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ESG, Product insight

Impact Investing in the UK

June 12, 2020
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  • What real estate investors should know

    In recent years, many institutional investors have embraced the principles of responsible investing (PRI)(1) in order to shape a sustainable global financial system.

    These principles seek explicit and measurable approaches to the adoption of Environmental, Social and Governance (ESG) standards in investment decisions and active ownership of assets. As a natural extension of the PRI, the field of “ethical investing” has grown quickly, as evidenced by rising capital allocations to vehicles that include ethical criteria [see Chart 1]. When these considerations are combined with financial criteria, the investment can be considered part of the growing universe known as “Impact investing”.

    Impact investing refers to investments made with the specific intention to generate a measurable, beneficial social and/or environmental impact alongside a financial return. This rapidly evolving investment practice relies on the concepts of intentionality and additionality, the notion of generating a positive impact beyond what would otherwise have occurred. At its core, impact investing include procedures for reporting and accountability that ensure strategy and practice are aligned with both societal goals and financial objectives. Whilst impact investing is a natural progression from ESG adoption [see Chart 2], we firmly believe that there should be a clear distinction between the two. ESG standards can be integrated into any investment process to ensure investments are socially, environmentally and ethically responsible. Impact investing goes one step further and includes the achievement of positive social and environmental outcomes as measures of success, in addition to financial criteria and meeting minimum standards for ESG. Growing academic evidence supports the idea that “ESG incorporation does not come at a cost”2. The academic literature on “impact investing” is still in its infancy, although financial economists have surveyed the definitions used by the first wave of “impact investing products” and found them to be remarkably consistent in terms of their emphasis on intentionality, financial returns, and impact measurement across a wide range of asset classes3.

    [1] The PRI website introduces the principles for responsible investment here:
    [2] See “What is the PRI?”
    [3] Höchstädter, A.K, and Scheck, B. (2015) What’s in a Name: An Analysis of Impact Investing, Understandings by Academics and Practitioners. Journal of Business Ethics 132 (2), pp 449-475.

A cafe with a terrace among office buildings
Feb 27, 2024 European Net Zero Carbon annual progress report LaSalle Investment Management is a founding signatory of the Better Buildings Partnership’s (BBP) Climate Commitment, which acknowledges the transformation that is required across the real estate sector to deliver net zero buildings by 2050. The scope of the commitment makes it one of the most ambitious that property owners can adopt.
an image of solar panels on top of a building
Sep 11, 2023 ISA Focus: The value of green The transition to a lower-carbon built environment is reshaping the definition of quality real estate.
An overhead view of New York City
Aug 02, 2023 ISA Portfolio View 2023 LaSalle’s ISA Portfolio View is our guide of things to consider for institutional investors seeking to diversify portfolios with real estate.

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