PRI Encourages Investors to Take More Active Ownership Role

March 06, 2009
by Robert Kropp

Principles for Responsible Investment publishes eight-point plan to help institutional investors avoid the pitfalls that contributed to current economic crisis.

SocialFunds.com -- As owners of the financial institutions whose practices led to the economic crisis, institutional investors must accept a share of responsibility, according to the Board of the United Nations-backed Principles for Responsible Investment (PRI), which released an eight-point plan for institutional investors to respond to the crisis.

According to the PRI Board statement on financial crisis, investors must take responsibility for protecting their investments and ensuring that their agents act in their best interests.

The Board of the PRI asserted that the Principles provide a robust framework for assisting investors in their response to the crisis, and called on institutional investors to work together to improve risk management practices and create a culture of active ownership.

The eight-point plan espoused by the Board calls on institutional investors to see responsible investment as an important response to the current economic crisis and to increase their investment in activities that enhance understanding of environmental, social, and corporate governance (ESG) issues. Investors should become signatories to the PRI as well, said the Board.

Institutional investors should provide agents such as fund managers with concrete incentives to help them better understand ESG issues, and invest in active ownership by monitoring their investments and engaging as activist shareowners in their portfolio companies.

The plan also calls on institutional investors to engage with regulatory agencies to ensure that consideration of ESG issues is part of the solution to the crisis, and to publicly disclose their responsible investment activities.

Donald MacDonald, Chair of the PRI Initiative, said, "We believe this current crisis could have a catalytic effect of shifting the mainstream investment sector towards more responsible investment practices. Institutional investors can make a positive contribution to rebuilding trust and confidence by taking action in support of our eight-point plan."

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IDB Announces Energy Innovation Contest

http://www.climate-l.org/2009/03/idb-announces-energy-innovation-contest-.html

03 March 2009

27 February 2009: The Inter-American Development Bank (IDB) has announced a contest to finance proposals for promoting energy efficiency and access to renewable energy in Latin America and the Caribbean.

The contest will award up to US$200,000 for projects that propose novel solutions to the region’s energy shortages, particularly in rural and low-income areas. The contest is funded by the IDB, GVEP International, GTZ and the Government of the Republic of Korea. It will award between US$4-6 million over the next three years.

The criteria for evaluation include degree of innovation, developmental impact (economic, social, and environmental), scalability, replicability, financial sustainability, institutional capability and the quality of the proposal, implementation strategy and projected risks. Proposals must be submitted by 15 May 2009, and the winners will be announced in August. [IDB Press Release]

Green Building Investment: Energetic and Evolving

By Leanne Tobias, March 9, 2009

Last week brought me to San Francisco to speak at Infocast's Green Building Finance and Investment Forum. Lead sponsors of the event included Galley EcoCapital, Miller Canfield and Conestoga-Rovers & Associates. I feel fortunate to have helped create this conference in early 2008, and my company, Malachite LLC, continues to co-sponsor this energetic series. The March 2009 conference was our third, and I'm surprised how far green finance and investment has come in a year's time.

In the February 2008 conference, our first, we spent a fair amount of time documenting the value proposition associated with green real estate investment. This year, that presentation was no longer needed-conference attendees have seen repeatedly that green features can be delivered cost-effectively to the market and that sustainability leads to faster leasing, higher tenant retention and stronger-although, in this market, not necessarily premium-rental rates.

Are sustainable buildings immune from the economic downturn? Of course not. But conference participants -- including such multi-billion investors as TIAA-CREF, the AFL-CIO Housing Investment Trust and the Multi-Employer Property Trust (three investors who continue to put money into the property market) -- find green properties better positioned to weather the storm than conventional properties. Why? Lower water and energy costs are valuable tenant commodities in times of economic distress, and tenants appreciate the superior amenities found in green buildings-among them, more comfortable temperatures, cleaner finishes and more natural light. And as the real estate market slackens and tenants have wider choice in spending their real estate dollars, many will be taking advantage of market rental rate declines to secure better space. That favors higher green building occupancies.

Especially striking over the last year has been the rapid refinement of financing, contractual, leasing and management protocols to guide the development and operation of green buildings. Among them:

• No-downpayment financing mechanisms to support energy-efficient retrofits. The energy-savings performance contract (ESPC), which effectively leases green upgrades to the property owner under a long-term contract, was pioneered in the federal government sector, but has been extended to private sector use. Hannon Armstrong, a leader in this market, now provides such financing for privately-owned buildings. Hannon Armstrong has revised the ESPC structure to reflect commercial real estate needs, says John Christmas, senior vice president for energy efficiency financing. Christmas and his team underwrite potential ESPC properties for cash flow and appraised value, and require investment grade contractors to install improvements.

