A streamlined, industry-led initiative for climate finance
ARESI was established to provide a practical, market-driven and open-source solution that harmonises sustainability indicators. By Hugh Garnett
The real estate sector is at a pivotal moment. As global regulations tighten and investment in climate solutions grows, a fundamental challenge persists: the lack of alignment in sustainability key performance indicators (KPIs) for the purpose of investment decision-making.
The Aligning Real Estate Sustainability Indicators (ARESI) initiative seeks to address this with an industry-led approach. It focuses on streamlining key climate transition indicators, reducing reporting burdens and fostering greater confidence in sustainable investment decision-making and transactions.
Once ARESI has addressed the ambiguity in key climate transition indicators, it will seek to tackle further challenges, such as financial product labelling, physical climate risk, biodiversity and social value.
The need for alignment
A staggering $6 trillion in annual climate finance is required to meet global net-zero targets by 2030, yet only $1 trillion is currently accessible.
Private finance must rapidly scale up to bridge this gap, but inconsistent and market-recognised KPIs are creating barriers to investment. Financial market participants are now expected to comply with multiple voluntary and regulatory sustainability indicators, such as the Sustainable Finance Disclosure Regulation (SFDR), EU Taxonomy and other regional frameworks such as the Energy Performance Buildings Directive (EPBD).
The inconsistency in key metrics, such as variations in measuring floor area, undermines comparability, increases costs and creates uncertainty in investment decisions.
ARESI was established to provide a practical, market-driven and open-source solution that harmonises sustainability indicators without reinventing the wheel. The initiative focuses on leveraging existing regulatory frameworks to create interim alignment, allowing investors, asset managers and financial institutions to make informed decisions while reducing the complexity of sustainability reporting.
Crucially, ARESI isn’t creating new standards or methodologies. Instead, it leverages existing frameworks, collaborating with key stakeholders to drive the adoption of agreed-upon clarifications and assumptions.
This approach tackles the root causes of ambiguity, ensuring consistency and avoiding the confusion that would arise from yet another set of standalone guidelines.
What ARESI proposes
The ARESI working group, composed of key industry players including IIGCC, RICS, INREV, EPRA, ULI and leading real asset investment managers, has identified 10 critical climate-transition indicators that are widely used in real estate finance. These indicators span energy efficiency, greenhouse gas emissions and exposure to fossil fuels.
The goal is to create a standardised approach to these indicators, applicable across transactions, valuations and investment decisions.
The ARESI proposal offers a data hierarchy to guide calculations of the 10 key climate transition indicators, ensuring consistency across voluntary and regulatory frameworks.
By aligning assumptions and methodologies, the initiative eliminates ambiguity, mitigates greenwashing risks and promotes transparency in sustainable real estate finance.
Industry consultation
ARESI conducted a comprehensive industry consultation and pilot programme. More than 30 organisations participated, including investment managers, banks
and industry associations.
The response was overwhelmingly positive, with 100% of respondents willing to adopt the proposal following minor refinements. Notably, 30% of participants already utilised all 10 climate-transition indicators in their reporting frameworks.
A selection of investment managers tested the practical application of ARESI’s methodology. This two-stage pilot assessed data availability, reporting burdens and the feasibility of standardising calculations. The results reinforced the effectiveness of the framework.
The road ahead
The publication of the ARESI white paper marks the beginning of an industry-wide effort to institutionalise these standards. The initiative will proceed with a two-tier engagement strategy:
1. Industry adoption: Encouraging real estate firms, investment managers, reporting tools and benchmarks to align their sustainability reporting with ARESI’s 10 key indicators.
2. Regulatory engagement: Collaborating with European regulatory authorities to integrate ARESI’s framework into formal sustainability disclosure requirements, including engagement on the forthcoming EU omnibus legislation, which aims to consolidate and streamline existing sustainability frameworks.
A recent joint statement by IIGCC, the European Sustainable Investment Forum (Eurosif) and the Principles for Responsible Investment (PRI), supported by more than 200 investors, urged EU policymakers to focus on targeted changes to technical standards and clearer implementation guidance.
ARESI aligns with this call for practical, transparent and actionable measures to improve sustainability reporting.
For industry professionals, the white paper offers an immediate opportunity to streamline sustainability reporting and improve the credibility of climate-related investment decisions. By providing clear, consistent and accessible sustainability indicators, ARESI aims to unlock greater investment in sustainable real estate.
The future of real estate finance depends on transparency, consistency, and sustainability. ARESI provides a crucial step toward harmonising sustainability reporting, reducing unnecessary burdens and fostering confidence in sustainable investment strategies.
As the industry moves towards widespread adoption, ARESI provides the critical foundation for informed investment in sustainable real estate. Through consistent KPI measurement, it reduces ambiguity, mitigates risk and enables investors and valuers to accurately assess the financial implications of sustainability, driving capital towards funds and projects aligned with net-zero ambitions.
Hugh Garnett is senior specialist for real assets at the Institutional Investors Group on Climate Change
ARESI – what industry experts say
Robbie Epsom, EMEA head of sustainability and senior director, CBRE Investment Management
“The ARESI open-source initiative is crucial for unlocking capital in real estate. We need clear KPIs, especially those formally recognised by both financial regulators and valuers. This alignment ensures everyone, from investors and occupiers to regulators and valuers, is working towards the same goals, using the same metrics and underlying assumptions. Only then can we effectively price sustainability into real estate assets, making it a recognised part of value-add and a core component of what defines ‘prime’ in the built environment. This shared understanding is the key to unlocking both sustainability-linked capital raising and asset-level investment.”
Aneta Rusiniak, head of sustainability real estate for Europe, Invesco
“Participating in the ARESI pilot has been invaluable. The guidance provided clear criteria for compliance, such as nearly-zero energy buildings. Despite some challenges with data comparison tools, the framework supports our reporting process. We value the consistency and standardised KPIs ARESI promotes, positioning our portfolio to integrate sustainable practices and anticipate regulatory shifts with measurable benchmarks. ARESI’s approach reduces complexity and fosters confidence in sustainable investment decisions.”
Brett Ormrod, net-zero carbon lead for Europe, LaSalle Investment Management
“The ARESI initiative provides an essential framework for making more-informed investment decisions for sustainable real estate in Europe. Through consistent measurement of a consolidated set of KPIs, it reduces ambiguity, mitigates risk and enables investors and valuers to accurately assess the financial implications of decarbonisation, enhancing our ability to serve as responsible fiduciaries of our clients’ capital.”
Aleksandra Njagulj, managing director and global head of sustainability real estate, DWS
“While aims of regulations are clear – address climate change mitigation and adaptation – the metrics and definitions are not always fully defined and can lead to confusion and inaction. Initiatives such as ARESI help break these barriers, establishing consensus and aiding regulators in their reviews. As both SFDR and EU Taxonomy are being reviewed, this white paper is a very well-timed contribution to this process.”
