Purpose -A green agenda has become a growing subject throughout an increasing number of European listed real estate companies over the last decade. The focus on sustainability is presumably not only goodwill or legislation driven but is rather a benefit driven action to achieve an economic surplus. The purpose of this paper is the development of an adequate sustainability definition, the investigation of the effect of a sustainability agenda on a company level, and the identification of possible financial benefits. Design/methodology/approach -This is an explorative qualitative and quantitative study. First, the authors developed a four-bottom-line real estate sustainability agenda in accordance with the guidelines of the European Public Real Estate Association and the Global Reporting Initiative. Second, the study examines 80 European listed real estate companies from 2006 until 2009, and third, the study applies a panel analysis with conditional and unconditional regression techniques. Findings -After classifying firms across different levels of sustainability intensity and quantifying the impact of an intensive green agenda the authors found a positive linkage between a green agenda and a green performance, especially in terms of an increased ability to generate revenues and a decreased level of idiosyncratic stock volatility. As a result, green commitments are not merely altruisms but are economically driven instead. Originality/value -This paper gives, to the authors' knowledge, a first insight of how European real estate listed companies behave in terms of corporate social responsibility. The study contributes to the theoretical literature of corporate sustainable real estate companies by establishing an economic transmission mechanism as well as providing empirical evidence in favour of responsible activities.
Purpose -Given the growing market awareness concerning responsible investments in recent years, the purpose of this paper is to bridge the gap between real estate companies which implemented a corporate social responsibility (CSR) agenda and the possible role within a multi-asset portfolio optimisation framework. The behaviour of the asset class sustainable real estate (SRE) together with its diversification characteristics are the main focus. Design/methodology/approach -The study is an explorative empirical analysis applying a portfolio optimisation algorithm. First, the authors developed a sustainable real estate index comprehending listed real estate companies from 2004 until 2010 acting in line with a CSR agenda. Second, the authors introduced SRE into the opportunity set of an UK investor and finally, generated the theoretical optimal asset allocation of SRE within different risk-return portfolios. Findings -The unique risk-return pattern of SRE enables the asset class to be allocated across all portfolios ranging from low to high risk along the efficient frontier. In the low-risk levels, SRE behaves as a diversifier whereas in the medium-to high-risk portfolios SRE is represented as the main allocated asset. Sustainable real estate thus offers opportunities to numerous investors in view of their investment preferences and corporate strategies. Practical implications -The results could encourage institutional investors to take investments in CSR-driven listed real estate companies into account and to rethink their strategic asset allocation approach in view of the identified asset characteristics and the behaviour within a portfolio framework. Originality/value -The paper provides a first insight in the field of portfolio management by introducing SRE into the opportunity set of a UK investor. The study raises SRE to an aggregated level and delivers theoretical as well as empirical evidence of the role sustainable real estate is playing within a multi-asset portfolio.
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