A new reality: sustainability disclosure standards in CRE

Property owners are striving to adhere to a growing list of Environmental, Social, and Governance (ESG) requirements to ensure their asset remains a viable long-term investment. Investors, along with governments, tenants, and communities, are increasingly prioritizing comprehensive, data driven ESG enhancements in commercial real estate, and using this to predict performance and guide decision making.

At the International Financial Reporting Standards (IFRS) Sustainability Symposium last month, we got one step closer to formalizing an international baseline for sustainability disclosures. This will drive greater transparency and accountability around ESG performance and give investors and other stakeholders the tools they need to effectively evaluate their next move.

New standards are emerging.

Much like the International Accounting Standards Board of the IFRS – which has helped develop the “global language of financial reporting” – the International Sustainability Standards Board was developed in 2021 knowing that sustainability factors are becoming a mainstream part of investor decision making. The standards for disclosure are focused on the needs of investors and financial markets and are intended to be cost-effective, decision-useful, and market informed.

How do the new standards affect me?

The new standards will require companies to provide more detailed information on their ESG strategy. This includes measures to reduce energy usage and greenhouse gas emissions (GHG), and measures that promote social wellbeing. A company will be required to disclose material information about all significant sustainability-related risks and opportunities to which it is exposed, in the context of helping investors assess enterprise value.

REMS’ ESG expertise

When the new sustainability disclosure standards take effect January 2024, a lot of eyes will be on the commercial real estate sector. Worldwide, building operations account for approximately 27% of global direct greenhouse gas emissions, and as such, there is growing demand to elevate ESG performance.

Our Real Estate Management Services ESG team is ready to advise our clients on how the management of their assets will need to evolve to demonstrate progress and performance in line with these new standards. This includes:

• Resource use efficiency and innovation
• GHG emissions reduction and net zero transition planning
• Social impact, inclusion, and accessibility

Together with our global network of experts, we are well positioned to help our clients apply international standards in a local market and tailor ESG solutions to unlock the potential of a specific asset.

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