Ontario Construction News staff writer
Companies are favouring environmental, social and corporate-governance (ESG) factors more heavily in their decisions on which buildings to lease or buy, with many prioritizing green-building certifications and features that reduce energy consumption or generate renewable energy, according to a new global survey from CBRE.
The survey examined responses collected in Fall 2022 from more than 500 commercial real estate professionals worldwide. Overall, more than two thirds of respondents said their companies’ focus on ESG intensified in 2022 and the primary ESG consideration for real estate is to reduce energy consumption and carbon emissions.
Findings include:
- companies face rising energy costs and government regulations, they’re willing to pay a premium for spaces with features like on-site renewable energy generation (58 per cent) or smart technology to monitor and adjust energy use (53 per cent) to help reduce energy consumption and carbon emissions.
- 84 per cent of respondents said they specifically look for energy-reducing features – and almost half would either seek a discount or walk away from a deal if a building lacked these.
Another big ESG influence is green-building certification, such as the Leadership in Energy and Environmental Design (LEED) rating system or several administered by the Green Building Council. Forty-five percent of respondents said they would pay a premium to lease or buy a certified building, and a third would either seek a discount from or outright reject a building that lacked certification.
“The voice of our clients on this topic is clear,” said Matt Werner, CBRE’s global president of client care. “Reducing emissions is at the forefront for our clients, and they see ESG goals impacting all aspects of real estate decision making.
“That can include providing spaces that improve employee health and well-being, reducing resource use in building operations, or investing in renewables or efficiency. We anticipate the most highly sought-after real estate will help companies in achieving their stated environmental and social goals.”
Companies are also placing a higher value on buildings that support their employees’ mental and physical health. For example, respondents said buildings that make it easier for employees to ride their bike or walk (66%) and have an inclusive design to meet the needs of all employees (58%) are more attractive than those with an absence of those features.
Other findings:
- Organizational ethics and values: Although government regulation and higher energy prices are contributing external factors, 63% of respondents said company ethics, values or purpose remain the main driver behind their respective ESG priorities.
- Building resilience: With natural disasters becoming more common, 75% of respondents cite a building’s resilience to effects of climate change as having an impact on their real estate decision.
- Challenges for implementing ESG goals. The most common challenge across all regions was the lack of quality data (53%), followed by costs (47%) and uncertainty of benefits (36%).
To read the full survey, click here.