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ESG criteria: What they mean for the real estate industry and how location intelligence supports investments

The importance of real estate for sustainability is huge: real estate is responsible for 40 % of energy consumption and 36 % of CO2 emissions in the EU. The ESG criteria (Environmental, Social, Governance) provide guidance on what to consider. However, since this year, this orientation has been firmly anchored in law: through the Sustainable Finance Disclosure Regulation (SFDR) the EU is now holding the real estate industry accountable. Location Intelligence helps to ensure a smooth and orderly transition in accordance with the regulations.

Head to the portal!

The ESG criteria

We have mentioned it before in another blog article: Sustainability is not a topic that can be described simply and comprehensively. Rather, it includes all levels of our society, just like the Sustainable Development Goals. In order to further establish sustainability and make it the standard, the EU is now also taking a look at investments and assets. 

ESG criteria are used to assess the sustainability of an investment. And these criteria can be divided into three dimensions:

Environmental - Social - Governance

Environmental
Social
Governance
  • investments in renewable energies
  • energy and raw materials are used efficiently
  • production is geared at environmentally compatible standards
  • amount of emission in the air is reduced
  • labor rights are considered and respected
  • high standards of occupational safety and health protection
  • equal conditions for all prevail in the workplace, especially in terms of wages and opportunities for training and further education
  • freedom of association is particularly valued
  • subcontractors are required to comply with sustainability standards as well
  • reduction of and fight against corruption and bribery
  • sustainability management is firmly anchored, also at Executive Board and Supervisory Board level
  • the remuneration of the Executive Board should also be based on whether sustainability targets have been achieved

 

That sounds like a lot, and it is. A complex undertaking, no question. And it's a topic that should be approached from all sides. It is no surprise that some real estate companies are hiring new staff to focus exclusively on implementing ESG criteria.

For the real estate industry, the environmental dimension is particularly relevant.

  • How sustainable are the properties I invest in?
  • Is there a need for further renovation and expansion?
  • Am I contributing to sustainability with my investments?
  • Do facades need to be renewed?
  • Do old boilers need to be replaced?

Challenges exist especially with large and old buildings that do not achieve the desired climate protection standards.

An investment must therefore be demonstrably measured against ESG criteria and take them into account. And this is no longer a recommendation or an appeal. It has been actively demanded in EU law since March of this year in the SFDR.

 

The SFDR - Sustainable Finance Disclosure Regulation

Since March 2021, it has been mandatory for players in the real estate industry to implement ESG reporting. They have to report on how risks in terms of sustainability are to be taken into account in accordance with ESG criteria in decision-making processes within the company and in investments. Read more here.

 

But how can investments be evaluated in terms of their sustainability?
In the Geospin portal by linking multi-layered data throughout Germany.

 

 

Geospin's Data Diversity for Sustainable Investment

Geospin and LIA can further help drive sustainability and ESG criteria in the real estate industry through a diversity of data. As the different dimensions of sustainability, the data is even more multi-layered.

And what data plays a role in the sustainability of a property?

Real Estate Specific Factors
Social Factors
Climate and geopolitical factors

  – rental price

  – year of construction

  – building type

  – apartment use

  – ownership

  – living Space

  – number of rooms

  – heat consumption and heat demand of individual properties (in planning)

  – isochronous maps (accessibility to certain intersections, in planning)

  – accessibilities

  – proximity to public transportation

  – proximity to schools / kindergartens

  – proximity to shopping facilities

  – recreational facilities

  – flood risk areas

  – recreation areas

 

All this data is collected in our Geospin portal for the whole of Germany and can be accessed directly.

So you can directly, quickly and easily evaluate the sustainability of real estate according to the ESG criteria.

 

Using the Geospin Portal as a basis for decision-making puts investments on a sound and sustainable footing.

Head to the portal!

 

 

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