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Decarbonizing Real Estate:

Raphael Mertens on PIMCO Prime's Path to Net Zero

Allianz SE | Munich | Feb 10, 2025

We sat down with Raphael Mertens, Chief Sustainability Officer at PIMCO Prime Real Estate, to learn how the firm has developed robust expertise in selecting and transitioning assets as it aims to enable one of the world’s largest real estate portfolios to achieve net zero emissions by 2050.

Raphael, thanks for taking the time to talk. A broad question to start: why is it important for PIMCO Prime to focus on decarbonization?
Raphael Mertens, Chief Sustainability Officer at PIMCO Prime Real Estate
Raphael Mertens: Thanks for having me. The real estate sector accounts for approximately 40% of global greenhouse gas (GHG) emissions1, making its decarbonization both challenging and crucial. With around 70% of these emissions stemming from building operations2, significant reductions can be achieved relatively quickly by refurbishing and updating existing buildings, particularly in terms of energy use and efficiency.
What steps is PIMCO Prime taking to address this challenge?
Raphael Mertens: As a leading global real estate investment manager, PIMCO Prime has developed significant expertise in sustainable operations. Since 2018, we've been focused on transitioning assets in one of the world’s largest global real estate portfolios towards net zero by 2050. To facilitate this, we’ve created a global sustainability framework that systematically assesses portfolios and develops tailored paths to net zero for individual assets at various stages of their investment cycle. This expertise has enabled us to assist approximately 50 clients in their ambitious goals to achieve net zero by 2050.
Let’s dive deeper into the process. Can you give a bit more detail about how PIMCO Prime supports its clients’ sustainability goals?

Raphael Mertens: To support our clients’ goals, we actively adapt to tenant expectations, local legislation, and carbon taxation policies. We follow a Sustainability Framework, which is designed to be adaptable and provides a comprehensive action plan that includes:

  1. Evaluation: Conduct asset and partner due diligence, collect data, and determine climate-related risks.
  2. Enhancement: Implement smart building programs, deep retrofits, and on-site renewable energy installations to maximize decarbonization.
  3. Engagement: Run tenant and partner engagement programs to promote sustainable best practices and implement a global green lease framework.

This framework ensures consistent assessment across all assets, regardless of location, and tailors strategies to measure impact and enhance performance based on specific client mandates.

What are some of the key steps you take to help with implementation?

Raphael Mertens: We’ve delivered initial successes through a combination of dedicated asset-focused CAPEX and a program of introducing smart features and green energy solutions into standing buildings. Understanding a building’s energy efficiency is the first step in reducing emissions, allowing for effective planning and progress measurement. PIMCO Prime employs a “no regrets” approach, typically involving the use of renewable energy while enhancing a building’s energy efficiency to modern standards.

Our key implementation steps include:

  • Energy Monitoring: Deploy environmental data management platforms and smart meter systems to inform decisions.
  • Efficient Operations: Conduct energy audits and implement energy management solutions for systems like HVAC and lighting.
  • Renewable Energy Procurement: Engage tenants to adopt green practices and install on-site renewable energy sources such as wind turbines or photovoltaic panels.
What successes have you notched since implementing these strategies, and what does the future look like?

Raphael Mertens: This approach has proven effective. By 2022, PIMCO Prime already achieved its interim goal of a 25% reduction in CO2 emissions by 2025, in line with the early version of the Carbon Risk Real Estate Monitor (CRREM) pathway, and we are currently on track to meet the stricter CRREM V2 pathway. This success has been driven by the implementation of remote energy monitoring in 87.4% of its portfolio and the switch to renewable energy in all landlord-controlled areas.

That being said, the next five years will be critical as redevelopment programs are completed and new assets are acquired with clear plans to meet their CRREM targets.

To learn more about PIMCO Prime's approach to sustainability and read about some compelling Use Cases, please visit our website.

A leading global real estate investor and manager, PIMCO Prime Real Estate is a subsidiary of PIMCO and part of the PIMCO real estate platform, focusing on the Core and Core+ segments of the market and managing the Allianz Group’s c.$93B real estate mandate.

We manage a global investment portfolio of over $97B AUM, with an international team of almost 450 employees working in 16 offices in Belgium, China, France, Germany, Italy, Japan, Singapore, Spain, Sweden, the UK and the U.S.

PIMCO’s real estate platform is one of the largest and most diversified in the world, with c.$183B[1] in assets and a broad set of solutions that leverage decades of expertise across public and private equity and debt markets.

1. UNIP FI: Climate Risks in the Real Estate Sector – United Nations Environment – Finance Initiative (unepfi.org)

2.  Using AI to decarbonize buildings | McKinsey and 40% Of Emissions Come From Real Estate; Here’s How The Sector Can Decarbonize (forbes.com)

Further information

Sustainability
Sustainability at Allianz
PIMCO Prime Real Estate

About Allianz

The Allianz Group is one of the world's leading insurers and asset managers with around 128 million* private and corporate customers in nearly 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 776 billion euros** on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage about 1.9 trillion euros** of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are among the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2024, over 156,000 employees achieved total business volume of 179.8 billion euros and an operating profit of 16.0 billion euros for the group.
* Including non-consolidated entities with Allianz customers.
** As of December 31, 2024.

Cautionary note regarding forward-looking statements

As with all content published on this site, these statements are subject to our cautionary note regarding forward-looking statements:

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