ESG practices in the Swiss real estate market: new evaluation of 128 investment vehicles

The Center for Risk Management at Lausanne (CRML) at HEC Lausanne (UNIL), in collaboration with Quanthome SA, has published the latest results of its tool for assessing the ESG criteria of Swiss real estate funds: PRESS scores (Public Real Estate Sustainability Switzerland). Since last year, the methodology has evolved to extend coverage to more than 20,000 properties, representing some 200 billion Swiss francs.

Switzerland’s real estate sector, responsible for almost 40% of the country’s energy consumption (source: Swiss Federal Office of Energy), is central to achieving global sustainability goals by 2050. In 2023, the CRML at HEC Lausanne launched the PRESS scores with Quanthome SA and the financial support of Banque Cantonale Vaudoise and University of Lausanne. This assessment now covers 128 investment vehicles, compared with 41 previously. In addition to the listed funds, it now also includes most non-listed funds, foundations and real estate companies, as well as new indicators.

The new PRESS score metrics include analysis of green spaces around buildings and commercial buildings accessibility, evaluation of real estate reinvestment to estimate renovation rates, and an indicator of geographic and administrative risk diversification. Textual analysis of annual and sustainability reports was reduced in the final score.

Prof. Eric Jondeau and Dr. Nathan Delacrétaz, researchers at the CRML, at HEC Lausanne, commented: “The 1st version of the PRESS scores attracted a lot of interest from investors and very positive feedback. These improvements in the 2nd version reflect our commitment to providing accurate and comprehensive ESG assessments – environmental, social and governance criteria – for in-depth analysis”.

Analysis of results and trends
Due to the diversity of investment vehicles in each category, the scores do not show significant differences between categories. However, several trends stand out: companies and foundations produce around 2kg CO2/m2 less than funds, although this difference remains marginal. Non-listed funds reinvest less in renovation than other types of vehicle.

Real estate companies stand out for their greater accessibility to residential areas. They show higher rents, as do foundations, which invest less in social buildings. Non-listed funds and companies are more exposed to administrative risks, while foundations show better geographical diversification. When it comes to communicating and ratifying sustainability treaties, investment funds clearly outperform.

Updates and future developments
PRESS scores are available for free on the CRML website. They are updated every six months.

An ESG index is currently being developed to facilitate the use of scores by investors.