Real estate in some form affects all sectors of the economy and therefore it is important that the owners of real estate are cognisant of the social impacts their portfolios can have in their respective communities. One of the greatest assets every property company has are its tenants. The Covid-19 pandemic has shifted the weight of attention to the ‘Social’ criteria in the sustainability framework in the short term. Research by the SA REIT Association estimate that circa R3bn of Covid-19 related rental relief was provided by the SA listed property sector. The quantum of relief provided was predominately in the latter part of 2020 and the beginning of 2021, with focus being on retaining tenants, keeping businesses open, and people healthy and employed.

Source: SA REIT Association, Anchor Company Data March 2021

Sustainable financing:

The sustainable finance market has seen an exponential increase in size and activity in recent years. Innovative offerings such as green, social, and sustainable bonds, green and sustainability-linked loans and most recently sustainability-linked bonds, have contributed to the market’s incredible growth. Research from Sustainalytics suggest that in 2020, global sustainable debt capital surpassed US$700 billion, a 30% increase compared to 2019. Part of this capital was channelled towards tackling the effects of Covid-19 as government agencies and corporates borrowed money to support areas most affected by the pandemic, such as healthcare. This shift in fund usage in 2020 resulted in the rapid growth of social bonds and sustainability-linked bonds.

With investors further integrating environmental, social and governance (ESG) criteria into their investment decisions, we expect an increase in the issuance of green and sustainability linked bonds on the back of rapidly growing demand for such products. In 2020, Nepi Rockcastle implemented a Green Finance Framework prepared in accordance with the ICMA Green Bond Principles 2018 and LMA Green Loan Principles 2020. The Group committed to use the proceeds from green bonds to finance and or refinance existing and/or future projects which would improve the environmental performance of the Group’s property portfolio. Below we highlight recently issued/to be issued sustainability-linked bonds within the sector:

At Catalyst, we aim to invest responsibly. We believe companies that incorporate the three core factors of ESG into their strategy and implement demonstrative changes within their business tend to outperform their counterparts over the long-term. Companies integrating an ESG assessment into their long-term strategy should make better-informed decisions and provide stakeholders with a more comprehensive view of risk and opportunities in their individual investment case.