Green Urban Development: The Impact Investment Strategy of Canadian Pension Funds

Abstract

This paper investigates the investment strategy that large Canadian pension funds implement in the private real estate market. Even though they manage just 6% of global pension assets in our data, Canadian pension funds are responsible for 60% of the total value of private real estate deals that directly involve a pension fund. A key component of their strategy consists of internally developing and greening urban properties in core downtown areas. Using a common benchmarking methodology across funds, we show that this impact strategy delivers superior performance net of fees and drives the green development of major city centers.

Keywords: Pension funds, real estate, impact investing, sustainable finance, active management

JEL Classification: G23