the challenge

PERIAL AM manages an Article 8 real estate fund with a portfolio of assets exclusively dedicated to healthcare (clinics, nursing homes, etc.) and hotels. In light of recent developments, the fund has sought to strengthen its understanding of ESG risks, with a particular focus on social risks. The aim is threefold:

• To map and manage its social risks (taking into account the diversity of its assets and geographies)
• Define performance indicators to monitor improvement trajectories by asset and at fund level
• Set up its processes and procedures with a view to the planned SRI labelling project.

Ksapa supported the fund management team and the CSR & Innovation department in improving control of social risks by identifying relevant objectives and indicators to support the fund’s social risk management approach. As the fund was already defined, the aim here was not to (re)define the fund’s strategy, but to update the monitoring procedures and strengthen the analysis, understanding and expectations of social issues – while limiting the roles and responsibilities of everyone involved in managing a property fund.

Ksapa’s expertise was essential in building the fund’s social objective. Their understanding of the multi-stakeholder real estate sector also made it easier to get the teams on board and mobilise them around new and complex issues. Their rigorous yet realistic approach was perfectly suited to our needs, while meeting the project’s very tight deadlines.

Anne-Claire Barberi, CSR & Innovation Director

OUR APPROACH

To ensure that the project was properly understood and implemented, it was essential to include all the stakeholders involved and impacted by this work at an early stage: asset managers, property managers, tenants and ESG business lines. To ensure that the project ran smoothly, the strategies, roles and responsibilities of each party had to be carefully considered in order to :

• Limit social risks in asset management while
• Respecting everyone’s boundaries, and not asking customers to go beyond their role as investors.

This work, which was highly operational in terms of ensuring the proper integration of assets already in the portfolio, took place around two key milestones:

1. Exploration of the available data on assets in terms of social issues, following the prioritisation of material and cross-cutting social risks in particular – including issues of dignity and the social quality of accommodation;
2. Based on the data collected, identification of indicators and development of a social performance grid – taking into account the considerations of the assets and stakeholders associated with the project.

This two-stage process gave the asset and property management teams access to methodologies and expertise that will be directly transferable to the roll-out of this programme, as well as to other funds and other internal projects in the future.

RESULTS & NEXT STEPS

The working methodology proposed will enable the fund to comply with the SFDR regulatory requirements for an Article 8 fund, ensure that the management teams are not caught out on social risks, identify the PAIs (principal adverse impacts) linked to human rights issues in their investment universe and strengthen their ability to reduce social risks.
The definition of social indicators, the development of a social performance grid specific to material social risks enabling both the social trajectory of an asset (out of 100) and that of the fund to be monitored, has made it possible to establish an ambition for the fund’s social performance to 2030.
This collaborative work has helped to align the importance of looking at these issues, not only as part of a compliance exercise but also beyond.