Green Urban Development: The Impact Investment Strategy of Canadian Pension Funds

Abstract

This paper investigates the investment strategy that large Canadian pension funds implement in the private real estate market. Even though they manage just 6% of global pension assets in our data, Canadian pension funds are responsible for 60% of the total value of direct real estate deals involving a pension fund. Their portfolio strategy combines global asset diversification with a local impact strategy that consists of internally developing and greening urban properties. Using a common benchmarking methodology across funds, we show that this strategy delivers superior performance net of fees and drives the green development of major city centers.