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Connect buildings to start the long journey to sustainability

Sustainability has been in the spotlight in the past year but things have only just got started for the real estate sector, experts agreed at Real Asset Media’s ESG – The New Driver for CEE briefing, which was held online recently on the REALX.Global platform.

“We just are at the beginning of a long journey,” said Elisa Rönkä, global head of SaaS (software as a service) sales – digital buildings, Siemens Smart Infrastructure. “All the players along the life cycle of a building must come together at the beginning and follow it through to the end.”

Elisa Rönkä.

Buildings are not isolated entities but must be seen in their context, so connecting them is the first step on the journey.

“It’s challenging to have separate initiatives and solutions,” said Rönkä. “It is better to bring them together in a platform perspective, connect the buildings and the transport infrastructure and then you can implement solutions. That’s when the magic happens.”

A broader and wider perspective is needed and that is being encouraged by legislative changes.

“On the EU regulatory side the focus has been on carbon neutrality and avoiding stranded assets, but keep in mind that there is a lot more to do, many technical aspects that need to be taken into account if a building is to be future-proof,” said Michael Nauta, senior associate, CMS. “Carbon neutrality is no longer the be-all and end-all.”

The requirements are getting tougher. EU taxonomy regulations and two acts on climate change mitigation and adaptation have just been adopted and will come into force on 1 January.

Specific time frame for green certificates

“Green certificates started years ago but now there’s a specific time-frame if you want to stay relevant in the market,” said Monika Rajska-Wolinska, chief executive officer, CEE, Colliers.

It means having to look at every single asset in the portfolio and assessing what needs to be done.

“Meeting the goals is a massive challenge because of the granularity of the requirements,” said Georg Schattney, group head of ESG/sustainability officer, Corestate Capital Group. “In every portfolio there are buildings that are older than 10 years, which means they are not compliant.”

The traffic light system divides assets into green, which are ESG-compliant; amber, which can be improved and brought up to the required standard; and red, which must be demolished or totally repositioned.

“The problem is you need a lot of knowledge to make that assessment and then carry out the required strategy,” said Adrian Karczewicz, head of divestments CEE, Skanska Commercial Development Europe.

Banks and insurance companies as well are looking at this closely as well as the EU, governments and local authorities. Yet despite the increased emphasis on sustainability, it has yet to be fully taken on board by the market.

“When we do due diligence questions about ESG are very important, but it doesn’t have a direct impact on price yet,” said Nauta. “Technical questions sometimes don’t get answered. The market still allows a lack of information on these topics at the moment, but I am sure that will change in a matter of months.”