ESG Risks and Opportunities in Affordable Housing Investments

Originally published by UN PRI. 

Author: Lenora Suki, Head of Sustainable Finance Product Strategy, Bloomberg LP

The PRI’s Fixed Income Case Study series highlights examples of interesting and innovative approaches to responsible investment. Written by fixed income practitioners from around the world, the case studies cover topics such as integrating ESG, negative and positive screening, thematic investment and engagement.

WHY DO ESG ISSUES MATTER FOR AFFORDABLE HOUSING?

The investment opportunity of affordable housing, especially in emerging markets, is massive: the McKinsey Global Institute estimates1 that construction investments of between US$9 trillion and US$11 trillion will be necessary by 2025 to replace today’s substandard housing and build necessary additional units, and that an additional US$16 trillion will be needed for land. The growth of green bonds is further stimulating interest in socially-themed fixed income investments, including in sustainable affordable housing.

However, prominent examples of default, including in Brazil, China and Mexico, demonstrate risks for investors.

Continue reading the full case study here.