Bouwinvest Real Estate Investors B.V. (hereinafter: Bouwinvest) is the manager of five Dutch sector funds and three international mandates. Bouwinvest invests the funds of institutional investors in real estate worldwide in a responsible manner, with the aim of creating ‘Real Value for Life’. Social and environmental aspects are two of the key pillars that will enable us to achieve our goals.
On 10 March 2021, the Regulation on sustainability-related disclosures in the financial services sector (hereinafter: SFDR) comes into force. The aim of the SFDR is to create more harmonisation in the sustainability-related disclosures that investment managers provide their clients and to make it easier to compare the financial products of various providers in terms of their sustainability. The SFDR is also intended to combat the so-called ‘greenwashing’ of financial products.
The SFDR applies to Bouwinvest as a manager of investment funds. Under the SFDR, the investment institutions Bouwinvest Residential Fund, Bouwinvest Retail Fund and Bouwinvest Office Fund qualify as separate financial products, as does the portfolio Bouwinvest manages solely on behalf of bpfBOUW.
Our key goal is to ensure that 80% of our invested capital delivers an above-average performance on the environmental, social and governance (ESG) fronts in 2021. We measure this performance on the basis of the total invested capital with a GRESB rating of four or five stars. This is how we make a positive contribution to the sustainable development goals (SDGs) of the United Nations: Sustainable cities and communities (SDG 11). In addition to this, we make a positive contribution to SDG 7: Affordable and clean energy, SDG 8: Decent work and economic growth, and SDG 3: Good health and well-being. On the climate change front, our ambition is to meet the goals of the Paris Climate Agreement no later than 2045.
In general, the establishment of risk management within Bouwinvest is to protect Bouwinvest’s going concern today, as well as in the future, and to create awareness across the organisation of the potential material risks to which Bouwinvest is exposed. This is done to protect both Bouwinvest’s assets and as well as its client’s assets and interests.
Effective risk management means meeting our mission, vision, ambition and achieving our strategic objectives whilst remaining within the spirit and boundaries of the laws and regulation, our agreed risk appetite, and our desired behaviour and culture.
Being compliant with laws, regulations and ethical standards is a cornerstone of Bouwinvest’s license to operate. Agile adaption to an evolving regulatory landscape and high ethical awareness contributes directly to Bouwinvest’s continued integrity and a sustainable achievement of its strategic goals.
Within Bouwinvest sustainability risk is considered in the strategic objective setting and investment and asset management processes to mitigate any potential negative impact, but also to capitalise the opportunities deriving from Bouwinvest’s solutions.
To manage sustainability risk within Bouwinvest a risk governance framework for the threefold scope (management company, Dutch sector funds, international mandates) is applicable. This framework exists of e.g.: a three lines of defence model, up to date policies (e.g. Responsible Investment Policy, Exclusion Policy, Engagement Policy) and procedures, risk governance committees, and a clear decision matrix, which ensures that substantiated decision making takes place at the appropriate level within the organisation. Supported by advice of subject matter experts residing within the organisation and/or if deemed necessary by advice of external subject matter experts. Furthermore, a risk return model is in place, used to support decision making on investments, in which sustainability risk is one of the criteria.
To manage sustainability risk within its boundaries, as determined by Bouwinvest’s risk profile, a risk appetite on ESG risk (low risk appetite), including (internal early warning) limits is determined and continuously monitored. Furthermore, sustainability risks affect a large number of financial and non-financial risks within Bouwinvest’s risk taxonomy and are an integral part of risk analyses Bouwinvest performs on entity, portfolio and asset level, risk monitoring, and an integral part of the decision making.
With regards to the investment approval process the above applies, where the business is responsible for performing risk analysis regarding each investment proposal and to present the proposal, including the analysis, to the Investment Committee. Several functions (e.g. Sustainability, Risk Management, Compliance, Control, Research) participating in the Investment Committee, challenge and advise on the investment proposal as well as the risk analysis. Ultimately the investment proposal is subject to Executive Board of Directors’ approval.