As predicted by the international consultancy firm, Cushman & Wakefield, in its latest report “Trends Radar”, by 2024 the commercial real estate market in Poland will be greatly influenced by increased regulatory pressure related to ESG. The implementation of EU reporting standards and the new version of the EPBD directive will mean that investors will have to place increasing emphasis on the implementation of practical solutions supporting sustainable development in their property portfolios.
The growing importance of social and environmental aspects is now a key challenge for investors and companies operating in the commercial real estate market.
Regulations are undeniably the main driver of the pursuit of sustainable development and the implementation of ESG aspects today. They enforce a thoughtful approach to managing their impact on the environment and society in organizations, as well as focusing on the risks arising from climate change and the transformation towards a low-emission economy. The need to adapt to new standards, most of which are still not definitively established at both the regulatory and market level, generates financial and organizational pressure”, says Ilona Otoka, Senior ESG Consultant at Cushman & Wakefield.
In the medium term, investors should expect the implementation of the EPBD directive, along with national transposition, as well as energy classes for buildings. Therefore, strategic decisions about preparing their properties for new requirements should be made now.
In connection with the separate emission trading system (ETS II – Emission Trading System) created at the European Union level in 2023, for the construction sector and road transport, new fees and penalties related to greenhouse gas emissions will also be introduced from 2027. This calls for the introduction of risk management tools, such as Internal Carbon Pricing or Shadow Pricing.
Ecological multi-criteria certification systems also follow regulatory changes, and this will likely be the near future of these assessments. This is evidenced by the latest version of the BREEAM V7 certification being consulted, the added value of which will be the introduction of indicators ensuring greater compatibility with the EU Taxonomy and the SFDR regulation, adds Ilona Otoka.
Regulations will also translate into the need to monitor the carbon footprint throughout the lifecycle of buildings, and investors will strive to avoid overvaluation of their properties associated with the lack of reflection of risks and opportunities related to the transformation towards a low-emission economy.
At the same time, the expert from Cushman & Wakefield draws attention to the fact that there is still a lack of sufficient market data to appropriately reflect the risks of this transformation in valuations, which in turn may affect the risk of the so-called “carbon bubble” in the market.
ESG due diligence is becoming increasingly common in investment transactions, and tenants are increasingly considering ESG aspects when choosing their locations.
Organizations that approach sustainable development and ESG issues in a strategic way can gain a competitive advantage in the market, building trust and creating long-term value”, says Katarzyna Lipka, Head of Strategic Consulting and ESG at Cushman & Wakefield in Poland.
Energy efficiency and increasing the share of green energy in the energy mix are one of the priorities on the way to transforming the sector. Market leaders are already developing strategies to achieve Net Zero, with substantial assistance from Net Zero Carbon Analysis for owned assets.
The principles of a circular economy are of particular importance in the context of reducing the carbon footprint in the real estate market. As predicted by experts from Cushman & Wakefield, designing buildings oriented towards zero emissions and circularity will be the norm in the long term.
Sustainable development requires cooperation – in the coming years, sharing economy models and energy cooperatives, which are excellent solutions e.g. in the absence of opportunities to install RES on their own property, will become more important.
The development of building management systems using artificial intelligence (AI), which will enable more efficient and sustainable exploitation and management of energy consumption, will also be crucial. This may generate savings in the long run.
As highlighted by Cushman & Wakefield’s experts, the social role of the industry is just as important as its action for environmental protection. Factors related to the attractiveness of the work environment and diversity, equality and inclusion issues are becoming increasingly important, as is cooperation with local communities, which can bring many benefits to both developers and residents.
Space design and planning are guided not only by the trend towards a circular economy. Supplementing missing functions, social integration, “giving back” green and open spaces to city residents – these are also priorities in contemporary architecture and urban planning”, summarises Katarzyna Lipka.
