The importance of the construction and real estate sector in delivering the ambitions of the Paris Agreement and the UN Sustainability Development Goals is unparalleled. New regulations, rising operating costs, and growing scrutiny from stakeholders are among the factors creating fresh challenges and opportunities for the sector.

CBRE’s latest global survey of more than 500 commercial real estate professionals worldwide illustrates the most common and impactful initiatives currently applied in real estate strategies by both investors and occupiers.

The following trends were revealed among survey participants from Continental Europe (CE):

• 70% of all respondents increased their focus on ESG in 2022
  • The focus on ESG priorities intensified because of external factors such as the government imposition of ESG disclosure requirements (67%) and higher energy prices (55%).
  • But also due to internal factors such as company ethics, values or purpose (62%), which remain among the top priorities for all respondents.
• ESG building features are impacting real estate transactions
  • Features that reduce energy consumption had the most impact on investment and occupier transaction decisions (88%).
  • More than half of the respondents would seek a discount or walk away from a deal altogether if a building lacks these features.
    
• There is an emphasis on the value of social building features
  • Proximity to public transport was the social feature most cited by respondents (86%) as having an impact on real estate decisions.
  • Social controversy is also a top consideration, with 52% of all respondents indicating they would reject a building involved in any controversy.
• The top three challenges for implementing ESG goals are 
  • Poor availability or quality of data (53%),
  • Costs exceeding benefit, making it difficult to justify action (39%), and
  • Benefits being unknown or uncertain (36%). 
    
    

Regional Differences

The survey has offered some interesting insights into regional differences in priorities and approaches:

1. While companies based in US and APAC prioritise social aspects of the ESG agenda, CE-based respondents are more focused on using local suppliers, biodiversity and reducing risks related to controversial firms.  
2. CE is leading in terms of net-zero goals settings, with CE- and UK-based companies pledging to achieve net-zero goals sooner than respondents from other geographies.
3. The use of “Scopes” is a mixed trend, with investors and occupiers in CE being less concerned about categorising their emissions into Scopes compared to respondents from other regions.
4. CE investors and occupiers have higher expectations in terms of environmental building features than their counterparts in other regions.
   
   

The bottom line

With the increasing scrutiny on ESG issues, commercial real estate (CRE) stakeholders more than ever need to understand, enhance, and leverage their ESG performance to drive value and stay competitive. To achieve this, they need to understand the stakeholders they interact with – their mutual drivers, incentives, and backbones of their corporate ESG strategy.

CBRE’s survey revealed that occupiers and investors are not always aligned in their priorities, ESG Goals, and the timeframes for achieving them. Going forward, an open dialogue will prove to be crucial for minimising the risk of buildings becoming obsolete and undesirable to occupants. A significant aspect of this collaboration will be green lease clauses which include operational procedures that advance efficient and carbon-neutral buildings. 

Find the full survey report here.

Footnote 1: The % figures in brackets mean % of respondents. 
Footnote 2: Scope 1 - Carbon emitted directly from a company's building systems and vehicle fleets; Scope 2 - Carbon emitted indirectly through electricity or fuel consumption for heating and/or cooling buildings; Scope 3 - Carbon emitted indirectly through the products and services provided by building suppliers.