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Colin Course Assignment Online

Colin Course Assignment Online

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Published by Tim Nabholz
This article examines the current standing of ‘Socially Responsible Property Investment’ within
investment funds in the United Kingdom. A particular emphasis has been placed on analysing the
impact that corporate social responsibility within investment institutions has in the development of
such funds. The paper also seeks to identify key features that may characterise socially responsible
property funds going into the future.
This article examines the current standing of ‘Socially Responsible Property Investment’ within
investment funds in the United Kingdom. A particular emphasis has been placed on analysing the
impact that corporate social responsibility within investment institutions has in the development of
such funds. The paper also seeks to identify key features that may characterise socially responsible
property funds going into the future.

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Published by: Tim Nabholz on Feb 28, 2012
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“An Investigation into Socially Responsible PropertyInvestment in the United Kingdom”
Colin Munro
Course: Sustainable Urban DevelopmentBY604E (30 Credits)Tutor: Stig WesterdahlAutumn Semester 2011Date of Submission: (12/01/12)
 
 
 Abstract 
This article examines the current standing of ‘Socially Responsible Property Investment’ withininvestment funds in the United Kingdom. A particular emphasis has been placed on analysing theimpact that corporate social responsibility within investment institutions has in the development of  such funds. The paper also seeks to identify key features that may characterise socially responsible property funds going into the future.
Introduction to Property Investment and Sustainability
Businesses globally are under growing public and legislative pressure to demonstratetheir ethical and sustainability credentials. A popular way for corporate business torepresent their actions and policies on the issue is by way of ‘Corporate SocialResponsibility’ (CSR) reports. Literature on CSR goes back to the early 1950’s whenHoward R Bowen published a book titled ‘Social Responsibilities of theBusinessman’ (Carroll, 1999). The concept has since evolved largely throughliterature and theories, for instance the ‘triple bottom line’ (Commission of theEuropean Communities, 2002, Pg 5) which places a strong emphasis on the issue of social, environmental and economic sustainability. As theories such as the triple bottom line have grown in prominence in recent years the ties between CSR andsustainability concepts have strengthened. The global sustainability agenda hasgained substantial momentum, which has lead to the large-scale implementation of CSR from theory into practice. Lindgreen and Swaen (2010) argue that the growing prominence of CSR policy has led to tension between company stakeholders and theexpectations of the wider public, reconciling these two pressures remains a major challenge.The impact of the built environment on global sustainability challenges has been welldocumented in recent years and the case for interlinking CSR and corporate real estatestrategies has become stronger. There are various avenues where clear efforts need to be made within real estate in order to make a positive impact on sustainability issues.For example the emergence of research stating that real estate is responsible for up to50 percent of carbon emissions in the UK has focused on the pressure from the publicand policy makers on this significant issue (Ellison and Sayce, 2007). From a perspective of commercial property, issues such as sick building syndrome (related to poor air quality) affect both the health of employees and subsequently the productivity of the company occupying the office premises (Burge, 2004). Theseexamples provide only a brief insight to the array of real estate issues that directlyaffect sustainability and CSR policy.Ownership of real estate also plays a significant factor in the evolution of the builtenvironment in response to CSR concerns. Firstly it is important to consider thedifferent categories of land in the context of the UK. Urban landscapes arecharacterised by residential property, commercial property and urban land availablefor development or previously developed (Dixon, 2009). This study is concerned withthe inter-relationship between property investment and corporate social responsibility,therefore it is appropriate to focus more on commercial property ownership asinvestment institutions predominantly focus their property funds within thecommercial property markets.Land ownership trends in the UK differ with different land categories, commercial property is characterised by owner-occupiers and landlord ownership by investment
 
institutions or property companies (Dixon, 2009). Investors can be characterised bymulti-asset funds of which real estate comprises a sub-section of a larger investment portfolio, or real estate specific funds. Importantly in the case of multi-asset funds,one should recognise the potential synergies between investing in sustainable propertythat may produce a positive return for their own tenant company (Pivo andMcNamara, 2005). In order to remain specific to the built environment this study willfocus exclusively on real estate funds.In order to further disentangle the web of participants within the real estate market,the three key players can be identified as; “…the owners of capital (or investors), themanagers of capital (also referred to as fund managers) and the asset owners (or landlords)” (de Francesco and Levy, 2008, Pg 4). It is important to note at this stagethat there is potential for substantial cross over between these key players, for example, managers of capital for example will find themselves as landlords when they purchase a property for a certain portfolio.The area of interest in this paper emerges when fund/investment managers compile a portfolio specifically targeted at satisfying the demand for investors with a strongdesire to fulfil CSR and sustainable objectives in their investment practice. These portfolios are widely known as ‘Socially Responsible Investments’ (SRI’s). For  property specific funds the practice is titled ‘Socially Responsible’, ‘Sustainable’ or ‘Responsible’ Property Investment - for the purpose of this study it will be referred toas Socially Responsible Property Investment (SRPI). SRPI is described by Pivo andMcNamara (2004 Pg 129) as:
“Maximising the positive effects and minimizing the negative effects of propertyownership, management and development on society and the natural environment in away that is consistent with investor goals and fiduciary responsibilities.”
Sparkes and Cowten (2004) argue that the prominence of SRI funds has grownsignificantly in recent years both in size and maturity, and as such they have a greater influence in how company executives react in the stronger and more explicitdevelopment of CSR policies. The traditional SRI markets remain in retail andinstitutional equity investment portfolios. SRPI can be viewed as a by-product of amaturing SRI market largely down to its less volatile characteristics when comparedto equities, and due to the widely documented impacts of property on sustainabilityissues (Rapson et al. 2007). The emergence of SRPI as a form of investment is stillrather tenuous and its development amongst both multi-asset investment funds and property specific funds is still in its infancy (Rapson et al. 2007).The publication ‘Socially Responsible Property Investment’ by Rapson et al. (2007)represents one of the few recent articles exploring SRPI in the context of the UK fundmanagement market. The research predominantly focused on mixed asset fundmanagers, but also included two property specific fund managers. The report foundthat none of the ten fund managers researched had specifically marketed SRPI funds,although many funds demonstrated socially responsible and sustainable features.The current picture is one of a distinct disparity between the relative prominence of sustainable real estate issues, CSR and SRI, and the underdevelopment of SRPI inresponse to this. The role to be played by property investment managers has potential

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