Improving energy efficiency and calculating and reducing the carbon footprints of buildings throughout their lifecycle remain key ESG tasks for the real estate market. However, global real estate services firm Cushman & Wakefield notes that 2025 will also see a greater focus on the EU Taxonomy, including preventing the use of hazardous substances in construction, circular economy practices, as well as waste reduction and management.
Efficiency, efficiency and technology
The desire to reduce carbon emissions and resource use goes hand in hand with the search for cost savings. This will drive property owners, managers and developers to focus on new technological solutions that can bring the biggest positive change to their buildings. The development of smart building management systems, the Internet of Things (IoT), AI and 5G connectivity will enable more efficient and sustainable energy use and management in buildings. The team of Cushman & Wakefield helps select the right tools for each individual project,”
explains Katarzyna Lipka, Head of Strategic Consulting and ESG Advisory, Cushman & Wakefield Poland.
The challenge facing the retail sector is its high primary energy demand compared with other types of buildings. The benchmarks prepared for Deepki’s 2024 ESG Index reveal that this demand 48% higher than that of offices. Therefore, our long-term objective is to significantly improve the energy efficiency of retail properties,”
says Agnieszka Bobela-Musiał, Regional Shopping Center Director, Cushman & Wakefield.
The perspective of a whole building life cycle
EU member states are required to incorporate the provisions of the EPBD into their legislation within the next 18 months, which will also necessitate their further detailed specification. For instance, we are waiting for decisions from individual EU member states on whether renovation passports, scheduled to be introduced in 2026, will be mandatory or voluntary. These passports are expected to contain descriptions of renovation technologies, along with estimates for energy savings and reductions in operational greenhouse gas emissions, thereby supporting the transition of buildings to net zero. If made mandatory, preparation for them will require significant attention from market players,”
adds Katarzyna Lipka.
Above all, do no harm
One of the major challenges in ensuring that a building causes no harm to its users and the natural environment is preventing the use of hazardous substances. Such substances are still common in building and finishing materials, as well as in furniture, and the market is not yet fully equipped to deliver documentation confirming compliance with the EU Taxonomy. There is a strong need to create databases containing environmental parameters for building and finishing materials, such as the French INIES database, to provide easier access to information and facilitate demonstrating compliance with the EU Taxonomy guidelines. Companies must also gradually adapt their reporting systems to meet Taxonomy requirements,”
explains Julia Faltus-James, ESG Services Manager, Cushman & Wakefield.
Achieving compliance with the EU Taxonomy will require significant effort from the entire real estate sector. While companies have not yet recognised the short-term benefits of non-mandatory changes, it is important to note, however, that compliance with sustainable building standards is likely to lead to higher property valuations in sale transactions. Additionally, adapting to climate change could help lower future insurance premiums, for example,”
adds Julia Faltus-James.
The challenges of a circular economy
Designing buildings with easy demolition in mind has already gained traction. This trend is accompanied by the rise of modular construction solutions enabling the repurposing of newly designed properties to extend their useful lifespan. However, there are still no established frameworks for treating buildings as material banks (BAMB),”
explains Katarzyna Lipka.
An investor’s take on ESG
We have observed that due diligence processes are becoming increasingly detailed, covering a wide range of factors such as energy efficiency, decarbonisation, compliance with and readiness for evolving regulatory requirements, as well as social and environmental considerations. This shift is also being significantly driven by pressure from tenants and banks, and by the potential for tangible savings on service charges. The adaptation of buildings to ESG requirements or the failure to take appropriate action will lead to further investment product polarisation. Some investors seek prime products, including prime sustainable buildings, while others focus on high returns from opportunistic assets,”
comments Marcin Kocerba, Partner, Capital Markets, Cushman & Wakefield Poland.