Considering ESG integration, an advantage relevant to private real estate markets but not equities and fixed income is most likely:
Correct Answer: C
In ESG integration, private real estate markets have specific characteristics that differ from equities and fixed income. One of the key distinctions is the framework used for sustainability assessment and reporting:
Majority ownership (A): Majority ownership is not unique to private real estate markets; it can also be relevant to equity markets, particularly in cases of private equity investments or controlling stakes in public companies.
Coverage of assets by ESG rating agencies (B): ESG rating agencies cover a wide range of asset classes, including equities, fixed income, and real estate. While the extent of coverage and focus may vary, it is not a distinctive advantage unique to private real estate markets.
Adherence to the Global Real Estate Sustainability Benchmark (GRESB) rather than the Sustainability Accounting Standards Board (SASB) framework (C): The GRESB is specifically designed for assessing the sustainability performance of real estate assets and portfolios. This benchmark provides a comprehensive framework tailored to the unique aspects of real estate, such as energy efficiency, water usage, and building certifications. In contrast, the SASB framework is more general and applies to a broad range of industries, including equities and fixed income. Therefore, the adherence to GRESB is an advantage particularly relevant to private real estate markets and not typically applicable to equities and fixed income.
References:
Global Real Estate Sustainability Benchmark (GRESB)
CFA ESG Investing Principles
Sustainability Accounting Standards Board (SASB)