• Performance contracting in the construction and renovation of green buildings. The use of performance contracting is growing more important with respect to the functionality of green features and the attainment of green certification, according to a panel of green attorneys, including Greenberg Traurig's Doug White, Hanson Bridgett's Howard Ashcroft, and Daniel Slone of McGuire Woods. Developers and investors are being increasingly advised to make a property's LEED certification a performance specification. As well, financial penalties and incentives are increasingly being linked to the attainment of a green building rating.

• New leasing and management protocols. At the property level, new leasing and management practices are being adopted to guide sustainable building operation. In the current soft market, landlords and tenants frequently supplant confrontational lease language with cooperative provisions, says Marc Winters of McNaul Ebel. Under this lease model, pioneered in Canada, enhanced sustainability performance is a goal shared by owners and tenants. Another key aspect to green leases are pass-through definitions, reports Cushman and Wakefield's Steven Ring. Owners, tenants, management companies and their attorneys continue to tackle this question as 2009 begins. Among the questions: should LEED consulting costs be passed through to tenants? How about revenues and costs associated with the sale of renewable energy credits?

• Growing use of environmental performance as a screening feature in space decisions. In marked contrast to prior years, commercial leasing brokers are becoming increasingly conscious of sustainability issues, and environmental requirements are being added increasingly to standard property RFPs (requests for space proposals), reports David Pogue of C.B. Richard Ellis.

The verdict? Green building investment continues to hold its own and evolve, even in the biggest economic slump in close to a century. That's one of the few things to cheer about in 2009.

Leanne Tobias is founder and principal of Malachite LLC, an advisory firm that specializes in the development, leasing, management, financing and certification of sustainable or green real estate on a global basis. Comment online, or write to Leanne about your green real estate thoughts and experiences at greenstimulus@malachitellc.com. She'll share the best of reader feedback in future posts.

http://www.greenbiz.com/blog/2009/03/09/green-building-investment

Marriott reducing cost by recycling

March 2, 2009

Hotel Reduces Costs by Recycling

By reducing its trash and recycling more, a Marriott Hotels location is generating savings.

After starting a recycling and composting program in February 2008, the University of Maryland University College Inn and Conference Center by Marriott has achieved significant savings, according to this press release.

Here is a comparison of 2008 versus 2007.

• In 2008, about 28 tons of trash left the hotel per month, or about 336 tons a year
• In 2007, the hotel generated about 37 tons of trash per month, or about 444 tons a year.

Of the 336 tons generated in 2008, 10 percent was recycled (glass, metal, paper, cardboard), 32 percent was composted (food scraps, plant materials), and 52 percent was trash that ended up in landfills. The recycling and composting resulted in annual savings of $6,000.

The hotel started a “green team” last year and hired as its compost vendor Envirelation Inc., according to the release. In addition to training employees on what can be recycled and how to separate it, the team examined other areas in the hotel that could be reevaluated, including the restaurant and kitchen.

Recently, Marriott began giving its customers the opportunity to “green” their hotel stay for an additional dollar per day.

Source: http://www.environmentalleader.com/2009/03/02/hotel-reduces-costs-by-recycling/

Reduced green business travel in recession

February 11, 2009

Green Business Travel At Risk In The Recession

Companies are still committed to a Corporate Social Responsibility platform, but certain aspects of CSR, such as “green” forms of business travel, are beginning to suffer in the recession as organizations prioritize cost-saving over supporting sustainable travel, according to the latest opinion poll by the Association of Corporate Travel Executives and KDS.

The study of 329 travel managers and business travelers from around the world found that 61 percent of organizations now have a CSR charter, compared with 59 percent in 2008. Moreover, almost 30 percent of corporate travel departments are required to report carbon emissions performance to management.

However, the survey also found that this commitment to CSR does not translate into greener travel choices, which are often more expensive. Almost 80 percent of companies rated cost-cutting as the top business travel concern, while environmentally sustainable travel is a high priority for only 17 percent.

As viewed in Environmental Leader on February 12th, 2009

http://www.environmentalleader.com/2009/02/11/green-business-travel-at-risk-in-the-recession/

Can sustainability help in the financial crisis?

February 11, 2009

Sustainable Companies Outperform Peers During Financial Crisis

A.T. Kearney announced findings in a new report which showed that companies focused on sustainability outperformed their peers by 15% during the financial crisis.

