In its 2019 annual report, the Principles for Responsible Investment (PRI) organisation pointed to Australia as one of the fastest growing countries with a commitment to responsible investment.
And, according to Nuveen’s head of engagement Peter Reali, the COVID-19 pandemic will lead to environmental, social and governance (ESG) factors being even more important for investors.
In light of this, we take a closer look at 3 ASX real estate investment trusts (REITs) that have low ESG risk ratings.
Vicinity Centres (ASX: VCX)
As Australia’s second largest shopping centre landlord, this $7.60 billion company has assets skewed to large shopping malls.
Sustainalytics (a provider of ESG and corporate governance research and ratings to investors) has given this REIT a very low ESG risk score, ranking it first among its real estate industry peers when it comes to ESG. The rating service provider said Vicinity Centres is at negligible risk of experiencing material financial impacts from ESG factors, due to its low exposure to, and strong management of, material ESG issues.
At the time of writing, the Vicinity Centres share price is $1.68 per share, up 17% year to date.
Dexus Property Group (ASX: DXS)
Dexus is one of Australia’s largest office and industrial REITs and has a market capitalisation of around $10.70 billion.
It has a similar low ESG risk rating to that of Vicinity Centres, with a slightly riskier score under “governance risk”. Sustainalytics ranks Dexus as number 2 within its industry group, just behind Vicinity.
In its recent annual general meeting address, Dexus management highlighted its belief that as Australia opens up after lockdowns, office markets will continue to benefit from urbanisation and growth in capital cities, and that investors should expect a revival in the Australian property market.
At the time of writing, the Dexus share price $9.68, up 6% year to date.
Stockland Corporation Ltd (ASX: SGP)
Stockland Corp is another REIT with low ESG risk, according to its Sustainalytics score. Stockland has a market capitalisation of around $10.90 billion, and operates a diversified portfolio of residential, retail and logistics assets.
Sustainalytics has given Stockland Corp a low ESG risk score, recognising that the company is focusing on strengthening its ability to endure material risks by implementing organisation-wide sustainability programs. According to Stockland Corp’s governance and risk report, this program involves the development of environmental management systems and a cyber risk management plan.
The Stockland Corp share price has enjoyed an upward rally since April, and at $4.49 per share at the time of writing it has almost returned to its pre-Covid price level of $4.60.
