Ivanhoé Cambridge is proud to announce an ambitious program aimed at achieving net zero carbon for its international portfolio by 2040. As the real estate and construction sector accounts for nearly 40% of global greenhouse gas emissions, the company is accelerating its decarbonization strategy in light of the urgent need to address climate change.
The scope of this commitment covers all five continents where Ivanhoé Cambridge owns properties, either wholly or through partnerships*, comprising some 800 properties in a variety of asset classes: office and logistics buildings, shopping centres, residential units and hotels.
“Both as a player and as an influencer in our ecosystem, we believe it is our duty to make a positive impact on the environment,” said Nathalie Palladitcheff, President and Chief Executive Officer, Ivanhoé Cambridge. “We view this commitment as a value-creation strategy, and our approach also strengthens the resilience of our assets, because sustainable investments will be more profitable over the long term.” She continued: “Our environmental initiative will make a significant contribution to improving users’ quality of life, in line with Ivanhoé Cambridge’s mission to make a positive impact on the communities where we are present.”
Ivanhoé Cambridge is proactive on two inversely related fronts at its properties: the physical risks caused by climate change, and the risks and opportunities associated with the transition to a low-carbon economy. Accordingly, the Company is committed to achieving a net zero carbon portfolio by 2040.
A first milestone of a 35% reduction in our carbon intensity should be reached in 2025 compared with 2017, the year the trajectory was successfully initiated, with a reduction of almost 20% already achieved in 2020.
In addition, Ivanhoé Cambridge will increase its low-carbon investments by more than $6 billion by 2025 compared with 2020. The company’s low-carbon investments have already grown by nearly 200% since 2017, reaching $14.6 billion as of December 31, 2020. These positive results have already enabled Ivanhoé Cambridge to increase and diversify its green financing, the terms of which are partly tied to the carbon intensity of its assets.
Finally, starting in 2025, the company is committed to making all its development projects net-zero carbon. Over the coming years, its teams will work on taking into account the carbon associated with the construction of buildings, particularly in regards to the materials used.
“Our target is ambitious but realistic, and we aim to ensure that the carbon trajectory of our portfolio is compatible with the Paris Climate Agreement,” said Stéphane Villemain, Vice President, Corporate Social Responsibility. “Our roadmap is a combination of energy-efficiency and renewable-energy strategies, and investment in low-carbon assets. We will act both on improving our existing assets and on our future developments.”
The main levers for achieving this target will be to improve the energy efficiency of our main assets, significantly reduce the use of fossil fuels, and increase the use of renewable energy in our properties. These aspects are particularly promising for the future and open up many investment opportunities, such as the recently announced strategic partnership with Fifth Wall (read the news release).
Climate issues are already systematically integrated into Ivanhoé Cambridge’s investment analyses for all new transactions as well as in asset management, and its properties benefit from a resilience plan tied to climate risks.
Ivanhoé Cambridge has a five-star rating in the GRESB survey, placing the Company in the top 20% of GRESB participants worldwide. With a score of 89 out of 100 for its managed portfolio, Ivanhoé Cambridge ranks first in the GRESB North American Retail (shopping centres) group for the second year in a row. In addition, Ivanhoé Cambridge received the highest score (30 out of 30) in the GRESB assessment of the company’s corporate social responsibility management (leadership, policies and reporting).
In my last comment, I discussed how CDPQ's CEO Charles Emond is urging large investors to follow his organization and invest more in climate action.
Today, Nathalie Palladitcheff, the CEO of Ivanhoé Cambridge and her team are officially committing to achieving net zero carbon by 2040, laying out a concrete roadmap for achieving this target.
Why are they doing this? Because the real estate and construction sector accounts for nearly 40% of global greenhouse gas emissions and the company is accelerating its decarbonization strategy in light of the urgent need to address climate change.
As you can read from the press release, Ivanhoé Cambridge initiated the road to net zeo carbon back in 2017 under the watch of Daniel Fournier, its former CEO, and Michael Sabia, CDPQ's former CEO who is now advising Chrystia Freeland, the deputy prime minister and minister of finance.
The press release states that a first milestone of a 35% reduction in their carbon intensity should be reached in 2025 and that a 20% reduction was already achieved last year.
Also, the scope of this commitment covers all five continents where Ivanhoé Cambridge owns properties, either wholly or through partnerships, comprising some 800 properties in a variety of asset classes: office and logistics buildings, shopping centres, residential units and hotels.
When you think about the work involved and the scope of the commitment, you cannot help but be amazed and wonder whether they're going to be able to achieve their net zero target by 2040.
