OPTIMISATION AND AUTHENTIC ESG INTEGRATION
02
CORESTATE CAPITAL: OPTIMISATION AND AUTHENTIC ESG INTEGRATION WRITTEN BY
MARCUS LAWRENCE PRODUCED BY
BEN MALTBY
03
w w w.c o re st a te - c a pi ta l. com
C O R E S TAT E C A P I TA L G R O U P
Justus Wiedemann, Group Sustainability Officer at Corestate Capital, discusses the Environmental, Social, Governance practices that are being infused into the firm’s core functions as it delivers value through data-driven optimisation
A
s a leading independent investment manager for real estate in Europe, Corestate Capital
has experienced substantial growth in recent years. Since 2016, Corestate 04
has brought the total value of its assets under management (AUM) to €26bn, translating to a compound annual growth rate of 110%. This growth is matched by the scale of its Environmental, Social and Governance (ESG) ambitions. Intending to integrate its ESG framework into its operations, Corestate appointed Justus Wiedemann to lead the charge as Group Sustainability Officer. The reasons for Corestate’s ESG ambitions are clear. “Investors are increasingly keen to invest in progressive opportunities, particularly as the European Union (EU Green Deal) and United Nations (PRI) have laid out ambitious but vital frameworks for the development
05
w w w.c o re st a te - c a pi ta l. com
C O R E S TAT E C A P I TA L G R O U P
“ Value creation and trust are getting more and more important for our clients and the wider stakeholder group of employees, politicians and society as a whole” — Justus Wiedemann, Group Sustainability Officer, Corestate Capital 06
of sustainable societies, supply chains and economies,” says Wiedemann. ”From a market potential point of view, there is an apparent demand for authentic sustainable products.” Moreover, ESG criteria are becoming increasingly important for employees. Deloitte’s 2019 Global Millennial Survey found that 74% of those born between 1983 and 1994 would leave their company in the next five years if they hadn’t committed to environmental and social stewardship practices; an attitude reflected by wider consumer attitudes to sustainability in business. Wiedemann began his time at Corestate in the post-merger integration department. “When we started with ESG, it was part of our wider institutionalisation plan, which also includes reporting standards, compliance and governance on a group level,” he says. Until then, the company had strategically acquired along the value chain. “Corestate started as an asset and investment management firm, and has acquired property management firms such as CRM Students, which is a leading provider of student housing in the UK, a mezzanine financing firm, HFS which is the market leader in Germany,
CLICK TO WATCH : ‘CORESTATE CAPITAL MARKETS DAY 2019 – Q AND A SESSION CLIENTS’ 07 Austria and Switzerland, and a large
how we have optimised real estate
institutional asset manager, Hannover
assets along with reductions in utility
Leasing,” he explains. As a result,
consumption and carbon emissions.
Corestate now offers the whole invest-
In the end, we can manage on the
ment management chain for real estate,
ground each and every part of the
including financing, structuring, asset
investment value chain according to
management and property management.
our ESG strategy.”
“Out of our holistic view comes
As data forms the backbone of the
the strength of our ESG integration
company’s strategy, Wiedemann’s
approach,” says Wiedemann. “We are
background in project management
operatively capable of reflecting what
and data science is proving instru-
the EU wants in their Green Deal and
mental in the rollout of ESG principles
Action Plan on Financing Sustainable
across the company’s operations.
Growth, conforming ESG with sustain-
Particular emphasis is placed on
able investments to transparently show
buildings management. “Looking at w w w.c o re st a te - c a pi ta l. com
C O R E S TAT E C A P I TA L G R O U P
08 overall carbon dioxide emissions in the
By acting on the insights that data
EU, the highest polluting factor is real
provides, Corestate is able to amortise
estate buildings. 36% of CO2 emissions,
a part of the cost of building optimisa-
within the EU, come out of real estate,”
tion with funds saved through reduced
Wiedemann highlights. By comparison,
energy consumption. A key partner
manufacturing accounts for 25% of
for Corestate’s transformation is ESG
emissions. “We should all have a clear
software leader Measurabl. On this
focus on optimising buildings. We see
platform, with around 45,000 assets
enormous potential in that field because
from a global bank of asset managers,
we find so many opportunities that we
a digital twin of each of Corestate’s
gain through our data-driven approach.
property asset is created. Then
However, data is always just a vehicle
the platform is fed with utilities
that’s not an end in itself.” It does, how-
and emissions data from myriad
ever, enable operational optimisation
sources to maximise its capacity
on a scale not previously seen.
for buildings optimisation.
