Legal & General Investment Management has launched the Sustainable DC Property Fund, in a bid to fuel demand from DC schemes wanting access to real assets.
The £238m fund will reshape an existing property portfolio to include responsible investing as a core target, with explicit environmental, social and governance objectives including net zero operational carbon in the direct property portfolio by 2030. The fund is already measuring carbon emissions and has set reduction objectives in line with “science-based” targets.
Michael Barrie, director of fund management for LGIM Real Assets, said: “Real estate is central in the transition to net zero, as buildings play a major role in supporting a low-carbon economy and society. The demand for real assets is growing – three-quarters of our recent major investment consultant conversations in DC Distribution have emphasised demand for them.
“We believe that protecting and enhancing real assets against the effects of climate change will create long-term value and performance. We are adopting this positioning now to capture this performance and to help enhance the long-term financial value of real estate.”
Rob Martin, director of strategy and ESG for LGIM Real Assets, added: “The fund will provide a market-leading offering for clients that demand an increased focus on ESG. Providing a portfolio that positions towards the highest net-zero standards will benefit both occupier demand and investment performance, as well as reduce risk.”
The Investment Property Forum forecasts that DC assets are set to grow to £1tn by 2028, and that allocation to real estate will increase from 1.5% to 4% by 2027.
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