How ESG will shape the property market in 2024

29 January 2024

In 2024 the Polish commercial property market will be largely impacted by growing ESG regulatory pressure, says global real estate services firm Cushman & Wakefield in its latest Trends Radar report. Following the entry into force of the EU reporting standards and the revised EPBD, investors will be required to place an increasing emphasis on implementing practical sustainable solutions for their property portfolios.

The growing importance of social and environmental aspects represents a key challenge for commercial property investors and firms.

Regulations are undoubtedly the main driver behind sustainable growth and the implementation of ESG policies. They are forcing organizations to adopt an informed approach to managing their environmental and social impact, and to focus on climate risk and the transition towards a low-carbon economy. The need to adapt to new standards - most of which have not been fully defined at the regulatory and market levels - is creating financial and organizational pressure,”

says Ilona Otoka, Senior ESG Consultant, Cushman & Wakefield.

With new regulations such as the revised EPBD and its transposition into national law and regulations on energy efficiency classes of buildings expected to take effect in the medium term, investors should already begin taking strategic decisions to adapt their properties to new requirements.

Following the establishment at the European Union level in 2023 of a separate self-standing emissions trading system, among other things, for the building and road transport sectors (ETS II - Emissions Trading System II), new penalties and charges on greenhouse gas emissions will also be introduced with effect from 2027. This will require companies to roll out risk management tools such as Internal Carbon Pricing and Shadow Pricing.

Certification updates and the spectre of a “carbon bubble”

Multi-criteria green certification systems are also being revised to reflect regulatory changes and will most probably continue to be updated in the near future. This is evidenced by the latest BREEAM V7, currently under consultation, whose added value will include metrics for greater compatibility with the EU Taxonomy and the SFDR (Sustainable Finance Disclosure Regulation)[1],”

adds Ilona Otoka.

New regulations will also mandate carbon assessment throughout the lifecycle of a building and investors will take measures to prevent inflated property valuations that do not factor in the risks and opportunities of transition towards a low-carbon economy.

The expert from Cushman & Wakefield also notes that there is still a lack of market data to accurately factor in transition risks in valuations, which in turn is likely to increase the risk of a “carbon bubble”.

ESG due diligence is becoming more and more common in investment transactions, with tenants increasingly considering ESG aspects when it comes to choosing a location.

Organisations taking a strategic approach to sustainability and ESG are likely to gain a competitive market advantage by building trust and long-term value,”

says Katarzyna Lipka, Head of Strategic Consulting and ESG, Cushman & Wakefield Poland.

Investment in improving energy efficiency as a way towards net zero

Energy efficiency and increasing the share of RES in the energy mix are among key priorities in the transformation of the sector. Market leaders are already developing strategies for reaching net zero emissions, relying in this on Net Zero Carbon Analyses for their assets.

Circular economy principles are particularly important in the context of reducing the carbon footprint of properties. Cushman & Wakefield expects that designing buildings with a focus on zero emissions and circularity will become a market standard in the long term.

Sustainable growth requires cooperation. Sharing economy models and energy cooperatives will increase in importance in the coming years – the latter are a very good solution whenever RES systems cannot be installed on-site.

The development of AI-powered building management systems will also be a very important factor as they will enable a more efficient and sustainable use and energy consumption management, which in the long run is expected to generate savings.

“S” equal to “E”

Cushman & Wakefield notes that the sector’s social responsibility is no less important than its environmental measures. Factors impacting the attractiveness of the work environment and diversity, equity and inclusion matters are increasing in importance. Equally important is cooperation with local communities as it may bring many benefits to both developers and inhabitants.

Space designing and planning is impacted not only by the trend towards circular economy. Other important priorities in modern architecture and urban planning include adding missing functions, social integration and giving green and open spaces back to city inhabitants,”

concludes Katarzyna Lipka.

For more information on real estate market trends and ESG priorities in each market segment, please see the full version of the report at:

PL Trends Radar 2023

[1]: The Sustainable Finance Disclosure Regulation (SFDR) is to improve transparency in the analysis of sustainability risks inherent in the business conducted by financial market participants and financial advisors. Source document: https://eur-lex.europa.eu/legal-content/PL/TXT/PDF/?uri=CELEX:32019R2088&from=PL ]

Agnieszka Ratajczyk

Senior Consultant at Linkleaders

+48 512 546 107