• Real Estate Best Practices: ESG Criteria  

    October, 2023

The real estate sector plays a vital role in championing sustainable development amid pressing environmental challenges. Embracing Environmental, Social, and Governance (ESG) principles has become imperative for stakeholders, fostering positive change and a sustainable built environment. This post explores ESG integration in real estate, focusing on a sustainable practice and the rise of green buildings. According to CBRE in its last research, 60% of the global investors have acquired ESG measures in their real estate investments and plan to implement these further.

1º. Sustainable development in real estate aims to minimize environmental impact, promote social well-being, and ensure economic viability. Key considerations include energy efficiency, water conservation, waste reduction, carbon footprint mitigation, and social inclusivity, leading to climate change mitigation and enhanced quality of life for occupants and communities.

2º. The Rise of Green Buildings: Green buildings are the foundation of sustainable real estate, adhering to strict environmental standards with a focus on energy efficiency, resource conservation, indoor air quality, and occupant comfort. Certifications like LEED provide a roadmap to achieve sustainable outcomes, bringing economic benefits such as reduced operational costs and increased marketability.

3º. ESG Integration in Investment and Financing: ESG integration is gaining traction in real estate investment and financing decisions. Investors and lenders assess the long-term sustainability and risk profile of assets based on climate resilience, social impact, governance, and regulatory compliance. By integrating ESG principles, they align their portfolios with sustainability goals and support projects committed to ESG values.

4º. Engaging Stakeholders: Successful ESG integration requires collaboration among developers, investors, occupants, policymakers, and communities. Robust partnerships enable the exchange of expertise and best practices, empowering the industry to confront challenges, innovate, and create positive societal and environmental impacts.

5º. Transparency and Reporting: Transparency is essential in ESG integration. Real estate companies must disclose sustainability performance and ESG initiatives. Reporting frameworks like GRI and SASB provide guidelines for transparent disclosure, enabling stakeholders to make informed decisions and hold entities accountable for their ESG commitments.

To give few data’s, 75% of the dwellings in European Union are not efficient and by 2030 to rent or sell these dwellings, they will have to pass the sustainability checks on emissions, on energy waste, etc. and from 2025 onwards, all dwellings should be graded between A (being the best grade) and G (being the worst). Real estate’s ESG focus hinges on sustainable development, green building initiatives, ESG integration in investments, and stakeholder engagement. Embracing these principles allows the sector to drive positive change, creating a built environment that embodies environmental stewardship, social well-being, and economic prosperity in an effort to guide the industry towards a future of sustainable innovation and collective responsibility.