BCI's QuadReal Launches its Green Bond Framework

QuadReal Property Group, BCI's real estate subsidiary, launched its Green Bond Framework:
QuadReal Property Group ("QuadReal") is proud to announce today its Green Bond Framework to finance sustainable investments and projects through BCI QuadReal Realty ("BQR"). BQR is the primary issuing entity of unsecured notes for British Columbia Investment Management Corporation's ("BCI") real estate program. BCI is a Canadian leader in investment fund management that provides services to British Columbia's public sector.

"When QuadReal was launched, we established the principles of responsible investing and management," said Dennis Lopez, QuadReal's Chief Executive Officer. "QuadReal's Green Bond Framework demonstrates our approach to how we select and execute our projects to achieve the goal of having a positive impact on the environment."

QuadReal's Green Bond Framework has been reviewed by Sustainalytics, a global leader in providing environmental, social and governance (ESG) research and analysis. Sustainalytics issued a second party opinion confirming that QuadReal's Green Bond Framework is credible and impactful, and aligns with the International Capital Market Association Green Bond Principles 2018.

QuadReal is committed to providing ongoing reporting and transparency and will provide annual updates on its website until net proceeds of a green bond issuance are fully allocated to Eligible Green Projects.  A copy of QuadReal's Green Bond Framework and Sustainalytics' second party opinion is available at www.quadreal.com/sustainability/green-bonds.  For more information about QuadReal's ongoing commitment to sustainability including its approach, progress, and actions and related documents, please visit: www.quadreal.com/sustainability.

About QuadReal Property Group and BCI QuadReal Realty

Headquartered in Vancouver, Canada, QuadReal is a global real estate investment, operating and development company. QuadReal manages the real estate and mortgage programs of BCI, one of Canada's largest asset managers with a $153.4 billion portfolio as of March 31, 2019.

QuadReal seeks to deliver strong investment returns while creating sustainable environments that bring value to the people and communities it serves. Now and for generations to come.

BCI QuadReal Realty is an actively managed pooled investment portfolio of real estate and real estate-related investments. All the assets of BQR are held in trust by BCI and managed by QuadReal Property Group. BQR's holdings span property types, geographic locations, investment sizes and risk profiles. BQR's investment strategy is to be well-diversified and to hold quality properties and investments that will perform well across multiple economic cycles. BQR was formerly known as Realpool Investment Fund.
There are three important documents to review in regards to QuadReal’s Green Bond Framework:
Take the time to review all three documents including the last one which is the opinion of Sustainalytics.

Below, the evaluation summary from Sustainalytics:

In short, QuadReal’s real estate portfolio is promoting improved environmental performance as well as support for innovation that makes buildings more resilient to adverse climate change impacts.

The Green Bond Framework defines eligibility criteria in six areas:
  1. Green Buildings
  2. Renewable Energy
  3. Resource and Energy Efficiency
  4. Pollution Prevention and Control
  5. Clean Transportation
  6. Climate Change Adaptation
QuadReal engaged Sustainalytics to review the Framework and provide an independent second-party opinion on the Framework’s environmental credentials and its alignment with the Green Bond Principles 2018.

In terms of reporting, Sustainalytics' report states the following:
  • QuadReal intends to publish a green bond report annually until full allocation.
  • This report will provide details of the allocation of green bond proceeds to eligible green project categories and will contain relevant metrics associated with the eligible green projects such as, achieving green building certification by building or square footage, annual energy saving (in MWh), water consumption reduction (in thousand cubic meters)and greenhouse gas emission reduction (in tonnes of CO2equivalent).
  • QuadReal may hire an external auditor or other reviewer to provide an annual review of the allocation of the net green bond proceeds.
  • Sustainalytics considers this process to be in line with market practice.
I also reviewed QuadReal's presentation and this slide definitely caught my eye:

Over 95% of QuadReal’s Canadian portfolio has been green-certified by BOMA BEST or LEED.

Moreover, these key milestones affirm QuadReal's commitment to sustainability:

As of 2018, QuadReal reduced its CO2e emissions by 38% from 2007 levels. By 2050, QuadReal aims to reduce its carbon footprint by 80% from 2007 levels.

Any way you slice it, that's very impressive.

QuadReal provides two case studies in their presentation:

You might be wondering why is QuadReal focusing so much on sustainability. The short answer is it respects BCI's commitment to responsible investing and it makes great long-term business sense.

For example, QuadReal’s redevelopment of the former Canada Post building in downtown Vancouver is taking shape, with two office towers expected to begin rising shortly above the podium:
The two 21 and 22-storey office towers will be occupied by Amazon Canada, a major vote of confidence in B.C.’s tech sector. Once Amazon’s offices at The Post are occupied, the company will be the largest corporate tenant in downtown Vancouver with a total of 1.5 million square feet of space.

The tech giant already has office space at Bentall Centre (WeWork), The Exchange Building and TELUS Garden. Amazon will also be moving into the recently completed 402 Dunsmuir office building across the street from The Post.
So, Amazon is poised to be largest corporate office tenant in downtown Vancouver and QuadReal (and others) will reap the benefits.

Amazon recently launched a $2 billion fund to advance technologies that will cut down greenhouse gases. The fund will help Amazon and other companies adhere to The Climate Pledge initiative it started in September 2019. That pledge committed the company, and others that sign onto it, to becoming carbon neutral by 2040.

In order for Amazon and other large corporations which signed that pledge to become carbon neutral by 2040, they need to make sure they are leaqsing office space at green-certified by BOMA BEST or LEED buildings.

Now you're understanding a little why QuadReal and other real estate divisions at Canada's large pensions are focusing on sustainability so much. Those that don't will be left behind, it's that simple.

The demand for green-certified buildings is only going to grow as companies look to reduce their carbon footprint, so pensions that are not doing enough to focus on sustainability will face major risks going forward.

That being said, QuadReal is taking a proactive stance and has done a great job explaining this Green Bond Framework. Kudos to Dennis Lopez and the entire team at QuadReal for launching this framework and having Sustainalytics review it and give its opinion. That's the right way to do it.

Below, Nada Sutic (Waterloo B.E.S. Environment and Resource Studies '03) is the Director of Sustainability for Bentall Kenedy, Canada's largest Real Estate Management firm. In this video, Nada talks about her work at Bentall Kennedy and how her degree from ERS has helped her in her career.

Bentall Kennedy used to manage BCI's massive real estate portfolio before QuadReal was formed in 2016. I like this clip because she explains well how her degree in environmental and resource studies helped her in better managing these properties with a focus on sustainability.