Carbon Care Asia Partners with Solactive to Launch the First Asia-Pacific Green REIT Index
The property sector is responsible for approximately one-third of global greenhouse gas emissions and 40% of global energy consumption. This development drives growing interest from global real estate investors to integrate sustainability into their investment process. To close this gap, Carbon Care Asia (CCA) has partnered with Solactive to launch the Solactive CarbonCare Asia Pacific Green REIT Index, the first index of its kind to allow investors to identify companies which demonstrate strong sustainability performance and commitments to meet the carbon reduction targets set out in the Paris Climate Agreement.
According to a 2019 survey by the UNEP Finance Initiative, 83% of the respondents have experienced an increase in demand for sustainability performance disclosure, and according to the International Finance Corporation, the green building market represents a USD 17.8 trillion investment potential in East Asia Pacific and South Asia. The Solactive CarbonCare Asia Pacific Green REIT Index aims at allowing these investors to engage with green real estate investments.
The Solactive CarbonCare Asia Pacific Green REIT Index is a rules-based index and includes Asia-Pacific REITs that own the highest percentage of green-certified buildings in their portfolio and which are committed to climate-aligned emissions reduction targets. Additionally, the index applies weights to reward best practices and industry climate leaders in Asia-Pacific. The weighting methodology on securities is based upon a combination of factors such as the percentage of Certified Green Building Area owned; or a commitment to a Net Zero Emissions (NZE) target no later than 2050 or a Science-Based Target (SBT).
As of 23 November 2020, the index holds 56 REITs, with a weighted average yield of 4.3%. The index is quoted in USD and calculated as a total return index.
Albert Lai, CEO of Carbon Care Asia, commented, “Many of the most precious properties in Asia are located in cities vulnerable to sea-level rise and extreme climatic events. This index serves as a valuable tool for investors to differentiate climate-conscious REITs which can protect their assets better from future shocks, from the rest of the pool.”
Timo Pfeiffer, Chief Markets Officer at Solactive, said, “We are pleased to cooperate with Carbon Care Asia again to launch another first of its kind index – an innovative sustainability REITs index for the Asia Pacific region. We are convinced that carbon-conscious investors that seek to invest for income amidst a globally low-yield environment will find this REIT index suited to their needs.”
Water Cheung, Chairman of Carbon Care Asia and Senior Partner of StormHarbour Securities, added, “Property is a dominant part of many Asian economies, often also the number one user of energy. The greening of buildings will become a central plank of national agendas on our low carbon future. Investors that position themselves ahead of the game in the move to low-carbon, energy-efficient buildings will face lower risks and higher returns.”