WHAT DOES ESG MEAN?
ESG stands for Environmental – Social – Governance and describes the three sustainability-related areas of responsibility of companies.
The EU is to become the first climate-neutral continent by 2050. This goal was decided by the European Commission in December 2019 as part of the European Green Deal. As a first milestone, the EU’s greenhouse gases are to be reduced by at least 55% below 1990 levels by 2030.
What impact will the EU taxonomy have on the real estate industry?
Even though there are currently still some open questions in the interpretation of the regulations and further legal acts will follow, all members of the real estate industry can only be strongly recommended to keep an eye on the criteria implemented by the Taxonomy Regulation with regard to the sustainability of real estate.
Properties that are not taxonomy-compliant are likely to be less in demand on the market, at least in the medium to long term, and may also be less easy to finance with debt capital. This is likely to have an impact on the performance of such properties. This is certainly also an opportunity for certain market participants.
This also applies in consideration of the efforts at the national level. With the Building Energy Act, concrete requirements for the energy efficiency of buildings are summarised in a set of regulations for the first time. The requirements contained in the Building Energy Act will be put to the test again in 2023 at the latest. At present, the specifications contained therein are less stringent than the technical assessment criteria of the Taxonomy Ordinance. However, it is to be expected that the specifications will become increasingly stricter in the coming years in view of the ambitious goals of the Green Deal.
Overall, it is therefore to be expected that the price differences between energy-efficient and non-energy-efficient buildings will increase in the coming years. The other sustainability criteria that have yet to be specified will also become value-forming factors in the near future. Investors should therefore already take these criteria into account in their purchasing decisions. Portfolio owners should also check their properties at an early stage to see whether they are already taxonomy-compliant and, if not, with what effort this goal can be achieved.