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

60 Pages Posted: 25 May 2022 Last revised: 1 Jun 2022

See all articles by Fabio Alessandrini

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

Date Written: May 25, 2022

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.

Keywords: Sustainable investment, ESG ratings, Real estate

JEL Classification: C83, Q01, Q56, R3

Suggested Citation

Alessandrini, Fabio and Jondeau, Eric and Lang, Ghislaine and Reins, Evert, How Sustainable Is Swiss Real Estate? Evidence from Institutional Property Portfolios (May 25, 2022). Swiss Finance Institute Research Paper No. 22-46, Available at SSRN: https://ssrn.com/abstract=4119681 or http://dx.doi.org/10.2139/ssrn.4119681

Fabio Alessandrini

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

Banque Cantonale Vaudoise ( email )

Place St-Fran├žois 14
Lausanne
United States

Eric Jondeau (Contact Author)

University of Lausanne - Faculty of Business and Economics (HEC Lausanne) ( email )

Extranef 232
Lausanne, 1012
Switzerland
+41 21 692 33 49 (Phone)

HOME PAGE: http://people.unil.ch/ericjondeau/

Swiss Finance Institute ( email )

40, Boulevard du Pont-d'Arve
40, Bd du Pont-d'Arve
1211 Geneva 4, CH-6900
Switzerland
+41 21 692 33 49 (Phone)

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Ghislaine Lang

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

Evert Reins

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

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