Time over for greenwashing

Interview with Prof. Dr. Sven Bienert, IREBS University of Regensburg – Climate Protection is a task for society as a whole, which is also increasingly reflected in the legal framework for the economy in Germany. The real estate industry has a special responsibility in this regard: the building sector contributes around 35 per cent to final energy consumption and around 28 per cent to CO2 emissions. In order to achieve the specified climate protection targets at portfolio level, HIH Invest's asset management is developing strategic measures with the aim of reducing CO2 consumption on a portfolio-wide basis, increasing energy efficiency and conserving resources.

HIH Invest is in close exchange with industry associations and scientific initiatives. The question that concerns us: How can real estate companies make their contribution to climate protection across sectors and beyond national borders? In this interview we speak to Professor Dr Sven Bienert, Head of the Competence Centre for Sustainability in the Real Estate Industry at the IREBS Institute of the University of Regensburg, who examines the role of the real estate industry in the context of the climate and social changes taking place from a scientific and practice-oriented perspective.

The days when "greenwashing" was enough are simply over and even the last institutional market participant has set off. Climate risks, regulation and changing market demand - the pressure to act is now coming from all sides. Especially the legal requirements based on the EU Disclosure and Taxonomy Regulation, but also the CO2 pricing in Germany were massive drivers here. In addition, we now recognise another force in the real estate sector that supports decarbonisation efforts: Banks and other financial institutions providing debt capital to the market are increasingly demanding clarity on the emissions being financed - impacts on loan prices and lending can soon be expected. It is now essential for investors to have a clear sustainability strategy.

There is particularly great potential in older existing buildings. 80 percent of the buildings we will be using in 2045 are in fact already built. Common measures are the relationship of green electricity, water saving devices and waste reduction. In addition, owners can invest in a new sustainable heat supply system, install photovoltaic systems and switch to sustainable refrigerants in air conditioning systems.
However, the recording of consumption data is of particular importance. In the meantime, there are numerous providers who support digital data management and evaluation. In this context, it is more challenging to obtain data from the tenants, to whose consumption data the owners usually do not have access. For this reason, green leases and the installation of smart meters are becoming increasingly important.

At IREBS, we have developed the Carbon Risk Real Estate Monitor (CRREM) together with an international consortium, which investors, asset managers and other stakeholders use to determine the CO2 emissions of real estate portfolios and assess the extent to which these are in line with the Paris climate protection targets. The tool converts the consumption of different energy sources and F-gases at property level into greenhouse gases and compares them with climate protection-compliant decarbonisation paths up to 2050. The tool also reveals when properties lose their marketability due to excessive CO2 emissions, i.e. when they are in danger of becoming stranded assets. The tool thus shows when investments in improving the CO2 balance are necessary at the latest.

The real estate sector has to make its contribution in terms of reduced CO2 consumption; companies have recognised this and have adapted their business strategies and risk management accordingly. But it is also clear to the market participants that the social component must not be disregarded: specifically in the residential sector, it must be ensured that the already high rents are not driven up further. Ecological goals must not be achieved at the expense of the affordability of the rented housing stock. Here, politics is called upon to create incentives to mitigate the tenant-landlord dilemma, which weighs particularly heavily due to the moderate German ownership rate. The social issue also includes mobility concepts and urban development, where the real estate industry actively cooperates with municipalities, for example, to mitigate the urban-rural divide.