ESG is an incredibly important topic in real estate, with important standards to be met by industry players in order to achieve net-zero status. We talked with Oana Stamatin, ESG Chief Officer CEE and Romania at Colliers about the transformations we are about to witness in real estate to meet these standards and the role technology plays in the process.

Oana has 16 years of Real Estate Consultancy – from Building Surveying, Green and Health & Wellbeing Certifications to ESG Advisory. Over the years, she has provided project monitoring (lender’s supervision) reports for financing banks and technical due diligence, she coordinated the certification processes (LEED, BREEAM and WELL) during 2012 – 2021 for more than 100 projects (certified and in progress to be certified), approximately 3,100,000 sqm built area.

Main takeaways:

• Many occupiers are also now conscious of the correlation between office ESG performance and employee wellness.
• All organizations, including the property owners, need to develop capabilities and leadership approaches that can work with ESG goals.
• Technology is helping to deliver sustainable materials or equipment that make the buildings healthier and more efficient.
• There is a challenge of getting the industry with the right skills to help sustain that great retro-fit to achieve that level of energy savings that will put us on a path to net-zero.

We need to see strong measures being taken by the real estate industry in order to limit the negative impact on the environment. Oana Stamatin emphasizes that the built environment is responsible for approximately 40% of the carbon emissions which means that a new approach could lead to a limitation on global warming.

The ESG framework for the real estate sector will become clearer in the near future, Oana adds, as the EU has decided upon the European Green Deal. The goal is to achieve zero greenhouse gas emissions by 2050 while transforming the economy.

Due to the multitude of definitions and criteria that can be adopted in assessing the “sustainability” of the real estate projects, the EU has presented a standardized assessment tool, EU Taxonomy, that will allow determining whether the project meets the guidelines of sustainable finance.

The taxonomy affects many areas of activity, but for the real estate sector, specific guidelines refer mainly to:

– construction of new investments;

– renovation of existing buildings;

– installation, maintenance, and repair of energy efficiency equipment.

The identified environmental objectives present in the taxonomy are:

– climate change mitigation;

– adaptation to climate change;

– sustainable use and protection of water and marine resources;

– transition to a circular economy;

– pollution prevention and control;

– protection and restoration of biodiversity and ecosystems.

But are developers open and prepared to embrace these goals and put serious efforts into achieving them? Oana thinks that pressure doesn’t come only from regulators, but also from tenants, who prioritize ESG transparency and disclosure and will be choosing buildings that align with their own ESG targets and commitments.

Companies are starting to measure their carbon emissions and will recognize the impact that real estate makes on their performance. Many occupiers are also now conscious of the correlation between office ESG performance and employee wellness. And that means that the real estate environment needs to help them deliver on their ESG objectives, both for the short term and the long term.

So, the developers that fail to align to the future demands of the stakeholders will be left behind.

With a new status quo come new opportunities and new challenges alike. When it comes to following ESG regulations, real estate developers face systemic changes that completely differ from traditional ways of doing things.

They go beyond the boundaries of the organization, and they include social and political dynamics. So, all organizations, including the property owners, need to develop capabilities and leadership approaches that can work with this.

There is still a lot of uncertainty on the market, especially regarding the ESG European context, regarding the applicability of the EU Taxonomy, SFDR or CSRD – and this also impacts the delay with which the change is implemented. 

We will see more and more tenants declaring ESG targets and that means that developers and property owners will need to carry out part of the work that will help tenants to reach the targets. That means they need the proper consultants nearby and the will to think on the long term instead of short term, with the known implications on the budgets, CAPEX or OPEX.

Another aspect that needs to be addressed is our actions and our behaviors – of us, the people, employees of the companies that will occupy / occupy these buildings. Are we ready for a change in the mindset?

In order for these changes to happen, multiple elements must concur. Technology represents way more than just a trend in real estate – it plays a critical role in its future. Oana adds that technology helps predict the impact of the construction from an early stage.

Also, we see software used for construction management that contributes at an easiest data collation, communication, approval of processes.

Going in the heart of the building, technology is helping to deliver sustainable materials or equipment that make the buildings healthier and more efficient. In addition, using sensors and software, the health, safety and productivity of the employees can also be improved.

And when it comes to report on ESG targets, specific software and platforms can also contribute for an easiest collection of information and conversion into ESG recognized metrics.

I consider that technologies that will help the buildings to improve their energy efficiency and to minimize/ reduce to zero the carbon emissions will be the most attractive in the upcoming period. 

Taking all of the above into account, how will the future of the real estate industry look, from an ESG perspective? According to Oana Stamatin, sustainability and responsibility goals will lead to a difference in the choice of markets, capital spending on assets and asset management priorities and ultimately investor/owner strategies. 

On a macro level, we have a challenge with the existing stock; we know that most of the buildings that remain in operation in 2050 have been built, so the challenge is not building from scratch, but is to get those buildings to perform to net zero standard, when we know that most of them don’t do that. So there is a challenge of getting the industry with the right skills to help sustain that great retro-fit to achieve that level of energy savings that will put us on a path to net zero.

And not only the EU regulations and new legislation will put pressure on the built environment – tenants will put pressure as well. Landlords of older office buildings might suffer in the long run as more and more tenants are placing a higher emphasis on energy efficiency, carbon emissions reporting, green certifications etc.

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