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First Sentier launches ESG property fund

The new Global Property Securities Fund, accredited by the Responsible Investment Association of Australasia (RIAA), will build on the firm's ambition to minimise carbon emissions within the property sector.

To do so, the fund will build a carbon overlay into the investment process, including both direct and indirect greenhouse gas emissions of the assets it analyses, with the fund currently forecasting to reach net zero emissions in the portfolio by 2040.

"Approximately 40% of global greenhouse gas emissions come from the real estate sector, so if we are to limit global warming to 1.5 degrees, we need to reduce the sector's carbon emissions from today," First Sentier head of global property securities Stephen Hayes said.

"Our team has developed an innovative, robust process designed to measure both controlled and non-controlled operational and embodied GHG emissions in property assets, and we aim to better allocate capital to where the greatest carbon efficiency gains can be made."

Carbon emissions in real estate are generated by operations, such as heating, cooling and lighting, as well the construction and demolition process, such as transport and materials production.

First Sentier's global property securities team has developed a proprietary methodology designed to capture both operational and embodied emissions.

"To get the fuller picture of risks and opportunities, investors need to look at how companies are identifying, measuring, and acting on their carbon reduction and renewable energy ambitions, not just how they operate their assets," Hayes said.

By integrating comprehensive environmental assessment into our investment process, we aim to value companies more accurately and mitigate any risks associated with environmental inaction, he added.

Hayes said the team is also focused on working with landlords to improve their carbon footprint.

"Comprehensive carbon measuring and reporting allows First Sentier Investors to decarbonise our real estate portfolio, at the same time as fostering change within the sector," he said.

"Our extensive market engagement provides the landlords with information to assist them in implementing further their carbon efficiency programs and measure against peers."

Read more: Stephen HayesFirst Sentier Investors