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Summary: A real estate sector that emphasizes sustainable development and operation can play a significant role in reducing greenhouse gas (GHG) emissions and help slow climate change, with the added benefit of increasing asset valuations.
With almost 40% of global carbon dioxide emissions arising from the real estate sector, any business with four walls is compelled to assess how ESG initiatives fit into its business model.
There’s a global imperative and mounting pressure from regulators and tenants to develop, operate and retrofit buildings to be sustainable. There could be upfront costs to becoming green, but also many benefits. By reducing operating costs through sustainable strategies, real estate owners and investors could increase their profits and build a portfolio that grows in value while contributing to a healthier planet.
Real estate stakeholders can integrate sustainable measures into internal processes, combating the impacts of climate change from within.
Implementing sustainable practices goes beyond regulatory compliance. It requires a deep understanding of the short and long-term impacts on your business. By taking a strategic and integrated approach to ESG initiatives, you can create a platform that not only meets regulatory requirements but also helps drive positive change, creating a sustainable future for your company and the environment.
With the right skills and resources, you can revolutionize your real assets and become a sustainable leader.
Regulatory requirements are critical to moving sustainable real estate ahead. The forthcoming SEC climate disclosure rules and existing reporting requirements will help drive the sector toward a more sustainable future, following the EU and other global markets.
Embedding sustainability into real estate — whether beginning in development or through rehabbing — could reap multiple benefits, including cost reductions that result in higher ROI, attracting tenants and investors and reducing risks associated with climate events.
Real estate investors prioritize value creation and ROI, but a demographic shift shows climate change is a pressing concern; many are considering the environmental impact of their investments. In addition, more investors have funds earmarked for sustainable development, increasing the demand for green real estate projects.
Meantime, there’s also a growing understanding among building owners that real assets need protection from climate events. So leveraging ESG strategies in the real estate sector comes with rewards:
For real estate owners and investors, company operations can be complex and the stakeholder base is often varied across business sectors. Yet, many boards, senior management, employees and customers are interested in decarbonization goals.
By prioritizing sustainable building and operations — whether in the development phase or through rehabbing existing real assets — owners and investors can help mitigate GHG emissions, as well as reduce energy costs and create value in a changing environment.
Ultimately, taking advantage of sustainable opportunities can help companies and investors gain a competitive advantage in the marketplace while simultaneously reducing climate risk.