Expo Real: Standardizing ESG data crucial for EU real estate
More standardization of ESG 'best practices' is essential to creating a level playing field in the European real estate sector, panelists agreed during the Real Asset Media event on data, innovation, and proptech at EXPO REAL, held in early October in Munich.
The real estate sector currently has various certifications, noted Chris de Wal, Director of Operations & Investments at Necron Capital. “These need to come together so that we have one benchmark and one goal that everyone works toward.” Necron Capital specializes in investing in and managing commercial real estate for professional investors. For the opportunities Necron sees in the logistics market, the Necron Capital Logistics Core Fund was recently set up, valued at €500 million. The panel was moderated by Richard Betts, founder of Real Asset Media.
Standardization is a key topic, said Paul Wessels, founder and CEO of Blue Module, an ESG reporting software provider. “We see intense discussions between banks and major investors via organizations such as INREV and RICS to create a common data list for ESG. It’s similar to financial information [for company results] – you need to understand what you're discussing, and evidence is crucial. But I see progress in this area, so we are making real strides forward.”
Many real estate investors have portfolios across different regions and asset classes, and it’s very difficult to manage all data centrally unless a standard exists for each asset class, added Jan-Kristian Westerlund, Chief Commercial Officer at Freesi (air quality monitoring). “We need the sector to come together as owners, managers, and data providers to create standards – or at least de facto industry standards – so that more players can participate.”
Westerlund pointed out that many building certifications are shifting toward performance-based scores, which means investors must find resources and methods to assess and score aspects such as air quality performance. “It’s still relatively new, and we need to learn how it works, but that’s certainly where the market is heading,” he said.
Blue Module assists its clients in delivering the necessary ESG reporting for bank loans, and companies that can’t provide this are already facing a “brown discount” or are even failing to secure financing, Wessels noted. “We see this drive from a value perspective, but also from the investors themselves. ESG is increasingly important for the due diligence you must conduct on a building.”
Much more developers and investment funds should see ESG as a value creation tool, De Wal agreed: “I think that’s the main driver behind the sector and helps us to have as little impact on our environment as possible.”
Photo, from left to right: Richard Betts, Jan-Kristian Westerlund, Paul Wessels, Chris de Wal
