A snapshot of panel discussions from the European Public Real Estate Association’s annual event in London.

The EPRA Sustainability Summit, which took place in London in late November, explored how Europe’s public real estate sector can turn sustainability goals into measurable impact.

The summit brought together leading investors, CEOs and sustainability experts to share strategies that are shaping the future of real estate. Several speeches and expert panels focused discussions on climate resilience, regulatory change and value creation.

Participants welcomed the simplification of the Sustainable Finance Disclosure Regulation (SFDR) announced by the European Commission, which, everyone agreed, will make it easier for funds to raise capital for transition strategies to decarbonise the built environment.

Here we present a snapshot of what some of the panellists had to say.

Panel 1

Olivier Elamine, CEO, Alstria: ‘net zero is a misleading term’

“Net zero is a misleading term, because it leads people to believe that you can operate your building without any carbon. We need to be honest as an industry, and for me saying net zero makes it more appealing, like an advertising campaign. It is not about creating value but about making the right choices.

“We have low-carbon design principles, which are simple and shared with everyone in our value chain. We always opt for common-sense solutions. There is a tendency to turn to tech as a default, but there might be too many sensors in a building and we may be collecting too much data. Sometimes less is more. At Alstria we use tech if we can demonstrate that it adds real value to a building.”

Linda KjÄllÉn, head of ESG and sustainability solutions, senior director, CBRE: ‘decarbonisation is being driven by occupiers’

“Investors want to buy ESG-compliant, certified buildings, but they are also more cautious. We look at occupier trends and we see that decarbonisation is increasingly being driven by them, as most tenants want a 2030 target.

“They are more demanding and discriminating, but they do not necessarily want to pay more. There is a rental premium for certified assets in Europe, but it has decreased in the last few years.”

Andrea Palmer, CEO, CRREM: ‘the sweet goal of double CRREM’

“It is valuable to know how to build something properly, because once it has been built it will be there for a while. I am optimistic because even in the US things are happening and some doors are opening. There is a review underway of our entire global EUI (energy use intensity) methodology so that it makes sense, and a slimming down of KPIs.

“We no longer talk of stranded assets but of misaligned assets. The idea is to have both CRREM pathways – decarbonisation and energy reduction – aligned. The new term is double CRREM.”

Laurent Lavergne, global head of sustainability, AXA IM Alts: ‘the importance of alignment’

“How do you allocate capital to retrofit your portfolio? As investment managers we also need to look at cashflow and energy savings. CRREM is one of our main tools, and we have integrated it into all our policies. Alignment is very important: it is a completely different way of thinking and acting, and asset managers play a very crucial role in the process.”

Panel 2

Christiane Conrads, partner, global real estate sustainability lead, PwC: ‘the application problem’

“Uncertainty about new regulations and what is required is the biggest challenge I see in the market. There was a sense of enthusiasm after covid, but now there is some fatigue and we need to act to
get that motivation back. While some German companies have stopped reporting, some clients in the Middle East now publish their sustainability report as a choice, without any obligation to do so, because they are convinced that the methodology will help them analyse the entire value chain.

“There is a lot of benchmarking and looking at what other players internationally are doing. There is a progressive strategic integration of sustainability. The real estate sector does not have an awareness problem, but it does have an application problem. That is why other sectors are way ahead of us.”

Melville Rodrigues, head of real estate advisory, Apex Group: ‘winning hearts and minds’

“Our sector needs to attract institutional pension funds, there is a desperate need
for that capital to support transition strategies. We need to move away from a sustainability bubble and win the hearts and minds of people to stop the anti-ESG agenda. We need to sharpen our act, show efficiency of operations and contribute to meaningful change.”

“Collaboration can achieve persuasion at the regulator level: the European Commission’s decision to scrap Article 8 and 9 labels from SFDR is a tribute to EPRA and INREV that for years have been articulating the message that the Article 8 and 9 regime was not credible. The sustainability regulatory regime must work with objective criteria and win the confidence of pension funds.”

Amelie Woltrager, lawyer, senior associate, Arendt & Medernach: ‘mismatch in interpreting the rules’

“There is a lot of interest in the topic, but for cross-border investors there is always a mismatch between the interpretations of SFDR in each country, which complicates things. It is of crucial importance how the regulators will apply the rules, and also how the market will react.

“Some funds can find it difficult to align their operations with new sustainability objectives. On the other hand, there is the question of reputational risk if you do not comply with sustainability requirements.”

Robert Greenberg, Head of Sustainable Finance, Segro: ‘focus on value’

“The purpose of the regulation is to improve efficiency. We know what creates value and we should focus on what is material for business, whatever the regulatory changes, we should always have that internal strategic focus and make that link to value.”