As demand for mandatory ESG reporting grows, the commercial real estate sector is pivoting toward sustainability.
The CSRD is one of a number of complementary EU frameworks driving compliance in reporting, due diligence and impact management from the Green Deal to the Taxonomy. Jurisdictions from China to Brazil, Japan and the UK are mandating that companies demonstrate their understanding of, and report on, the risks to their business from climate change.
As Tom Hoban, president and chief investment officer at real estate investment group Kitson & Partners, says” while customers may not always be willing to pay a premium for green buildings immediately, the long-term value of these assets is undeniable.” Over time, markets tend to reflect the fair value of energy-efficient buildings as cost savings and lower risk profiles become more apparent to investors and tenants alike.
Green-certified buildings with robust ESG credentials are perceived as lower-risk assets. They are not only better protected against climate-related damages but also tend to have lower insurance premiums due to their resilience. As climate risks rise, insurers are adjusting premiums to reflect the long-term sustainability and risk mitigation measures of buildings.