USGBC, FTSE Launch Green Property Index for Investors

by | Nov 15, 2012

FTSE Group, the US Green Building Council and the National Association of Real Estate Investment Trusts have jointly developed green property indexes for institutional and retail investors.

The indexes have been designed to give investors a structured way to measure and model the risk and reward profile of green property, using the first codified, transparent definition of listed green property, the three organizations said.

Now in the final stages of implementation, the indexes will be based on the FTSE NAREIT Index Series, using LEED and Energy Star ratings.

The green property indexes are based on the analysis of 13,126 LEED and 18,402 Energy Star projects that have received third-party certification based on their green achievements and performance, the organizations said. These projects represent 4.7 billion square feet of commercial real estate.

USGBC certifies an average of 1.5 million square feet of additional property per day.

The global building and construction sector, which consumes a significant portion of the world’s critical resources, is highly exposed to the risks and rewards associated with the transition to a low carbon economy, the three partners said.

The sector accounts for at least 30 percent of greenhouse gas emissions, according to a Royal Institution of Chartered Surveyors study cited by USGBC, NAREIT and FTSE Group. Buildings and construction materials are some of the heaviest consumers of natural resources, using three billion tons of raw material per year and accounting for 55 percent of the wood cut for uses other than fuel.

The indexes will enable more real estate investors and managers to integrate sustainability factors into their strategies, both as benchmarks and as the basis for investment products, said USGBC president and CEO Rick Fedrizzi.

The FTSE4Good Index, which identifies on a semi-annual basis businesses that meet globally recognized corporate social responsibility standards, in September added 21 companies including Coca-Coal Amatil, Suncorp, DirecTV, chemical company Ecolab and food producer Hillshire Brands. FTSE4Good dropped seven companies that month for no longer meeting the criteria.

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