ESG criteria as innovation drivers to build value along with real estate retrofit and urban transformation processes

Track 2 – Special session

Photo credits: artursafronovvvv from freepik.com

Organisers: Paolo Rosato (University of Trieste and SIEV President), Marta Bottero (Politecnico di Torino) , Chiara D’Alpaos (Università degli Studi di Padova), Adriano Bisello (Eurac Research), Inger Andresen (NTNU)

Keywords: ESG, Real estate, Impact investing, Urban projects, Smart buildings, Sustainable living

Journal publication: Valori e Valutazioni – DEI (special issue)

Description:

Compliance to Environmental, Social, and Governance (ESG) criteria is becoming a key factor to rate companies, alongside financial performance, on their impact on operations and future outlook. This enhances their attractiveness to investors, as it shows not only paying attention to current impacts, but also readiness to cope with future transformations due to climate change.

On the other hand, the real estate market is full of sustainability rating systems (LEED, BREEAM, …) which mainly focuses on the “E” component of ESG, and research on certified buildings has already shown some appreciation by the market (especially commercial locations), although with high variability.

As:

  • the building sector is one of the largest contributors to greenhouse gas emissions in the EU,
  • the European Commission has committed itself to ESG’s and in its long-term strategy for 2050, recognises the need for near-complete decarbonisation of the building sector to meet its climate goals, which implies large scale investments
  • citizens have a lot to gain from the decarbonisation of buildings, including health, employment, lower household energy bills, and system cost savings
  • there is a growing number of ESG investors, “doing nothing’ means the value of the asset – no matter where it is or what type – will likely be negatively impacted by long-term sustainability challenges.

Moreover, as stated by the EU Vademecum for project appraisal 2021-2027, “in our path to a more innovative, sustainable and cohesive growth model, the role of economic appraisal is more important than ever. Our projects need to provide the best value for money and offer the best return for the society by providing services and goods in an effective and efficient manner”.

In this framework SIEV, Società Italiana di Estimo e Valutazione, (Italian Society of Appraisal and Valuation) together with the H2020 ARV Project and Eurac Research would like to enter into the debate on how ESG criteria should be assessed and measured from the real estate asset’s perspective as they affect not only the behaviour of owners and operators but also other matters related to the physical properties themselves, such as high energy efficiency, low life cycle emissions, accessibility criteria, adequacy of working or living conditions, fair access to affordable housing, low operating expenses, resilience to changes / multiple purposes, availability of smart systems.

Original research contributions, ranging from theoretical works to applied case studies are welcome to better understand what are the components that enhance ESG factors, their cost and estimate; whether favourable financing is available for buildings with a higher ESG rating, and how to leverage it; what decision support tools can be offered to investors and decision-makers approaching real estate retrofit projects and urban transformation investments.

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