ESG Real Estate Insights 2021
ESG has moved to the top of the agenda in the real estate sector
Undoubtedly, ESG and sustainable investing are on top of the agenda of the financial industry. The impact on real estate players is significant and multi-faceted, and ranges from regulatory and tax topics to strategic planning and operational decisions. A year ago, some of these aspects were still “music of the future”, whilst the pandemic has certainly accelerated developments and the need to act.
ESG has taken a key role in organization’s strategies
and daily operations. To remain successful, ESG factors have to be incorporated
in strategic decision taking, transformation, reporting and assurance. We at
Deloitte will accompany you through the sustainability journey and highlight
any aspects which have an impact, today and in the future – and with a focus onreal estate.
Our new article series „ESG Real Estate Insights” has been specifically developed to shed light on key ESG topics relevant to real estate players.
With contributions from Deloitte member firms in Austria, Central Europe, France, Germany and Luxembourg, connected to a worldwide network of real estate and sustainability experts, our annual article series aims at providing a diversified view.
#1 Sustainable Finance Disclosure Regulation (SFDR) in the Real Estate Industry
Discover the key steps and challenges for real estate asset managers to comply with the SFDR by March 10, 2021.
With buildings being responsible for approximately 40% of energy consumption and 36% of CO2 emissions in the EU, the relevance of SFDR to the real estate sector is indisputable.
Regulators, investors, stakeholders and the public in general are increasingly holding businesses accountable for sustainable practices. The growing relevance of sustainability issues is also driven by recent legislative developments which reflect the urgency to mitigate environmental risks related to climate change.
#2 European Green Deal
What’s in there for real estate companies?
The European Green Deal aims at meeting the goals of the Paris Agreement to make the EU carbon neutral by 2050. Part of the Green Deal are various carbon initiatives – of which one of them is the improvement of the energy efficiency of all buildings. And important for real estate companies, one of the flagship programs of the Green Deal is building renovation.
#3 Real Estate Investment Management in the light of ESG
How to navigate through the ESG jungle to define and implement a future-proof organization
Over the past years, the relevance of real estate funds with an ESG-focus has increased. While some players managed to establish themselves successfully as sustainable Real Estate Investment Managers (REIMs), others only did little to prepare their organizations for this shift.
#4 Deriving business value from tax governance as part of the ESG strategy
When governance models are reviewed by real estate players to achieve their ESG goals, it also integrates an important tax dimension – tax transparency – which requires the production of data on tax governance and a control framework and which is in many cases not yet available. Real estate players have an opportunity to increase the value of their portfolio and their brand by taking pre-emptive actions to set up a tax governance as part of their overall ESG strategy.
#5 ESG data management in the real estate industry
ESG challenges are becoming a higher priority for businesses across the real estate sector, making data management more important than ever. Achieving a single data model and defining the key metrics for ESG are issues real estate players can no longer afford to ignore.
#6 RE-thinking Due Diligence - ESG impact on M&A
Evidence is mounting that business performance is impacted by environmental, social and governance factors and recent developments demonstrate that the speed at which those elements become material is increasing. Drivers of this accelerating change are, for example, increasing transparency based on improved data availability around environmental, social and governance (ESG) factors, society’s changing expectations as public awareness of social and environmental challenges increases and growing influence of investors as they integrate ESG factors into the core due diligence process.
#7 ESG as real estate value driver
Recently, environmental and social issues have become a public and political priority, and as such, of material value for investors. An informed and regular approach to identification and management of ESG impacts shall protect investment portfolios and not only enhance resilience and guard against the risk of accelerated obsolescence and value erosion – and will also provide better financing conditions within a larger pool of new, more responsible capital, attracted to the industry to make a positive ESG impact.
This article series consists of ten articles, which will be published every two weeks. In each article, we will address some of the most interesting topics as they relate to various real estate players, including:
• ESG & Finance
• ESG & Value
• ESG Reporting
• ESG Due Diligence
• Sustainable Corporate Strategy
• Social & Governance aspects of ESG
• Adding value to Real Estate through ESG and tax
• RE Carbon footprint
This article series should give you, our valuable readers, an insightful and thought-provoking read, and we look forward to receiving your comments and suggestions for future topics.