The topic of sustainability is on everyone's lips – there is hardly any economic sector that can ignore it. But sustainability is a very broad term – and includes much more than optimal waste separation and the lowest possible number of flying hours per year. But how do you bring sustainability and the real estate industry together? Can sustainability also be interesting from an economic perspective?
The fact that interest in sustainable real estate has grown so rapidly is due to both users and investors. Nevertheless, the question arises: Why should you invest in sustainable real estate, what value do they offer?
It's not just the financial benefits and incentives that are driving demand: increasing regulatory requirements are also responsible. The United Nations’ “Sustainable Development Goals” have a strong influence on the real estate industry. The sustainability goals must be pursued with regard to climate change, which includes, for example, improved energy and resource efficiency. This implies an increased disclosure and reporting obligation at the country level. An example of this is the energy certificate requirement in Austria, which is mandatory for a real estate transaction to take place. In general, building regulations and energy laws are constantly being tightened so that climate goals can be achieved. Or to put it another way: It's hard to avoid sustainability in the real estate industry.
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How it all began
Ecological real estate labels were introduced for the first time around 30 years ago. The aim was to reduce the environmental impact in the real estate sector. Various labels such as “Leadership in Energy and Environmental Design” (LEED, USA) or “Building Research Establishment” (BREEAM, Great Britain) were created as early examples of certification systems. Many local labels followed suit, and at the same time as these ecological labels, energy labels were also created, for example Minergie in Switzerland.
The change
In recent years there has been a change towards sustainability and sustainable construction, which of course also resulted in the establishment of new labels: in Switzerland, for example, the “Standard for Sustainable Building Switzerland” (SNBS). The difference between the different labels (energy labels, ecological labels and sustainability labels) is as follows:
- Energy labels aim to minimize ecological impacts by reducing energy consumption and increasing energy efficiency.
- Ecological labels include social aspects with criteria for operational energy and thermal comfort.
- Sustainability labels take a holistic approach with three dimensions of sustainability: society, environment and economy. They also cover topics such as health, infrastructure, life cycle phases, mobility and spatial flexibility.
The real estate world is also confronted with increased environmental and energy requirements, which requires the further development of various labels. Ecological labels have historically focused on reducing negative impacts, while sustainability labels have avoided them altogether. Many labels have now introduced “measures” to proactively achieve positive impacts: for example, providing bicycle parking spaces that enable low-carbon mobility; or the use of bio-based building materials, which helps store carbon throughout the life of the building.
How can you measure sustainability?
The topic of sustainability has long since reached the various sectors of the economy; the corporate policies of many large and international companies are geared towards sustainability. They are based on ESG criteria that take into account environmental and social standards as well as aspects of corporate management. Many labels emerged from a national context, are based on country-specific characteristics and have different focuses. Even if they are becoming more and more widespread, a holistic and international sustainability assessment in the sense of the ESG criteria is usually not possible. Nevertheless, professional real estate investment managers must evaluate their real estate portfolio according to appropriate sustainability criteria, which are of course compatible with ESG criteria. The problem is obvious: when real estate portfolios have properties in different countries that are subject to different standards, this is of course particularly difficult.
Global Real Estate Sustainability Benchmark (GRESB)
To remedy this problem, the Global Real Estate Sustainability Benchmark (GRESB) was launched, which determines the sustainability performance of real estate and real estate portfolios worldwide according to uniform ESG criteria. Depending on the size of the portfolio, the type of use and the country allocation, the comparison groups are evaluated and then compared with each other. This ensures the objective comparability of the portfolios.
Sustainability for everyone
It is clear that sustainability is very interesting from an economic point of view and is not a synonym for profitless investments. Sustainability is no longer just an attitude, but a reality in both politics and business. However, this important topic not only affects higher authorities, but also private individuals as well as companies. We can and must all do our part. And to stay in the area of real estate: It is not enough if real estate is built sustainably but the residents do not live consciously; Because: Sustainability is not just in building, but also in living.