But Stéphane Villemain, Vice President, Corporate Social Responsibility remains undeterred:“Our target is ambitious but realistic, and we aim to ensure that the carbon trajectory of our portfolio is compatible with the Paris Climate Agreement. Our roadmap is a combination of energy-efficiency and renewable-energy strategies, and investment in low-carbon assets. We will act both on improving our existing assets and on our future developments.”
The main levers for achieving this target will be to improve the energy efficiency of their main assets, significantly reduce the use of fossil fuels, and increase the use of renewable energy in their properties.
The press release cites their recently announced strategic partnership with Fifth Wall as an example of moving in the right direction:
Ivanhoé Cambridge is proud to announce a strategic partnership with Fifth Wall, the largest venture capital firm with a focus on real estate technology. Ivanhoé Cambridge and Fifth Wall share the belief that their partnership will accelerate Ivanhoé Cambridge’s technology adoption and innovation across its portfolio. To date, Ivanhoé Cambridge has also committed US$85 million across four Fifth Wall funds focused on climate technology, retail, real estate technology in North America and Europe, and is the first investor in Fifth Wall’s Climate Technology Fund.
“This strategic partnership is perfectly aligned with our investment vision and will enable us to create value as well as accelerate the deployment of technology-based solutions across our portfolio,” said Sylvain Fortier, Chief Investment and Innovation Officer, Ivanhoé Cambridge. ”It will allow us to have direct access to companies and have insights into emerging trends in proptech.”
With approximately $1.7 billion in commitments and capital under management across multiple strategies, Fifth Wall employs the model of working with strategic limited partners in venture capital, and today, 65 of the largest real estate owners, operators and developers from 15 countries have invested in one or more of Fifth Wall’s funds. Fifth Wall has also identified and invested in many of the most iconic and successful companies in Proptech. Fifth Wall’s investment track record and network will provide unique insights and direct access to technological solutions that will enable Ivanhoé Cambridge to further strengthen and accelerate its technological and service-driven transformation.
“Real estate owners are finding that while investing in technology and innovation is complicated and challenging to do it all in-house, it’s absolutely imperative to the future of their business,” said Brendan Wallace, Co-Founder and Managing Partner, Fifth Wall. “We’re thrilled to be working with Ivanhoé Cambridge and deeply impressed by their holistic view of how large the opportunity is at the collision between real estate and technology, as reflected by their $85 million investment across all of Fifth Wall’s strategies, including climate technology, retail, and real estate technology in North America and Europe. Proptech is no longer niche; it is now one of the largest categories of venture capital and transforming the real estate industry. Ivanhoé Cambridge’s significant commitment to Fifth Wall symbolizes their deep understanding of how important Proptech has become. It is also inspiring to have Ivanhoé Cambridge as the first investor in Fifth Wall’s Climate Technology Fund, and I hope their bold commitment to that fund encourages other real estate owners to begin investing in Climate Tech and to fund the R&D that is required to decarbonize the real estate industry.”
Indeed, proptech is huge because it allows asset managers to gather all sorts of important data on their properties, adding value to them over the long run.
For Ivanhoé Cambridge to commit to achieving net zero carbon by 2040, it needs to have the best available data to perform carbon-impact analysis and monitor progress in all its properties all over the world.
Investing in proptech will also allow it to add significant value to all its properties.
Anyway, take the time to read the roadmap to achieving met zero carbon by 2020 here. It's a great presentation full of details.
Below, I embedded the key slides but read the entire presentation:
As you can see, Ivanhoé Cambridge is committing to achieving net zero carbon by 2040 and since real estate is a big part of of its total assets (roughly 10% as of end of 2020), their success in decarbonizing that portfolio is critical for CDPQ to decarbonize its total portfolio.
Is CDPQ the only large Canadian pension to do this? No, others are doing their part but to my knowledge, Ivanhoé Cambridge is the only real estate subsidiary in Canada to lay out such a detailed action plan of how it is going to achieve net zero carbon by 2040.
In related news, CPP Investments posted on LinkedIn that its Toronto office tower is now LEED Platinum certified:
This is good news and I'm sure its employees are looking forward to getting back to the office one day soon.
In other real estate news, Cohen & Steers — the firm that was arguably responsible for putting real estate investment trusts on the map — is now moving into privately held real estate and building the first investment strategies that can move back and forth between public and private markets.
Lastly, John Kerry said the US is likely to join Europe in mandating climate risk disclosure.
The world is heading toward carbon neutrality, governments are mandating it but as Charles Emond stated, they can only provide a framework and incentives, it's up to the private sector to do all the heavy lifting.
Below, watch a clip with English subtitles on how Ivanhoé Cambridge plans on achieving net zero carbon by 2040. Bon succès!!