It then enables Corestate to bench-
world. As these cost drivers are gen-
mark its buildings’ performance
erally a result of utility management,
against their peer group of similar
addressing them with an approach
structures. By establishing benchmark
geared towards efficiency simultane-
scores through such means, Corestate
ously creates value and minimises
circumvents the traditional limits of
the environmental impact of each
depth imposed by the labour-intensive
building. Combining Measurabl’s
nature of data collection.
data with its own utilities and energy
The result, Wiedemann says, is the
consumption information, driven by
revelation of hidden cost drivers
the proliferation of data points such
across the Corestate portfolio, ena-
as smart meters, offers Corestate a
bling cost cutting and value creation
powerful capacity to enact changes
that would have been far more chal-
that empower both its financial bot-
lenging to realise in a pre-data driven
tom line and the environment.
E XE CU T I VE PRO FI LE
Justus Wiedemann Justus Wiedemann is Group Sustainability Officer at Corestate. He is responsible for the overall ESG framework as well as the operational integration of ESG criteria at corporate, product and asset levels. Prior to joining Corestate, Justus was a consultant in a digital and banking unit and an executive consultant within the automotive supplier industry. Justus earned a BA in International Business and Finance from DHBW Stuttgart, a BA in International Accounting from the University of South Wales and an MSc in Management and Economics from Zeppelin University, where he wrote his master’s thesis on machine learning in conjunction with WHU – Otto Beisheim School of Management.
w w w.c o re st a te - c a pi ta l. com
09
C O R E S TAT E C A P I TA L G R O U P
11 Wiedemann adds that the increased digitalisation of energy data collection in Germany also offers an opportunity for improved vendor management. “We have started a group-wide process with major German operational cost advisory Westbridge to tender out our complete energy consumption of all of our managed assets,” he says. “We will then be left with a very consolidated vendor market, making it much easier to go ahead with smart metering at scale. If you have 33 fragmented energy vendors, you end up with 33 dif-
“ Looking at overall carbon dioxide emissions in the EU, the highest polluting factor is real estate buildings. 36% of carbon dioxide emissions, within the EU, come out of real estate. We should all have a very clear focus on optimising buildings” — Justus Wiedemann, Group Sustainability Officer, Corestate Capital
ferent hardware components to install.” w w w.c o re st a te - c a pi ta l. com
C O R E S TAT E C A P I TA L G R O U P
12
“ Data is always just a vehicle that’s not an end in itself” — Justus Wiedemann, Group Sustainability Officer, Corestate Capital
In a consolidated market with fewer vendors to consider, the amount of data noise is reduced significantly, offering higher quality data that elucidates multifaceted opportunities for optimisation. “Seeing what’s happening in each of our buildings on such a granular level is an immense advantage because we’re not in the dark about possible energy waste anymore,” enthuses Wiedemann. Outside Corestate’s focus on the environment, it is also fostering social change. One broader issue in this area that Wiedemann highlights is the lacking representation of women in management across Germany. Corestate is therefore committed to expanding the representation of women in top-level management, a figure which, according to Wiedemann, stands at only 14.7% in German DAX 30 w w w.c o re st a te - c a pi ta l. com
13
C O R E S TAT E C A P I TA L G R O U P
“ ESG is an imminent component of investing which creates value; it’s a holistic and brighter view that is more fitting for today’s and tomorrow’s world” — Justus Wiedemann, Group Sustainability Officer, Corestate Capital
companies. “Our goal is to attract, retain and develop talented women. As one of the first measures, we have become a sponsoring member of the Fondsfrauen association — a German initiative with over 2,000 female members — the majority of whom hold senior-level positions in the finance industry.” Fondsfrauen offers a mentoring programme which Corestate Women can leverage, providing the opportunity for training, networking and growth, and equipping female
2006
Year founded
€204.4mn Revenue in (2018) euros
730
Number of employees
employees with the tools to progress
becoming more and more important
within the organisation.
for our clients and the wider stake-
Wiedemann’s passion for these
holder group of employees and
strategies, and indeed those beyond
society as a whole,” he says. “ESG is
the scope of this profile, is glaringly
an imminent component of investing
evident. It is important, he says, for
which creates value; it’s a holistic and
businesses not only to adopt envi-
brighter view that is more fitting for
ronmentally and socially progressive
today’s and tomorrow’s world.”
initiatives but to do so authentically, as it cannot be a simple box-ticking exercise done to reflect the sociopolitical climate of the modern day. “Value creation and trust are w w w.c o re st a te - c a pi ta l. com
15
Friedrich-Ebert-Anlage 35-37 60327 Frankfurt am Main Germany T +49 69 35356300 www.corestate-capital.com