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Sustainable real estate – Responsible property investment | Deloitte solution


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Context

Sustainable real estate – Responsible property investmentThe evolution of the EU and local regulatory environment, together with the changes in market conditions, create major challenges for the real estate industry and has changed the context for real estate investment decision-making. Governments around the world are introducing ever more stringent regulations and fiscal policies to tackle the carbon and environmental performance of new and existing buildings, as well as the businesses that occupy them. The EU's Energy Performance of Buildings Directive is just one example of this.

Key issues

With the emergence of an array of regulations, guidelines and best practices, and a spotlight being shone on the impact of the built environment, it is difficult to know where to start.

Investors and shareholders are beginning to demand more robust and transparent approaches to ‘sustainability’ from their Fund Managers and General Partners.

Non-green properties will end up with lower rents and take longer to re-lease. In addition, these assets will depreciate more quickly and carry higher risks than their green counterparts, making non-green properties less desirable to investors.

Main challenges

An increasing number of occupiers, especially those with the strongest covenants, are working towards developing measurable carbon reduction and non-financial performance targets, many of which engage in robust public disclosure of performance, which stands to impact on leasing decisions where it isn’t doing so already.

Sustainability issues apply at each stage of the real estate investment and management process. This requires an integrated response which encompasses investment decision-making, asset management and development, stakeholder and tenant engagement, and measurement and reporting.

The general trajectory of rapidly rising utility costs, volatility in the commodity markets, and an increasing propensity for governments to ‘tax’ carbon emissions, introduces an increasingly compelling direct financial driver for greater resource efficiency within commercial property.

The prospect of detrimental impacts on building performance resulting from climate change is leading to an intensification of depreciation risk.

How can Deloitte help?

Deloitte offers a full range of sustainable property and real estate sustainability services including building carbon management, sustainable strategy and energy reduction services. We can assist you to:

  • Perform sustainability-related risk assessments to identify emerging sources of risk that could impact upon your expectations of investment returns
  • Provide locale-specific tools and advice to support the effective implementation of sustainability strategies for your operations globally
  • Create plans for tracking environmental, social and governance KPIs to measure performance, support decisions and demonstrate impact on investment returns
  • Obtain environmental certification of development and refurbishment projects, such as LEED and BREEAM
  • Assess compliance with environmental laws, regulations and expectations impacting financial or non-financial performance
  • Develop a sustainability strategy that considers sources of risk and opportunity, including investor or shareholder expectations
  • Conduct external assurance of sustainability reports
  • Identify and understand industry benchmarks and conduct gap analyses using our understanding of leading industry practices
  • Assess the effectiveness and visibility of sustainability activities

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Contacts

Name:
Benjamin Lam
Company:
Deloitte Luxembourg
Job Title:
Partner - Private Equity & Real Estate Leader
Phone:
+352 451 452 429
Email
blam@deloitte.lu
Name:
Nicolas Hennebert
Company:
Deloitte Luxembourg
Job Title:
Partner - Audit
Phone:
+352 451 454 911
Email
nhennebert@deloitte.lu
Name:
David Cau
Company:
Deloitte Luxembourg
Job Title:
Directeur - Business Risk
Phone:
+352 451 454 260
Email
dacau@deloitte.lu
Name:
Andreas Meier
Company:
Deloitte Luxembourg
Job Title:
Directeur - Audit
Phone:
+352 451 452 320
Email
ameier@deloitte.lu

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