Take responsibility for
tomorrow

In order to comply with Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosure requirements in the financial services sector (the ‘Disclosure Regulation’, ‘Sustainable Finance Disclosure Regulation’, or ‘SFDR’ for short), the KanAm Grund Group has realigned the LEADING CITIES INVEST mutual real estate fund (ISIN DE0006791825) in compliance with Article 8 SFDR. This was preceded by the ‘LEADING CITIES INVEST goes green’ initiative launched in 2018, which created the necessary organisational conditions for this at both fund-manager and fund level in recent years.

The SFDR is intended to provide (potential) investors with better information about the sustainability of financial products. It is therefore also aimed at real estate capital management companies and their fund products.
 
In order to further specify the transparency requirements of the SFDR, the European Supervisory Authorities (ESAs) have developed proposals for so-called ‘Regulatory Technical Standards’ (RTS). The EU Commission developed a Delegated Regulation on 6 April 2022 based on these proposals. Delegated Regulation (EU) 2022/1288 supplementing the SFDR with regard to regulatory technical standards was published in the Official Journal of the EU on 25 July 2022 and has been in force since 1 January 2023.  From this date, the requirements of the Delegated Regulation – in addition to the requirements of the SFDR to be observed since 10 March 2021 – are required to be implemented in practice. 
The most important obligations arising from the SFDR can be divided into three categories: Disclosure obligations on the website, in pre-contractual information and within the regular reporting. A further distinction must be made here between the disclosure obligations at company and product level and between the various products. 
  
In addition to the requirements of the SFDR, further regulatory and private sector initiatives are to be expected, particularly with regard to the classification of financial products as ‘sustainable’. 
 
On the one hand, this concerns the legal requirements that regulate the sale of financial products (notably MiFID II). In future, more far-reaching changes will apply here, according to which, among other things, customers will be asked about their ‘sustainability preferences’ when receiving investment advice. Which financial products then meet the requirements for any ‘sustainability preferences’ expressed by the customer is also newly regulated and is based on the SFDR system (without, however, adopting it in full). These sustainability-related sales requirements are required to be observed in fund sales (investment advice) from 2 August 2022. All ‘Art. 8 products’ in accordance with the requirements of the SFDR that meet these marketing requirements are also referred to as ‘Art. 8 plus products’.
 
In addition, well-known German associations, including the BVI, have formed various categories of product groups for the purpose of selling fund products, which are intended to make it easier for investors to classify funds in connection with the issue of sustainability (the so-called association concept). The association concept is coordinated with the German Federal Financial Supervisory Authority (known as BaFin). In accordance with this concept, which is not legally binding, there will in future be different product categories in the fund sector in the context of sustainability: the ESG strategy product, the basic fund and the non-sustainable fund. There are also products that can be aimed at clients with sustainability-related objectives as defined by the new MiFID II requirements. According to the draft of this ESG target market concept, the individual categories must fulfil different requirements. 

The KanAm Grund Group will continually orient itself in line with the current legal and private-sector requirements and publish which product category of the SFDR is fulfilled for the various real estate funds.

The KanAm Grund Group has seen itself as a responsible market participant since it was founded more than 20 years ago: It is deeply rooted in our corporate culture, our guidelines and our business model. From the very beginning, we have fostered team-oriented, open collaboration between all managers and employees with a flat hierarchical structure and high levels of motivation, tolerance and professionalism at our headquarters and in our international offices. It goes without saying that the KanAm Grund Group observes the BVI Code of Conduct in all processes for managing investment funds in the exclusive interests of investors and market integrity. KanAm Grund has also signed the UN Principles for Responsible Investments (PRI) and is thus committed to integrating ESG factors into its investment analysis and decision-making processes. In managing the assets entrusted to us, we act exclusively in the interests of the investors. We exercise their rights independently. We welcome state monitoring of this legal obligation. Our success is the success of our investors. Not only excellent returns but also risk diversification, liquidity and sustainability are very important here. We provide both small and large investors with equal access to all investment markets. We also offer targeted solutions for funded pension provision. Sustainability, from an economic, environmental and social perspective, determines our actions when selecting real estate investments. You can view the details of the sustainability-related aspects of the investment strategy for the individual funds on the website for each product, for example, for LEADING CITIES INVEST here.

