Reducing emissions the top ESG priority for real estate, CBRE finds

Real estate professionals are more concerned than ever about ESG issues, with energy-saving and emissions the main corporate priority, a CBRE survey found.

CBRE surveyed more than 500 real estate professionals around the world in order to assess their views on ESG initiatives and how these affected their decision-making. 

The survey found that real estate’s focus on ESG intensified in 2022, with more than two-thirds of respondents reporting a heightened focus due to higher energy prices and government-imposed ESG disclosure requirements. 

The prime focus of real estate’s ESG activities is reducing energy consumption and emissions: three-quarters of all respondents said reducing energy consumption and carbon emissions was the ESG consideration most likely to impact property value. 

Nearly two-thirds of organisations have committed to a Net Zero target, with 53% of occupiers and 29% of investors ambitiously committed to be Net Zero by 2030. However, 38% of occupiers and 47% of investors do not use Scope categories when tracking emissions, suggesting they do may not have an accurate grasp of total emissions.

The focus on energy efficiency means energy considerations are most likely to affect the value of a building. More than half the respondents said they would pay more for a building with smart systems to reduce energy use or for onsite power generation capabilities. 

Meanwhile, the absence of these and similar features would cause a sizable minority to seek a discount from the seller. For example, 31% of respondents would seek a discount for a building that lacked energy-saving features and 18% would reject it altogether. Generally, only a small minority (less than 10%) would reject a building outright for lacking sustainability features.

Green certification continues to be a priority for investors and occupiers, with 45% prepared to pay a premium for a certified building and 13% who would reject a building which lacked certification.

Unsurprisingly, when it is more difficult to get employees into the office and tenants into an office building, both investors and occupiers have become focused on wellbeing. More than 80% of respondents indicate that proximity to public transit (or lack thereof) impacts property value because easier commutes are associated with better employee well-being. Nearly half are willing to pay a premium for buildings which support the physical and mental health of their employees.

The major obstacle to organisations achieving their ESG goals is a lack of data, with more than half of respondents saying a lack of quality data was the most concerning impediment to achieving ESG goals. This was especially true among investors.

However, nearly half of respondents (47%) said the the costs of ESG initiatives exceeded the benefits, making them hard to justify and more than a third said the benefits of such initiatives were hard to quantify.