Shining light on ESG reporting in real assets – The Property Chronicle
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Shining light on ESG reporting in real assets

Investor's Notebook

The requirement for transparency in real asset reporting has ramped up significantly in the past year. Governments, investors and occupiers are asking for more data to help determine a building’s ESG performance. Crucially, this data impacts the valuations of assets, their attractiveness in the market and their ability to access green loans. 

Historically, one of the most marketable features of a green building has been its building rating, such as a BREEAM rating or an EPC. However, with modern smart metering, recovering data on actual performance has become easier and the focus on carbon greater.

“When investing in real estate assets, understanding the underlying quality of the building and how it runs is important”

When investing in real estate assets, understanding the underlying quality of the building and how it runs is important. While the building performance data can be challenging to obtain, the insight provided is more granular and valuable than aggregated data at a portfolio or fund level. 

In 2016, Carbon Intelligence started a smart-building programme with Aviva Investors, which has saved over £2m to date. Strong energy performance also typically leads to improved maintenance, reduced life-cycle costs and lower service charges. Long term, all these benefits will lead to improved IRR. A review of a portfolio with £2b AUM highlighted that they would save £15m a year if they aligned their energy performance with the UK-GBC net-zero pathway. 

Another challenge facing the nation is that the amount of green energy is limited; for this reason, transparent performance needs to show both figures, typically energy intensity, so it can be compared against other similar buildings, and absolute carbon emissions. This will show the environmental impact of energy used by the building.  






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