The label ISR (socially responsible investment) is a state labelIt was created by the Ministry of Economy, Finance and Recovery initially for funds specializing in securities and extended in October 2020 to real estate funds.
It allows savers to identify:
- SCPI: real estate investment companies
- OPCI: collective real estate investment organizations
- FIA: Real Estate Alternative Investment Funds
Who meet strict environmental and social criteria. In addition to demonstrating great transparency for the investor, it allows to give more value to the different real estate assets.
There are therefore independent certifiers who decide whether or not to award the label based on the specifications and the 3 ESG criteria:
The criterion environmental takes into account: CO2 and greenhouse gas emissions, waste management, electricity consumption and the prevention of environmental risks.
The criterion social takes into account the quality of social dialogue within companies, the employment of disabled people and the training of employees.
The criterion of governance ensures the transparency of the remuneration of company directors, the fight against corruption and the feminization of boards of directors.
The objective is to certify companies with economic models that are more resistant to the environmental and social crisis. Indeed, today economic and environmental performance are increasingly correlated.
How important are real estate funds?
This label is important for this sector because Real estate is one of the favorite investments of the French. According to Statista, “between 2015 and 2018, France ranked as the second country on a European scale behind Germany in terms of real estate investment”.
Furthermore, this sector is at the heart of the major challenges of our time: climate change And human well-being. Thus, the label does not only target new buildings, but also encourages the renovation of the existing housing stock.
The terms of the ISR label
Real estate funds that wish to acquire this label have an ESG rating out of 100 for each of the assets, then they will be classified into two categories: “Best in class”, which is a kind of “congratulations” from the listeners and “Best in progress”, which is a motivation to continue to improve on certain points. Funds with assets that fall into this last category will have to follow a 3-year action plan to continue to improve the social and ecological performance of buildings.
This label is awarded for a renewable period of 3 years, but the labeled funds are audited each year. To do this, they must publish extra-financial reporting, which presents the performance indicators. These Performance indicators are becoming increasingly demanding in terms of reporting and analysis of building data on environmental aspects: consumption of water, energy, waste, carbon footprint, etc. The objective is to combat the obsolescence of buildings by measuring their performance in order to optimize their management.
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