In institutional investment, the tilt towards sustainability has created an interesting challenge for many private markets fund managers: finding and hiring the right people. The world of private real estate is no exception.
The solution has been to innovate to find staff internally and also be bold in the search for skills outside of the industry.
For many, the search for the best ESG team has come from hiring inside the existing employee base. Identifying these talents has often been through individuals’ own determination to get involved in the ESG element of their company’s strategy. These are often investment managers that have applied environmental considerations and social programmes in their developments, even before the need was formalised.
This has sometimes led to investment team members voluntarily taking on roles in ESG on top of their everyday activities. Rob Sim, managing partner at private equity real estate firm Europa Capital, gives an example. “Our head of people and culture has really taken the lead on how much more we can do as an organization and on how we can engage with Sheffield Hallam University and Uptree on helping students get placements or experience at other organisations,” he says.
Aviva’s employees also step up to tackle ESG duties themselves, explains Ed Dixon, head of responsible investments. “What we are increasingly seeing is people taking on ESG topics, but off the side of their desks. Two of our core asset managers have taken responsibility for running a smart buildings programme,” he says. “They don’t have an ESG background, but they have the core investment knowledge which helps drive an ESG investment.”
For other large organisations, assessing what skills their teams already have and what skills can be developed is key. Helen Gurfel, head of sustainability and innovation at CBRE Investment Management, says her firm’s first steps began with an engagement initiative targeting its own employees.
“We launched an internal Sustainability Knowledge Hub, which collates a range of content and educational materials to accommodate various learning styles and knowledge levels. The Sustainability Knowledge Hub is available to all 1,000 CBRE employees worldwide via the corporate intranet,” says Gurfel.
Leading from the top
Hines developed its team around senior staff Daniel Chang, Mike Izzo and Peter Epping, who had demonstrated their knowledge of ESG. Once that was done, “we could hire people from the market and bring in people internally”, says Mary Edmunds, senior managing director for HR.
“One of our challenges was finding out who has a background that we need to know about. So we used our data and research to ensure people had the opportunity to apply for these jobs,” says Edmunds.
CBRE and Hines may have approached the issue from different starting points, but each then created education and mentorship schemes that further develop the ESG skills in the workforce. Gurfel notes that her firm introduced a series of live sustainability-focused webinars for staff who want to engage and participate with colleagues across the organisation.
“We have also launched an internal sustainability ambassadors programme to help embed sustainability throughout the CBRE IM platform by integrating knowledge across functions, sectors and regions,” she says.
Sometimes the right candidate has had a foot in the ESG space for some time. For Hines, this was Chang, now European head of ESG, who had worked on ESG-related investments for years before the creation of the dedicated strategy. He added to his team, “looking for people with experience in ESG from a strategy side”, eventually hiring largely from ESG consultancies.
This has created a diverse team. “We have got quite a mixed group from a diversity and inclusion perspective, but that is just something that was natural and as equally important, to have different perspectives,” says Chang.
Widening the net
Smaller investment teams are also keen to hire from an external source, looking at very different backgrounds that complement the skills of those already onboard. Barry Jessup, managing director at UK-based developer Socius, says: “We have people who come from a variety of backgrounds: our head of engagement comes from a political background, in campaigning, and we have people who have a background in running marketplaces.”
“It is about the transferable skills, but it is also about having a genuine interest in people,” says Olaide Oboh, a director at the firm. “Everyone working in a real estate has not necessarily studied the usual subjects or come in via the traditional route. It is important that people hear that.”
Getting that message out is already happening, often through employees working as mentors and educators in schools and universities. A significant majority of companies are also promoting volunteering programmes and encouraging staff members to take time off to go and work in the local communities.
Socius points to one team member who slept on the streets in Bristol to highlight the problem of homelessness, as an example. Dixon believes Aviva’s investment team has volunteered an aggregate 900 hours in 2022 alone.This and similar efforts are likely to add to the skills and interest of staff in ESG concerns and will naturally deliver more candidates for ESG teams in the short term.
ESG teams are being built by bringing in the best from a variety of sources using the existing skills and interests of the staff in and related to the industry. It is proving effective and has quickly developed into teams that have delivered social and environmental impacts with high returns.
In the longer term, the prospects for even more effective ESG teams are good. More students and new team members are coming into real estate with a strong understanding of environmental concerns and a desire to help communities. The options for recruitment into ESG in the coming years are looking bright.