July 20, 2020: Nikkei Inc. has launched a new green real estate index, the “Nikkei ESG-REIT Index” which incorporates environmental, social and governance (ESG) factors.
Responsible investment strategies are expanding globally with investors integrating ESG factors into listed real estate allocation processes. To meet this demand, Nikkei has developed a Japanese Real Estate Investment Trust (REIT) index which takes ESG performance into account based on the GRESB Rating. Index constituents are selected from REITs listed on the Tokyo Stock Exchange, and market capitalization weights are adjusted so that high-performing REITs have increased weights in the index.
Ruben Langbroek, Head of Asia Pacific at GRESB says: “GRESB supports investor demand for standardized and validated ESG performance data for real asset investments. One of the fastest growing markets for responsible investment in Asia is Japan, and most Japanese REITs report their ESG practices via the annual GRESB Assessment. The Nikkei ESG-REIT Index uses this data to track the performance of ESG leaders.”
The recent COVID-19 crisis has exacerbated existing ESG challenges such as the climate crisis, social inequality, and biodiversity loss. This has resulted in increased investor demand for ESG reporting and benchmarking to better manage risk, enhance returns and generate positive impact.
“During the COVID-19 selloff, investors dramatically reduced their risk exposures, leading to increased inflows to listed equities that demonstrate strong ESG practices. In global equities, ESG leaders outperformed companies with poor ESG ratings by almost 7 percentage points in the first quarter of this year. It shows, once again, that responsible investment strategies provide an important protection to downside risk.”
“A recovery that addresses acute economic issues as well as chronic environmental and social issues will require the efficient and equitable deployment of large amounts of capital. The Nikkei ESG-REIT Index allows investors to align their listed real estate investment allocation with this green recovery”, Langbroek concludes.
Nikkei Inc. is a world-renowned media brand for Asian news, respected for quality journalism and for being a trusted provider of business news and information. Founded as a market news media in Japan in 1876, Nikkei has grown into one of the world’s largest media corporations, with 36 foreign editorial bureaus and approximately 1,500 journalists worldwide. Nikkei acquired the U.K.-based Financial Times in 2015. With the combined digital and print circulation totalling over 3 million, Nikkei is continually deploying new technologies to increase its readership.
Mission-driven and investor-led, GRESB is the environmental, social and governance (ESG) benchmark for real assets. We work in collaboration with the industry to provide standardized and validated ESG data to the capital markets. The 2019 real estate benchmark covers more than 1,000 property companies, real estate investment trusts (REITs), funds, and developers. Combined, GRESB represents USD 4.5 trillion in real asset value. More than 100 institutional investors, with over USD 22 trillion AUM, use GRESB data to monitor their investments, engage with their managers, and make decisions that lead to a more sustainable real asset industry. www.gresb.com