Pricing ESG Equity Ratings and Underlying Data in Listed Real Estate Securities

Dirk Brounen, Gianluca Marcato and Hans Op ’t Veld
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Dirk Brounen: Department of Economics, Tilburg University, 90153 Tilburg, The Netherlands
Gianluca Marcato: Department of Real Estate and Planning, Henley Business School, University of Reading, Reading RG6 6UD, UK
Hans Op ’t Veld: PGGM Investment, 3700 AC Zeist, The Netherlands

Sustainability, 2021, vol. 13, issue 4, 1-20

Abstract: By analyzing the adoption of the European Public Real Estate Association’s (EPRA) Sustainability Best Practices Recommendations (sBPR), we examine and discuss the application of transparent environmental, social and governance (ESG) ratings and their interaction with public real estate performance across European markets. Due to increasing concerns about the environment and the impact of investment on society at large, public property companies have made significant progress in improving transparency and enhancing the protection of shareholder value by sharing and reporting ESG best practices. We explore and review the EPRA sBPR database, which is highly useful for investors who are already screening listed real estate companies. Hence, in this project, we carefully study the diffusion process of this new ESG metric as a tool to enhance informational transparency regarding public real estate investment management and assess the effects of this transparency and ESG performance for the real estate stock returns. We find evidence of a sustainability premium that investors are willing to pay to access companies with better sustainable ratings.

Keywords: ESG; real estate companies; ratings; sustainability; energy efficiency (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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