Sustainability disclosures: the changing nature of real estate

You can’t hide from data and, increasingly, requirements on the commercial sector to provide more information about sustainability are coming from investors, staff and governments


  • Helen Parton

22 November 2022

Plant surrounded by colourful mirrors

Illustration by Ibrahim Rayintakath

“If you ask me which stakeholders are driving these disclosures, it is the capital market and investors, where the money comes from,” says Susanne Eickermann-Riepe FRICS, chairwoman of both the RICS European World Regional Board and the ICG Institut in Germany.

“I can tell you from experience that if you need financing for your building, the first thing they will ask you at the current stage is what kind of energy you use and what your EPC rating is. And if you are not able to provide information on energy consumption or rating, you will not get any financing or only expensive financing,” she adds, pulling no punches. 

Sustainability disclosures finally seem to be at the cusp of formalisation. In April 2021, the EU released a  Corporate Sustainability Reporting Directive (CSRD)  to enhance the coverage and reliability of sustainability of data in this area. The CSRD will come into effect next year.

Across the Atlantic, in May – after prolonged resistance – the US Securities and Exchange Commission (SEC) decided to propose a new set of rules on climate-related disclosures to provide greater transparency for investors. Co-founder and managing director of London-based sustainability services company Evora Global, Chris Bennett believes that it was an overdue move.

“There’s a demand from real estate investors for stronger data and a deeper understanding of climate risk,” he says.  “This is in part due to legislation and also the belief that more environmental legislation is on the way. European legislation is impacting the rest of the world. We speak to investors in the US who come to us wanting help as they need to access funds based in Europe.”

Reporting on sustainability

Jean-Eric Fournier FRICS oversees RICS France’s environmental programme group. Since 2009, he has also been chief sustainability officer at Covivio, a real estate investment trust company which works in the office, hotel and residential sectors. As such he has overseen sustainability reporting for more than a decade.

“Social and environmental reporting has been mandatory under French law since 2001,” he says. “And since then, topics such as the fight against climate change, energy performance and biodiversity are increasingly being explored.”

As for which stakeholders are behind this move towards sustainability disclosures, Fournier confirms Eickermann-Riepe’s claim but adds: “There’s more demand from banks and from shareholders but really the entire value chain, from the tenants to the financial market, everyone is demanding it. Another important aspect is also employees, since an increasing number of people, especially newcomers in the employment market, are interested in CSR. Many of them consider it as an important part of their decision when choosing their company.” 

Not all governments have been as pro-active about making the case for CSR. JLL’s Milan-based head of building consultancy, Federica Saccani MRICS says: “In terms of disclosures Italy is a little bit behind, investors are applying international codes.” She believes that these priorities will increasingly be part of the valuation and surveying sectors but that to do this effectively will require additional training and awareness.

How real estate is valued

Seweryna Afanasjew MRICS, chairwoman of the RICS Advisory Board in Poland concurs. She is asset management head at GTC SA, a real estate investor and developer that focuses on Poland, Central and Eastern Europe (CEE). “The big discussion right now is for the valuers. All these changes will have a huge impact on how real estate is being valued and how that is changing. Valuers will have a crucial role in this whole process. They will have to really have good additional knowledge and experience.”

Afanasjew says that in Poland “We are similar to other countries. Maybe we have a little bit of a better situation because the real estate market is quite new, the majority of our offices and shopping centres have been built within the last 15 to 20 years, that might be an advantage. But, on the other hand, I can see that there are countries like the Netherlands or France which have much stronger legislation on a local level than the European Union is providing right now. That is not the case in Poland or in other CEE countries.” 

By contrast, older building stock is more of an issue for the likes of the UK, Germany and Italy. “A new project is able to absorb the costs [of sustainable elements] in construction but, with a refurbishment, the costs have to be phased in over a longer period of time. Investors have to balance the cost of benefits of doing that,” says Federica Saccani.  

“We have to be aware that it is not enough to have a BREEAM or LEED certification that is more than ten years old, because the requirements were different back then,” says Susanne Eickermann-Riepe. She also asks some important questions related to the existing portfolio that determine future viability and resilience: “Is it even known where the building is on the climate path? What measures need to be taken to reduce future energy consumption or use other technologies? Will renewal or retrofit measures need to be taken? Can solar panels be installed on the roof or are heat pumps an alternative?”

She continues: “When it comes to government decisions in the context of energy or CO2 budgets, experts are needed to verify the information. Perhaps a new business opportunity for verifiers or auditors. “Most investors today require ESG due diligence, and the results will also affect value. However, in the future it will not only be about the E in ESG, but also about the social value of an investment. More and more questions and answers will be needed to make all future [ESG] implications available as a basis for decision-making.” 

“Young people in particular are increasingly interested in corporate sustainability reporting when they are choosing a company to work at” Jean-Eric Fournier FRICS, Covivio

Corporate greenwashing

The issue of corporate greenwashing certainly came to a head this year in Germany and doubtless elsewhere. In May 2022, Deutsche Bank was raided in a $1tr enquiry into whether the asset management arm of one of Europe’s largest banks had been selling investments as more environmentally friendly than they were in reality. Can legislation finally eliminate the greenwash? Eickermann-Riepe says: “If we are not able to interpret the data in the right way, there will be an ongoing risk of some greenwashing.” 

Data is on Seweryna Afanasjew’s mind too. “It’s about more details and data, data, data! Being able to provide the trends and strategies with direct and detailed actions on how we can reduce our environmental impact. And within what timeframe and how much that will cost. I’m very passionate about implementing new technologies to help us. Without this, we really would be lost, because otherwise it’s not possible to collect and to analyse the data that the building is creating and really use it.” 

Jean-Eric Fournier agrees that building and sharing knowledge are the key in getting to grips with sustainability disclosures, “RICS is the best place to come together and share understanding around topics like this one. Alone you cannot do everything.”

“I’d like ESG data to be seen as important as financial data but we definitely aren’t there yet,” says Chris Bennett. “There are now far more discussions taking place about sustainability and I hope that will continue.”


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“Most of the investors are looking for ESG due diligence, this will also be a new part of the duty of the valuer” Susanne Eickermann-Riepe FRICS, ICG Institut

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