongoing commitment to ESG

Cromwell has formalised an ESG Strategy for our global business. This strategy includes targets that are crucial to our future, including decarbonising our business toward net zero and setting new baselines for areas – such as energy consumption, waste management, and carbon in each of our operating regions. We have also developed region specific targets to ensure we are addressing local concerns, such as the development and registration of an Australian Reconciliation Action Plan, with further progress and meaningful reflection occurring constantly.

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