ESG compliance makes financial sense, now more than ever, experts agreed at Real Asset Media’s ESG, Resilience and Driving Sustainable Returns Investment Briefing, which took place online recently.
‘Already prior to COVID 19 there was evidence of more transactions and more access to debt finance for buildings that comply with ESG regulations and conversely of the negative impact of poor EPC ratings,’ said Damian Harrington, Director, Head of EMEA Research, Colliers International.
This trend has strengthened since the outbreak of the epidemic and it is here to stay.
‘Banks are increasingly taking ESG factors into account, and sustainable buildings have lower financing costs as well as lower insurance costs,’ said Christiane Conrads, Head of German Real Estate Desk, PwC Legal.
In Germany ‘banks are already giving easier financing and better conditions for assets that are green and sustainable, and there are also subsidies and loans in place to upgrade buildings,’ said Thomas Veith, Partner, Real Estate, PwC. ‘Lower financing costs are a clear value indicator’.
Dutch institutions are also in line. ‘In the Netherlands all the major banks have committed to giving better financing conditions to buildings with green credentials,’ said Clemens Brenninkmejer, Head of Sustainable Business Operations, REDEVCO.
People are beginning to realise that complying with regulations will lead to opportunities, he said: ‘It is not a cost, it is an investment. Financial returns will be made.’
Buildings that do not comply will not have a place in a good portfolio, said Douglas Edwards, Managing Director, Head of Equity Raising & Client Service, CORESTATE Capital Group. ‘It is important to reduce exposure to secondary assets that well behind the curve, which will experience difficulties, as yields will move out and the nature of the occupation will change’.
Green buildings are also easier to sell, as there is more capital that wants to invest in sustainable assets than assets that comply with the rules.