Major Pushes For Net-Zero Carbon CRE Coming From Europe
The government of Norway has proposed that the country's sovereign wealth fund, the world's largest, should push the more than 9,300 companies it invests in to cut their greenhouse gas emissions to net-zero by 2050, in line with the Paris Agreement. Net-zero, or carbon neutrality, means an entity removes as much carbon dioxide from the environment as it puts out. The government doesn't run the fund directly, so the final decision to push for net-zero would be made by the fund's executive board.
The fund, formally known as the Government Pension Fund Global and run by Norges Bank Investment Management, has extensive real estate holdings. Among other U.S. holdings, the fund has major stakes in properties co-owned by Boston Properties, Kilroy Realty Corp., MetLife, Nuveen Real Estate, Oxford Properties Group, and Prologis Europe and U.S.
In Lower Manhattan, Hudson Square Properties is a joint venture of Trinity Church Wall Street and the fund. It includes a 12-building portfolio in that part of the city totaling about 6M SF.
The carbon-zero-focused changes were proposed in the white paper The Government Pension Fund 2022, and are mostly in synch with the recommendations in the 2021 report Climate Risk and the Government Pension Fund Global, which details climate risk for the fund's investments.
“The government wants to make the GPFG world leading in responsible investment and the management of climate and nature risks," Minister of Finance Trygve Vedum said in a statement in January. "There is, at the same time, a broad political consensus that the fund has a financial objective and is not a climate policy tool."
Norway's sovereign fund has done well recently. Last year, the fund returned 14.5%, enjoying positive equity and real estate returns and ending the year holding investments with a market value of $1.4T.
Equities did best for the fund, returning 20.8% in 2021, Pensions & Investments reports, followed by real estate with a 13.6% return. Renewable energy infrastructure investments returned 4.2% for the sovereign wealth fund.
Separately, but also related to carbon-zero efforts, the French company Deepki has raised $166M in a Series C funding round. The company offers software as a service that helps real estate companies track and analyze their ESG efforts, including carbon emissions.
The company plans to expand its operations in the United States in the next 12 months, via organic growth and acquisitions.
"More than $5T of investment is needed each year to decarbonize the built environment and ensure the real estate sector can meet its commitment to meet the net zero target by 2050," Deepki co-founders Vincent Bryant and Emmanuel Blanchet said in a statement.
The round was co-led by One Peak and Highland Europe, two London-based VC firms. Other investors include Bpifrance, Revaia, Hi Inov and Statkraft Ventures.