GREEN: Positive trends in climate risk management for real estate companies

GREEN: Positive trends in climate risk management for real estate companies

13 juni 2024

Klimaatverandering Risicomanagement Vastgoed
Duurzaam (19) vastgoed

Research by the Global Real Estate Engagement Network (GREEN) reveals a positive trend in climate risk management among listed real estate companies and non-listed real estate funds. 78% of listed companies now have short-term carbon reduction targets, and 40% have adopted Net Zero goals, up from 30% last year. Implementing these ambitions remains challenging. Only 15% of companies have disclosed high-level pathways to reach Net Zero, and 9% (up from 3%) have estimated their Capex needs to achieve their long-term targets.

Vincent van Bijleveld, CEO of GREEN, emphasizes the importance of incorporating Capex estimates to meet future carbon regulations and minimum energy performance standards into underwriting and financial planning. 'A third of the real estate companies that have made an estimate expect their Capex to be above 5% of NOI. GREEN calls for better insights into these financially material estimates to help investors make informed decisions.'

The increased ambitions, implementation efforts, and disclosures are, in part, a result of heightened shareholder activity. The 46 companies collaboratively engaged by GREEN members, such as Wellington, CenterSquare, APG, MN, Bouwinvest, Schroders, Robeco, Sarasin, Trillium, Vert, Almazara, and Finance Ideas, demonstrated superior progress in target setting, implementation and disclosure, compared to their peers. This highlights the significant role that investors can play in driving change.

Maaike Hof, co-CEO of GREEN, added, 'Our results underscore the effectiveness of engagement as a tool for enhancing climate risk management. Our survey among listed real estate companies further confirms this need, showing that less than 20% of investors actively engage with companies about the Net zero goal.' She urges other indirect investors in real estate to foster more collaboration to enhance efficiency and effectiveness.

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