Sustainability as part of our fiduciary duty
It is important for all KanAm Grund Group companies that we, as an international real estate group, make a positive contribution to society in general and to our investors, employees, and business partners in particular. More than that, our fiduciary duty requires us to take all necessary measures to ensure that the properties we manage retain their value in the future. Acting sustainably and taking responsibility for the investment success of our investors are therefore inextricably linked for us. 

Sustainability team implements sustainability goals:
At KanAm Grund Group, the in-house sustainability team has been actively working on the strategy and implementation of sustainability goals for years. The team consists of members of the management as well as directors and employees from all specialist areas and therefore enjoys a high status within the company. This has created an important anchor point within the company for defining, managing and advancing sustainability goals, which also includes active participation by company representatives in the working groups of the BVI industry association.

We rely on strategic energy procurement to promote renewable energy in our properties. Since 2019, we have been gradually transitioning the energy supply for common areas to a CO₂-neutral basis by entering into corresponding energy supply contracts. In Germany, electricity purchasing is specifically conducted through Power Purchase Agreements (PPAs) to ensure a direct and long-term supply of green electricity. Additionally, when acquiring new properties, we specifically look for sustainable energy supply and prefer properties with a high share of renewable energy.

Additionally, we encourage our tenants to join the framework agreement for the purchase of renewable energy. In the future, "green" contractual clauses will be increasingly integrated into new lease agreements and lease extensions to further promote the use of sustainable energy sources.

We are committed to increasing transparency and efficiency in the management of ESG data—particularly in the collection and analysis of consumption data in our properties. Using modern management tools, we proactively manage ESG data management and consumption monitoring processes with the aim of continuously improving data availability and quality. A centralized and consistent data collection at the property level forms the basis for a sound ESG assessment and allows for the targeted implementation of sustainable measures. 

To support a professional ESG performance evaluation, we are also examining the increased deployment of smart metering systems in selected fund properties. These systems enable computer-based measurement, determination, and management of energy consumption—a crucial prerequisite for effective control and optimization of the ESG performance of buildings.

Building certificates offer the opportunity to measure and compare sustainability criteria based on independent, established and recognised standards. The focus here is on the comprehensive assessment of a property from a social, environmental and economic perspective over its entire life cycle. Country-specific certification systems apply, depending on the investment location. There are now more than 600 certification systems around the world. The first certificate, which was the BREEAM certificate, was developed in the UK in 1990. This was followed during the 1990s by the US LEED certificate, the French HQE certificate, the Minergie certificate in Switzerland and the Green Star certificate in Australia, for example. In Germany, the certificate issued by the German Sustainable Building Council (DGNB) has become particularly well established since 2007.
 
KanAm Grund Group properties are certified by the following systems, among others: BREEAM, HQE, DGNB and LEED. A total of 22 properties worth around EUR 934 million are currently certified or in the process of being certified in LEADING CITIES INVEST. This corresponds to a certification rate of over 78 per cent in relation to the total real estate assets of LEADING CITIES INVEST.

KanAm Grund Group has been working in the sustainability space for more than a decade. For example, the KanAm Grund Group has been a member of the US Green Building Council since 2009. Since March 2020, KanAm Grund has been a signatory to the United Nations Principles for Responsible Investment (UN PRI), which are supported by the United Nations. As an international real estate company, we are proud to underline our strong focus on incorporating environmental and social issues as well as corporate governance into our corporate and investment process. In addition, the company joined the BVI guidelines for sustainable real estate portfolio management, which take into account economic, environmental and social issues at portfolio level and provide recommendations for sustainability considerations at portfolio level.

The KanAm Grund Group also participated in a green rating by GRESB (Global Real Estate Sustainability Benchmark) for the first time in 2020 with the LEADING CITIES INVEST open-ended real estate fund, achieving Green Star Status on the first attempt. GRESB is a globally recognised evaluation system for the sustainability performance of real estate portfolios. The notable advantage of the GRESB rating compared to the certification of individual properties – such as DGNB, LEED or BREEAM, for example, or group solutions provided by suppliers – is that GRESB can be used to neutrally measure the sustainability of entire portfolios.

The three companies in the KanAm Grund Group recognize the need for sustainable investment strategies and attach great importance to social responsibility as capital management companies for real estate funds and in the management of separate account mandates. The ESG Policy expresses our commitment to minimize negative impacts on sustainability factors and to act proactively to achieve positive outcomes for our clients, stakeholders and society. 
Click here for the KanAm Grund Group ESG Policy.