How does your impact investment strategy achieve a dual return of better environmental and social outcomes, as well as financial returns?
Marleen: For our PATRIZIA Sustainable Communities strategy, we have set up three pillars, or themes, that focus on six SDGs in total: affordable housing (SDG 1: ‘No poverty’), green real estate (SDGs 6: ‘Clean water and sanitation’, 7: ‘Affordable and clean energy’ and 13: ‘Climate action’) and inclusion and connectivity (SDGs 3: ‘Good health and well-being’ and 4: ‘Quality education’).
There is a large need for affordable housing in many European cities, particularly among lower-to-middle income people. More than 80 million Europeans spend too much of their income on the home, i.e. they pay more than 40% of their income on housing, and this percentage is rising rather than falling. This is unsustainable. With PATRIZIA Sustainable Communities, we invest in more affordable homes for lower-to-middle income people, who it’s important not to push out of central locations in cities, due to this imbalance of income and living costs.
In terms of climate, all our development projects should be ‘net zero carbon in operation’. Real estate can make a major contribution to achieving the climate goals because, currently, more than 40% of all energy consumption in the world comes from buildings.
The importance of the third pillar, that of inclusion and connectivity, is evidenced by the fact that more than 75 million people from Europe live in social isolation, i.e. they speak to not more than one person per month socially. We therefore invest in the community, by creating social spaces such as parks, community centres and libraries in or close to our properties and running social programmes there.
As for the financial return, if we cannot achieve at least 12% IRR [internal rate of return] on a project, we do not invest in it. Realising the KPIs for the three impact themes and the financial return therefore go hand-in-hand.