In the latest episode of PropCast, global head of ESG at Fiera Real Estate, Jessica Pilz, sits down with Andrew Teacher for a wide-ranging discussion on the responsibilities for investors, asset managers, owners and operators, and the government in creating the conditions for net zero in the built environment.
Once a new buzzword, ESG investing has quickly matured into a mainstay of many portfolios. And no sector is taking their ESG credentials more seriously than real estate – unsurprisingly, when the built environment represents 40 percent of worldwide energy and process-related emissions.
Yet there remain significant unanswered questions surrounding how investors, landlord, tenants and asset managers can work together to genuinely map climate impact and decarbonisation, as the UK aims to transition to the ambitious goal of net zero carbon by 2050.
Looking to provide solutions to this challenge is Jessica Pilz, global head of ESG at Fiera Real Estate. Fiera is an investment management company with offices in Canada and the UK, currently managing over $5.6 billion of commercial real estate through a range of investment funds and accounts. It is part of Fiera Capital, a global asset manager which has more than $115.2 billion of AUM.
“I’ve spent the last few weeks having really interesting conversations with investors and consultants,” Pilz says, “and one of the glaringly big things is that ESG is still vitally important. It’s not in lieu of financial performance and it’s not a compromise – they can be done together.”
Pilz brings a wealth of international real estate experience to her role at Fiera. After a BSc in Property Studies at the University of Cape Town, in 2010 she began her career in real estate at the Public Investment Corporation, the asset manager for South Africa’s public sector.
She moved to the UK in 2012 and became Senior Associate and Head of Sustainability at MSCI, before moving on to Associate Director of Sustainability at Avison Young. In 2015 she moved to the Commercial Real Estate Credit team within RBS Risk Management, becoming Environmental & Sustainability Risk Manager.
“Many people haven’t crossed over to the green side and are still needing to see the verification that ESG does actually provides value and mitigates risk”, she observes.
“By not doing it now, it’s a risk rather than a value. We will still see some value in the short term, particularly with those assets that have a net zero carbon plan versus those that don’t.”
Pilz took a career break starting in 2017 for maternity leave before joining Fiera Real Estate in 2020, becoming Associate Director of ESG for its UK business. In January 2022 she was promoted to her current role, Global Head of ESG, leading the firm’s global ESG strategies across its investment, developments, and operations in Canada and the UK. She also sits on the Association of Real Estate Funds (AREF) ESG & Impact Investing Committee.
“Real estate as a whole is really far ahead, particularly when it comes to data,” Pilz says. “We’ve been working on this for a lot longer. Infrastructure is also quite far ahead, through the nature of the asset class. From a data point of view, and actually knowing where we sit from a carbon footprint point of view, we’re very far ahead.
“It definitely depends on your type of investor and what market they are coming from – a private wealth investor from the Middle East is not going to give ESG as much attention as a local government pension scheme, who are really hot on ESG”, Pilz continues.
Despite the difference in approaches, increasing legislation means investors can’t ignore ESG reporting forever. “Investors want comparability,” she explains. “They have a requirement to report to the Task Force on Climate-Related Financial Disclosures, and they can’t do that unless we provide them with that data, so that is going to be huge.”
Yet Pilz thinks that reporting rules could go even further. “The government hasn’t instilled confidence that it’s going to reach its net zero target by 2050,” she notes. “If you think about real estate, where landlords cannot always get data from tenants, why is there not something mandating tenants to share this data, so we know what we’re working with?
“I don’t know the direction of travel, but I hope they are not going to be short-sighted given that we are looking at a potential recession, geopolitical instability, and the energy crisis. It can be very easy to be blinded by these and try for an easier solution, like more coal plants or lifting the ban of fracking. They need to remember ESG and renewable energy will improve the economy and create jobs.”