These results are according to two studies carried out recently by CBRE on Environmental, Social and Governance (ESG) which also found that more than 54 percent of investors want to change their portfolio strategy to ESG.
In the two reports in question, the “ESG Guide for Occupants: Environmental, social and governance agenda in the occupation of a property”, dedicated to occupants, and the “ESG & Real Estate: 10 key facts investors need to know”, aimed at investors, the real estate consultant identifies some ESG considerations that are important to real estate investors, as well as reviewing the latest trends, innovations and regulatory requirements in the industry.
“With ESG playing a more important role in the way companies operate, investors are beginning to incorporate ESG considerations into all phases of the property lifecycle, from due diligence to acquisitions, and from leasing to asset management”, CBRE told Idealista.
According to the consultancy firm, "there is growing pressure on owners, operators and occupants of buildings to reduce their carbon footprint". “'Green leases' between landlords and tenants to meet certain environmental objectives will become a more common tool for investors to monitor and boost the environmental performance of their real estate assets.” They adds, noting that "the gap between 'green premium' and 'brown discount' in leasing is widening".
CBRE also considers that "there is sufficient evidence that green buildings generate higher yields than comparable non-green properties, indicating considerable potential for a 'brown discount' in properties with a relatively lower environmental performance".
Cutting the carbon footprint
Noting that the construction industries are responsible for almost 40 percent of global annual carbon emissions and that cement and steel production each represent around 5 percent, CBRE concludes that “viable alternatives such as wood are more ecological, due to carbon sequestration”. “The costs of construction in wood varies according to the type of property, but, on average, they can be equal to or less than those of construction with conventional materials. Wood also offers greater cost stability and can significantly reduce construction time due to prefabrication”, the document reads.
Emphasis is also given to the fact that technology plays “a fundamental role in creating significant and lasting changes in investor practices and portfolios, improving the collection and communication of ESG data”.
For Cristina Arouca, Research Director at CBRE, "the considerations drawn from these studies will help corporate real estate leaders discover opportunities to advance towards a more sustainable future.These opportunities exist at every stage of a property's life, and can only be optimally achieved when coordinated across a broad spectrum of all stakeholders,” she concludes.
According to the World Green Building Council, buildings are currently responsible for 39 percent of global energy-related carbon emissions: 28 percent of the energy resulting from the building's use (heating, cooling and electricity) and the remaining 11 percent coming from materials and construction.