For institutional investors buying or managing residential property portfolios and banks granting mortgage loans, the need to take better account of climate risks is becoming a reality. Real estate data and insights can play a crucial role here.
In recent years, the introduction of various European environment-related regulations, reforms and guidelines has had a major impact on the real estate sector. These initiatives reflect a more rigorous and ambitious environmental policy in order to help slow down climate change, both at national and European level. They also drive to encourage residential real estate, banking and finance professionals to better integrate ESG (Environmental, Social and Governance) and sustainability topics into their activities.
Some recent examples include:
- The reform of the Energy Performance Diagnosis (or DPE in French) in France
- The mention of ESG factors in the revised EBA guidelines on loan origination and monitoring – In its May 2020 report, the EBA specifies that “Institutions should incorporate ESG factors and associated risks in their credit risk appetite and risk management policies, credit risk policies and procedures, adopting a holistic approach.”
ESG: What are the challenges and consequences for investors and financial institutions?
While ESG initiatives aim to foster change, these regulatory changes and guidelines create new challenges and considerable implications for stakeholders providing financial services or working in the real estate industry.
The challenge for institutional investors is clear: they need to understand and analyse their estate’s energy consumption and efficiency so that they can then anticipate the impact of each asset’s energy performance on the current and future value of their portfolio.
Financial institutions face a challenge that is just as significant: they must take energy performance and energy efficiency criteria (ESG) into account, when carrying out risk assessment, mitigation and monitoring of their real estate mortgage portfolios. However, many banks face a problem of poor internal data quality relating to the properties for which they are providing mortgage loans. The information in their databases is often not structured and limited in terms of availability.
In short: ESG issues feature at the top of banks’ and real estate investors’ agendas, however, accessing complete and reliable energy performance data is a struggle.
Adopt a data driven approach by taking current energy performance into account
At PriceHubble, our client base comprises of numerous institutional investors and banks, so ESG matters moving to the top of our agenda is only natural.
We’ve enhanced our solutions, making the most powerful and highest-performing digital products available to real estate and finance professionals so that our customers may respond to the key challenges which they are currently facing.
We help our clients in two ways: we identify the energy performance of a property and we estimate the impact of the energy performance on price.