At Vert we like to preserve the historical distinction between ESG investing and Impact investing. In this view, ESG investing is about prioritizing the public companies that are doing better for people and planet in their pursuit of profit. Impact investing is more of a for-profit version of philanthropy where the primary goal is solving an environmental or social problem first, prioritized before achieving financial returns. This simplified bifurcation reminds us not to compare a well-diversified highly liquid public equity mutual fund to a private placement in an organic farming collective. The world is, of course, not as binary as that, and there is a spectrum between value driven ESG and mission driven impact.

We are encouraged by the emergence of more public companies that are truly purpose driven. It is exciting to see impact begin to access the potential scale of the public markets. When the public markets accept and reward these new business models, it serves as a validation for sustainability more broadly.

The Vert Global Sustainable Real Estate fund invests in public companies that pass both strict financial and ESG criteria. We are pleased to report that the Investment Research Group has identified several ‘impact’ focused real estate firms that make the grade on both counts, a few of which we profile here:

HOME: HOME is a newly listed UK real estate investment trust that is focused on alleviating the chronic shortage of affordable housing for the homeless. Like much of the world, the UK is experiencing a growth in the homeless population. Perhaps more uniquely, the UK requires local governments to provide secure accommodation for those who are unintentionally homeless and for those who are at risk of becoming homeless. Currently, many of the local housing authorities meet the housing need through a patchwork of temporary leases of hotels, bed and breakfasts, and apartments. This is expensive and the accommodation is not always fit for purpose. HOME purchases houses and apartments that are suitable and then rents them under longer term leases to the local government. All parties stand to benefit: the homeless get better housing, the local government saves money, and HOME receives a steady rent.

Charter Hall Social Infrastructure: Charter Hall is one of the leading real estate groups in Australia with over $50 billion in assets spread across 1,300 properties. The firm offers several investment portfolios including the Charter Hall Social Infrastructure REIT. What is social infrastructure? This subset of the infrastructure asset class includes physical assets that support social services including education, healthcare, housing, and transportation. In Charter Hall’s case the majority of their 376 properties are used for childcare and early education. They also own a Brisbane bus terminal and a couple healthcare facilities. Because of the stable nature of their tenants, Charter Hall tends to sign 15-20 year leases and the portfolio currently enjoys an average lease length longer than 12 years.

Hannon Armstrong: This company is a popular REIT for sustainable investors. Their tag line is ‘Investing in Climate Solutions’. Hannon provides financing to companies investing in energy efficiency, renewable energy, and sustainable infrastructure. Many sustainability initiatives are profitable in the long run, but require upfront capital. By providing this capital Hannon both catalyzes the deployment of renewable solutions and earns a solid return on investment.

Dream Impact: Dream Unlimited, one of Canada’s better known real estate owners, created their Impact portfolio to focus on UN Sustainable Development Goal 11: Building Sustainable Cities and Communities. Their three-pronged strategy focuses on affordable and attainable housing, building inclusive communities, and promoting environmental sustainability and resilience. Dream is creating over 1,000 affordable residential units, many for Canada’s indigenous community, and is targeting a reduction in greenhouse gas (GHG) emissions of 20% by 2025.