How do you assess the real estate sector’s progress on sustainability in 2026?

The European real estate sector is making good overall progress on addressing sustainability challenges.

The decarbonisation of standing stock is being executed across asset classes by sophisticated institutional investors, which are leveraging active asset management and optimisation initiatives to secure uplifts in the energy efficiency and green credentials of their portfolios. The majority of new developments are also delivered to at least a ‘zero-emissions-ready’ standard, with occupier demand across sectors increasingly polarised in favour of the most sustainable properties. This alignment of incentives is driving sustainability gains across European real estate.

Investment decision-making increasingly takes physical risks of climate change into account, as well as the built environment’s contribution to global warming. Investors are exploring novel approaches to mitigate flood risk, for instance, through the design of new properties and the retrofitting of older assets.

Given that the pace of decarbonisation is slower than required to meet the objectives of the Paris Agreement, this is an important step for futureproofing European real estate against increasingly extreme weather events.

The sector is also embracing new tools and measurement frameworks, such as CRREM, to better measure its progress in transitioning to net zero.

What would you say is the biggest issue facing the sector when it comes to sustainability – is it decarbonisation, regulation, certifications, technological innovation, including AI, or something else?

There are several significant issues which the sector needs to address to accelerate its decarbonisation progress and meaningfully advance industry-wide sustainability goals.

Lease structures, for one, pose a major challenge to decarbonisation across Europe. They are ordinarily long-term agreements which lack the flexibility to anticipate or accommodate the intensive asset management initiatives which may be required to improve the sustainability credentials of standing stock.

‘Investment decision-making increasingly takes physical risks of climate change into account, as well as the built environment’s contribution to global warming.’

Laurent Lavergne, BNPP AM Alts

With landlords typically responsible for capex, but tenants covering energy costs for their premises, traditional leases are also poorly constructed to facilitate more productive dialogue to accelerate the implementation of sustainability-enhancing measures without prejudicing the finances of either party. Delays in agreeing and implementing measures to improve asset efficiency are therefore widespread.

Geopolitical tension is another meaningful inhibitor of decarbonisation. To deliver a more sustainable property industry aligned with international emissions objectives, the sector is reliant on countries across Europe rapidly adapting their energy mix to reduce the carbon intensity of their grids.

Over the long-term, European energy independence may rise up the agenda as a result of ongoing geopolitical instability, favouring renewable and low-carbon energy sources. In the immediate future, however, it threatens European commitments to wind down fossil fuel dependence.

What are your specific plans and key priorities for 2026 and what are the main obstacles you see on that path?

For the industry overall, the alignment of landlord and tenant incentives remains a crucial challenge that must be overcome to advance shared sustainability goals at pace.

BNPP AM Alts’ key priority for the year ahead is to continue to deliver on our portfolio-wide decarbonisation objectives. We have fully integrated CRREM trajectory tools into our front office, equipping our asset and fund management teams with robust data to inform investment and development decision-making.

We have made considerable headway towards the decarbonisation of our existing portfolio, and our development teams are also making progress with a number of significant new projects which will deliver market-leading assets with best-in-class sustainability credentials. Among these are 50 Fenchurch Street and 63 St Mary Axe, two City of London projects which, once complete, will be fossil fuel-free, all-electric, and target BREEAM Outstanding and NABERS five-star accreditations. 

Laurent Lavergne, BNPP AM Alts