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Socially Responsible Investment

Introduction

  • AEW believes that socially responsible investment - an investment approach that takes into consideration environmental, social and governance (“ESG”) issues - can positively impact long-term investment performance, well-being for occupiers of space and the community at large. 
  • While socially responsible investing is a concept that has been the subject of a global dialogue for some time, its application by the real estate investment management community is relatively new.  Accordingly, AEW seeks to identify ESG factors that are most relevant to real estate and that can be appropriately incorporated into the investment and asset management process. 
  • We also recognize that many of our clients share with us an interest in exploring the implementation of practices and procedures that are both consistent with current ESG thinking and the ongoing satisfaction of our fiduciary duties to our clients. 
  • Notwithstanding any other considerations, investments must be made and managed in accordance with client guidelines and requirements, and AEW’s duty to its clients must take precedence over any other considerations.

 Environmental Considerations

  • AEW acknowledges that commercial property is a significant source of greenhouse gas emissions as well as a major driver of energy consumption.  AEW also recognizes the important role of commercial property in the daily lives of the individuals who live and work in the properties that we occupy, own and manage on behalf of our clients. 
  • AEW is committed to providing a positive and sustainable workplace for its employees and to the degree that is prudent within our broader mandate of acting as an investment manager, seeks to enhance the sustainability of the commercial property investments that it undertakes on behalf of its clients. 
  • Mitigating actions may range from individual property-focused initiatives (such as identifying opportunities to reduce energy and water use, waste and carbon emissions) to the consideration of environmental best practices across all investments.  In our development activities, we seek to identify transit-oriented, mixed-use and urban infill strategies, to the extent they are consistent with the investment strategies of our clients and funds.   
  • Environmental sustainability initiatives implemented by AEW on behalf of its clients must be practical and cost-effective, as well as compliant with law and regulation.  Clients should expect such initiatives to have the potential for adding value to real estate assets not only through reduced operating expenses and environmental footprint, but also through distinguishing such assets within their respective markets and reducing the risk of functional obsolescence which could adversely impact disposition values. 
  • We strive to engage with thought leaders in this area so that we can make our portfolios greener whilst always acting responsibly for our investors.  By applying responsible reduction strategies, we believe we can enhance not only our environmental, but also our investment performance. 

Social Responsibility

  • AEW believes that social responsibility comprises good corporate citizenship, as well as consideration of the impact of our operations on others.  As such, we are committed to making business decisions based on what we believe is right, not simply what may be expedient.
  • AEW recognizes and seeks to take into account the interests of our stakeholders, whether they are clients, tenants, employees or other individuals with whom we interact.  AEW also seeks to respect: human rights; diversity and equality; and the health, safety and well-being of its employees and space occupiers.
  • AEW is committed to supporting non-profit organizations through its charitable giving program, including supporting organizations in which its employees are involved. AEW has in place charity and social committees through which appropriate charitable initiatives are selected and supported.

Corporate Governance

  • AEW believes that companies should embrace corporate responsibility, accountability, fairness, and transparency not only in the way they manage their own affairs, but also in how they manage their relationships with clients and investments made on their behalf.
  • AEW believes that a sound internal control environment, coupled with awareness, professional competence and a formal review process, is critical to the success of its business.  AEW strives to ensure that senior management and personnel are sufficiently aware of risks inherent in the investment management process and that control procedures exist to manage those risks adequately, including through the observance of appropriate compliance policies and procedures.
  • AEW’s governance relies on a committee structure (for example, Management Committee, Investment Committee and Audit Committee) where responsibility for oversight of the firm’s operations has been delegated to senior management teams that meet on a regular basis.  Matters reviewed by the various committees include, for example: proposed investments on behalf of clients; compliance with investment guidelines and restrictions; investment performance; risk/return characteristics and valuation metrics; economic and capital markets conditions; and AEW’s general risk control environment, including legal and regulatory risk, compliance policies and procedures, and operational controls.
  • AEW has a Code of Ethics that establishes guidelines for professional conduct, particularly with respect to limitations of potential conflicts of interest and personal trading restrictions, including pre-clearance and reporting obligations.  Additionally, AEW maintains an employee handbook which sets forth AEW’s professional expectations of its personnel, among other things.  AEW also maintains comprehensive policies related to client intake, know your client and anti-money laundering. 
  • With respect to commingled vehicles invested in direct real estate, we recognize the importance of governance and transparency in the relationship between investors  and the sponsor.  AEW’s commingled funds are generally structured and operated in a manner that is consistent with guidelines established by trade associations or non-governmental organizations focused on fund management, such as the ILPA (Independent Limited Partners Association), UNPRI (United Nations Principles for Responsible Investing) and INREV (European Association of Non-listed Real Estate Vehicles).  Particular attention is given to alignment of interest, governance and transparency.
  • With regard to publicly traded real estate securities investments, as active owners of listed real estate companies on behalf of our clients, we believe best practices toward ESG issues for a company is an important aspect in creating long-term returns for our clients and in upholding our standards of corporate citizenship. Through actively engaging the listed companies we own on behalf of our clients, we believe we can be part of the investment community that positively influences decisions that will benefit the bottom line as well as the community. An integral part of AEW’s investment process is a careful review of the management team of public companies in which AEW invests, including environmental and social policies implemented by the management team.  Where AEW is responsible for voting proxies on behalf of its clients, AEW will typically assess the corporate governance of such companies through the use of third-party research service providers and AEW’s Active Ownership Policy.  AEW will generally vote affirmatively on proxy issues that reflect sound corporate governance practices and which AEW believes are in the best interests of its clients.