FTSE Group, NAREIT and the US Green Building Council (USGBC) have jointly developed the first investable green property indexes for institutional and retail investors.
The three groups are global market leaders in US real estate indexing, REIT market expertise and environmental building standards. The indexes are in the final stages of implementation.
The family of green property indexes will be based on the FTSE NAREIT Index Series – the leading benchmark for US real estate – using LEED & Energy Star ratings from USGBC.
USGBC’s analysis spans 13,126 LEED and 18,402 Energy Star projects that have received third-party certification, for a total 4.7 billion square-feet of commercial real estate. An average of 1.5 million square feet of property is certified every day.
The indexes are designed to give investors a structured way of measuring the potential risks or rewards associated with green properties. Green homes in California, for example, garner a 9% higher sales price, so it stands to reason that certified commercial buildings would also be more valuable.
On the flip side, the indexes will help investors better understand which property managers and properties have been slower to make the transition to a low-carbon economy.
"Green building is a win-win, offering both environmental and economic opportunity. Greater building efficiency can meet 85% of future demand for energy in the United States and a commitment to green building has the potential to generate 2.5 million jobs. The sector has seen incredible growth and is projected to add $554 billion to the U.S. economy each year. This partnership creates significant investment opportunities for those ready to participate in this growing market," says Rick Fedrizzi, founding chair and CEO of USGBC.
Mitigating and adapting to climate change, resource depletion and environmental erosion are some of the biggest challenges for the 21st century and will be major structural drivers of economic change, the groups say. Because of this, a growing number of investors are seeking to understand how their portfolios will be affected and how they can reduce their risk. The global building and construction sector is a good example of this change. It consumes a significant proportion of the world’s key resources, making it highly exposed to the risks and rewards associated with the transition to the low carbon economy. In the US, buildings account for 38% of all carbon emissions and 73% of electricity consumption.
Learn more about the Indexes:
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