Realdania intensifies mission-related investments
A series of new investments by Realdania has increased the commercial investments while also supporting the association's philanthropic goals and mission.
Realdania's work on corporate social responsibility and sustainability includes an objective to increase the proportion of mission-related investments. In other words, investments that generate financial returns to fund Realdania’s grants for projects and initiatives, and that support our philanthropic goals and mission.
A number of new commitments will now increase the volume of investments in which financial returns and philanthropy go hand in hand. Over the next couple of months, Realdania expects to have made commitments for mission-related investments totalling about DKK 500 mill.
"The returns from our commercial investment assets form the foundation of our philanthropic work. Having a growing proportion of these investments to support our philanthropic goals, and the selected sustainable development goals they are part of, means that we can make an even greater philanthropic impact. This is both important and very positive,” said Nina Kovsted Helk, philanthropy director at Realdania.
Realdania invests part of its commercial investment assets in two funds that invest in companies working with new technologies in the building and property sector. These may be digital solutions that, in different ways, make construction more efficient, for example by reducing errors and wastage, thereby steering construction projects in a more climate-friendly direction. Some of the investments are in line with the association's philanthropic goal to promote healthy, efficient and sustainable buildings and construction.
Kenneth Lillelund Winther, CIO at Realdania said:
“In 2020, we began building up a portfolio of this type of mission-related investment, whereby we place demands on both financial and philanthropic returns. After this tentative start in 2020, with one investment, we’ve intensified activity considerably in 2021.”
Realdania's goal is to have more than DKK 1 bn. in mission-related investments before 2026, when the current investment strategy will expire. However, it takes time to build up the portfolio, explained the CIO.
"We place great demands on our mission-related investments. They must generate financial returns on a par with our other commercial investments. But they also have to support our mission and goals; meaning one of our philanthropic goals, or one of the UN sustainable development goals our philanthropic work contributes to. So there’s less room to manoeuvre than for impact investments, for example, and finding investments that meet our narrower definition is very demanding. However, it makes most sense for us to focus on the foundation and mission we already have for our philanthropic work,” said Kenneth Lillelund Winther.
The returns from Realdania’s commercial investment assets are the basis for our philanthropic work and annual grants for projects and initiatives throughout Denmark. Since the start of our philanthropic work in 2000, the association has granted an average of about DKK 1 bn. annually for development of the built environment. Projects range from initiatives by local enthusiasts, to urban development projects, to larger national initiatives such as for a better indoor climate in schools and for housing communities for the elderly.
“Mission-related investment is one of several initiatives we’ve taken over the past couple of years to become an even more socially responsible investor. We’ve also followed the Global Compact and disposed of shares in tobacco companies. Furthermore, we’ve acceded to the Tax Code of Conduct introduced by some Danish pension funds and foundations,” said Kenneth Lillelund Winther.
The Realdania investment strategy is long-term and it aims at both generating the best returns and protecting equity so that there is also funding for philanthropic work for future generations. The association usually makes investments through external capital managers and in foundations with other investors.
Examples of Realdania's mission-related investments
- Investments that support energy-efficiency improvements aiming to reduce carbon emissions.
- Investments in Venture Property Technology. Focus on digitisation and new solutions within the built environment that can contribute to greater efficiency and reduce waste and errors in building projects, for example.
- Investments in listed shares that contribute to the six UN sustainable development goals in Realdania's philanthropic strategy. This could be shares in companies which contribute to reducing carbon emissions at global level.