The concept of Environmental, Social and Governance (ESG) has gained significant traction across industries in recent years as a key effort to combat climate change and ensure a greener future for all. The asset class of real estate is no exception: a study by the European Commission estimates that residential and commercial real estate is responsible for approximately 40% of Europe’s energy consumption and 36% of Europe’s greenhouse gas emissions. So, it seems only logical for the EU and its member states to have revised and introduced new ESG-related guidelines and directives for the real estate industry.
ESG in real estate encompasses environmentally friendly practices, social responsibility and transparent governance. As ESG issues continue to rise in importance, it becomes crucial for all real estate professionals, banking risk departments, and insurance companies to understand its implications. Investors like institutional investors, real estate investors, investment managers or fund managers are no exception. This article explores the key points you need to know about ESG in real estate, focusing on its rising significance in Europe, the critical role of energy performance, and the importance of accessing reliable energy-related data.