INTRODUCTION
More and more investors are integrating ESG considerations into their investment process. Given the large size and specialized nature of real estate assets, the investment community has demanded sophisticated tools to more accurately identify real estate companies that own more or less sustainable properties and integrate this information seamlessly into their investment process.
S&P Dow Jones Indices has collaborated with GRESB, a leader in evaluating ESG characteristics of real estate companies, to create the Dow Jones Select ESG Real Estate Securities Indices (RESI). The indices, which utilize data from GRESB, are designed to reflect the investment characteristics of conventional real estate benchmarks but with an improved sustainability profile, thereby providing a sustainable alternative to existing real estate offerings.
ABOUT THE INDEX SERIES
The Dow Jones Select ESG RESI are based on the Dow Jones Select RESI, a widely used listed real estate index series with approximately USD 34.5 billion of benchmarked assets. They also utilize GRESB’s widely followed real estate assessment, which incorporates property-level data that measure such criteria as energy and water usage, carbon emissions, and leasable area covered by green building certifications, offering a deep, specialized sustainability analysis for real estate companies. This is a key component of the overall ESG assessment each company undergoes. The series currently includes the regional headline indices shown in Exhibit 1.
Methodology Overview
The indices consist of all companies included in the conventional Dow Jones Select RESI except for those deemed non-compliant with the United Nations Global Compact (UNGC) principles, companies exceeding certain thresholds of involvement in gambling, alcohol, tobacco, adult entertainment, fossil fuels, and controversial weapons, and those identified by S&P Global’s Media & Stakeholder Analysis (MSA) as involved in an ESG controversy. The impact of exclusions is typically relatively small, given that real estate companies tend to have limited involvement in these business activities. In fact, following the Sept. 30, 2022, rebalance, no companies were excluded from the Dow Jones Global Select ESG RESI.
