SFDR

Introduction

Bouwinvest Real Estate Investors B.V. (hereinafter: Bouwinvest) manages five Dutch sector funds and three international mandates. Bouwinvest invests the capital of institutional investors responsibly in real estate worldwide with the aim of creating 'Real Value for Life'. Important pillars in our aim to achieve our objectives are social responsibility and environmental impact.

On 10 March 2021, the Sustainable Finance Disclosure Regulation for the financial services sector (hereinafter: SFDR) came into force. The aim of the SFDR is to create more harmonisation in disclosures to clients with respect to sustainability, and to facilitate the comparison of financial products from different providers in terms of sustainability. The SFDR also aims to combat the so-called greenwashing of financial products.

The SFDR applies to Bouwinvest as a manager of alternative investment funds. Under SFDR, the alternative investment funds Bouwinvest Residential Fund, Bouwinvest Retail Fund, and Bouwinvest Office Fund qualify as separate financial products.

Bouwinvest aims to contribute to the following United Nations Sustainable Development Goals (SDGs): 

- SDG 3 - Good health and well-being 

- SDG 7 - Affordable and sustainable energy 

- SDG 8 - Decent work and economic growth 

- SDG 11 - Sustainable cities and communities 

- SDG 13 - Climate action

Bouwinvest has translated this contribution into objectives. The main objective is to ensure that at least 80% of our invested capital delivers an above-average performance on environmental, social and governance (ESG) aspects by 2023. We measure this by the proportion of total invested capital with a GRESB rating of four or five stars.

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In a general sense, Bouwinvest’s goal in setting up risk management within its organisation is to protect Bouwinvest's continuity now and in the future and to create awareness throughout the organisation of the potential material risks to which Bouwinvest is exposed. This is to protect both Bouwinvest's resources and the resources and interests of its clients. 

Environmental, Social and Governance (ESG) risks are an integral part of risk management within Bouwinvest at both strategic level and fund, mandate and investment levels. ESG risk is equivalent to the term 'sustainability risk' as defined in the SFDR.  

In the ESG risk category, Bouwinvest distinguishes between five risk types: 

• Physical risks due to climate change 
• Transition risks related to climate change
• Other environmental risks
• Social risks
• Governance risks

For ESG risk, in line with the existing Risk Management Framework, Bouwinvest has developed a methodology to systematically make the relevance of specific ESG risks transparent and to maintain that transparency. This methodology determines the relevance of risks on the basis of two pillars: 

• What is the impact on people and the environment if this risk occurs?
• What is the impact on our portfolio if this risk occurs? 

This methodology provides a good picture of the inherent relevance of ESG risks at fund and mandate level. Having a view of the risks at fund and mandate level also strengthens the view of how ESG risks can impact the risks at Bouwinvest Real Estate Investors. 

For the management of the most relevant risks, Bouwinvest has a system aimed at gaining and maintaining insight into the measures and KRIs (Key Risk Indicators). 

The ESG risk profile applicable to any fund or mandate is also used as a frame of reference for the assessment of ESG risks in all investment (and divestment) proposals. This ensures that Bouwinvest systematically takes into account all potentially relevant ESG risks.  

Bouwinvest is convinced that the impact of ESG risks on its investment products can be mitigated in part by reducing the impact of those investments on people and the environment. The extent to which this is the case varies between the different funds and mandates Bouwinvest manages.  

We are constantly working to improve our approach to sustainability in general and the mitigation of the impact of our products on people and the environment, which means that negative impacts may have an impact on the value and returns of our investments. At the same time, we also see opportunities to actually realise a positive impact in the value and returns of investment products.   

The ESG risk methodology and approach to determine the impact on investment products is constantly evolving. One aspect we are particularly focused on is the step towards further quantification of these risks and aligning our approach - where relevant - with developments in the market (including the availability of data and instruments).