Towards the end of 2021, CBRE conducted a survey of some of its clients in the UK to establish the ‘state of play’ on the full range of environmental and social sustainability issues that the real estate industry is being asked to tackle – including climate change, biodiversity, pollution, waste, health and wellbeing, and responsible business.
220 of CBRE’s UK clients responded, including a wide range of the UK's largest investors, housebuilders, occupiers, lenders and infrastructure providers. Respondents make decisions about a wide range of real estate types including office, industrial/logistics, residential and retail property – and usually more than one type. Although a UK led survey, most of these clients are also operating across Continental Europe, with the findings and results considered generally relevant across the whole region.
Key findings
Driven by organisational values, regulation and brand positioning, respondents’ strategies have good coverage of climate change and health issues – but there are other gaps.
Sustainability is being factored into real estate decisions – but not all the time and sustainability factors are more likely to be underweighted than overweighted in these decisions.
The big challenges which clients said they face are practical: data, cost and complexity. Uncertainty about future regulatory or social trends was not seen to be a major barrier, suggesting that clients know broadly what it is they need to do – the difficulty is lack of adequate or good quality data and the cost and complexity of doing it.
The biggest environmental priorities for real estate decision-makers were cutting energy and water use, and securing sustainability-related certifications.
Today’s climate change decisions in real estate are focusing on regulation, improving the flow of data and adaptation.
Among social issues, avoiding controversial counterparties was the biggest concern for clients in their decisions – bigger than the rather more frequently-discussed issue of health and wellbeing through building design.
Occupiers were slightly more willing than landlords to pay the full cost of environmental improvements to buildings – and much more willing when it came to reducing waste and water consumption, suggesting potential for a genuine ‘green premium’ relating to these types of building improvements.
Although clients told us that regulation was much less of a driver for their sustainability strategies than their own values and purpose as an organisation, simply complying with environmental regulations turned out to be a much bigger pre-occupation in practice.
Recommendations
Based on the report findings, CBRE advise:
- REVIEW YOUR STRATEGY'S REAL ESTATE ORIENTATION -
Many respondents had gaps in strategies which make it more difficult to justify action.
- COLLABORATE WITH YOUR COUNTERPARTIES -
Mismatches of understanding between landlords and occupiers suggest that collaboration and communication will continue to be important.
- REFINE YOUR DECISION-MAKING SYSTEMS -
While processes for making decisions are increasingly taking wider factors into account, those factors are not taken into account systematically enough.
- KEEP IT PRACTICAL -
Firms mostly know that they have to take action. But getting the right data, reducing the complexity of decisions, and better understanding the balance of costs and benefits are now crucial tasks.