The report, titled “Green Winners: The Performance of Sustainability-focused Companies in the Financial Crisis” looked at 99 companies with a strong commitment to sustainability as defined by the Sustainability Index and the Goldman Sachs Sustain Focus List.

Over the six months from May through November 2008, the study found that in 16 of the 18 industries studied, companies committed to sustainability averaged $650 million more than the industry average in protected market capitalization per company.

Dr. Daniel Mahler, author of the study, said, “We find common characteristics among the leading companies that show that sustainability goes far beyond the narrow definition of being environmentally friendly.”

These characteristics include:

• A focus on long-term strategy, not just short-term gains
• Strong corporate governance
• Sound risk-management practices

The firm released a study in 2007 revealing that while 60% of companies have sustainability strategies, only 36% have applied it to their supply chain. EL has reported in the past on A.T. Kearney’s ‘carbon-neutral consulting.’

As viewed in Environmental Leader on February 12th

http://www.environmentalleader.com/2009/02/11/sustainable-companies-outperform-peers-during-financial-crisis/

Loreto Bay article from USA today

http://www.usatoday.com/travel/destinations/secondhomes/2009-02-05-loreto-bay-la-paz_N.htm

Viewed on February 9, 2009

By Larry Olmsted, Special for USA TODAY

Mention "second home" and "Baja Peninsula" and many people think of Los Cabos, Mexico's most upscale resort. But the newest hotbed of residential development south of the border is a few hours north of Cabo, stretching from La Paz to Loreto.

La Paz (The Peace) is the capital of Baja Sur, one of two Mexican states that make up the 800-mile peninsula. With about 200,000 people, it is also the largest. The main attractions are beaches, desert and water sports, but the small city also boasts an impressive malecón, a waterfront promenade with shops, restaurants and hotels. Long popular with tourists for its combination of urban amenities and sleepy-fishing-town feel, La Paz is suddenly popular for its price: Homes are far less expensive in La Paz than in pricey Los Cabos, 130 miles south.

Two hours north of La Paz, Loreto is undergoing more aggressive development around a pristine bay that houses the 800-square-mile Bay of Loreto National Marine Park, a U.N. World Heritage Site. The area had been identified by FONATUR, the Mexican government's tourism investment arm, as a site with potential, and infrastructure was built to encourage development.

"The government has poured $200 million into an airport, roads, sewage, everything developers need," says Mark Codiroli, sales associate for the new JW Marriott Residences complex here and a longtime Baja real estate agent.

Codiroli, who is from San Francisco, became entranced with Baja Sur years ago and recently bought in Loreto. "If you were familiar with Cabo 30 years ago, when it was a sleepy getaway for Hollywood stars and fishermen, and you wished you had bought then, that's what this area is now. Prices are about half of comparables in Los Cabos."

Not everyone agrees. "Loreto is not the next Cabo," says Jim Spano, president of the Loreto Visitors Bureau. A master plan regulating building height, zoning and density will keep it from being overbuilt like Cabo, he says. "Think of Loreto as the 'Eco Cabo.' "

A look at three La Paz and Loreto neighborhoods

• La Paz: On a waterfront peninsula, Paraiso del Mar has the region's top golf course, an Arthur Hills design, plus homes and condos from $200,000 to more than $1 million; nearly 4,000 units are planned (paradiseofthesea.com). Many buyers consider downtown enclaves near the beach and shops, where bargains abound. Condos near the water begin at less than $100,000, two-bedroom homes with pools are in the $200,000s, and luxury homes with four-plus bedrooms run $500,000 to $1 million.

• Nopolo: Second-home construction is booming in this small beach resort town 7 miles south of historic downtown Loreto, including a JW Marriott Residences planned for late 2010. "People hear Marriott and think hotel or timeshare, but this is just whole ownership condos with a resort feel and hotel services," Codiroli says. The project has a spa, marina and private beach, and condos with two to four bedrooms will have waterfront views and outdoor living areas. Large condos begin at about $750,000. (liveloreto.com)

• Loreto Bay: One of the largest residential projects here with 6,000 planned homes, Loreto Bay uses a "new urbanism" design, with homes clustered into several villages strung along 3 miles of beach and linked by paths for bikes, walkers and golf carts. It has a golf course and hotel as well. Loreto Bay currently offers furnished two-bedroom casitas with extensive outdoor living areas for $365,000 with larger models under development. (loretobay.com)

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