ESG and Real Estate
A practical guide for the entire real estate and investment life cycle
Zusammenfassung
This is the first comprehensive practical handbook on the topic of "Environmental Social Governance" (ESG) and its impact on the real estate industry. The sustainability megatrend is still in its early stages in the real estate sector, and there is a lack of standards, practical examples and data. The development is very dynamic and sometimes confusing, and new, complex, requirements and regulations are constantly being added. The authors – an expert team of economists, lawyers, investors, asset managers and engineers – provide an overview of national and European regulatory requirements as well as current market developments. They show what role ESG plays not only in the areas of new construction, renovation and real estate management, but also in investment processes and real estate valuations. Contents: - ESG and the real estate market - ESG and regulatory environment - ESG and real estate management - ESG in urban and project development
- 1–14 Titelei/Inhaltsverzeichnis 1–14
- 15–16 Foreword 15–16
- 17–22 Foreword by the editors 17–22
- 23–236 Part I ESG and the real estate market 23–236
- 1 Policy and regulation in the area of tension between shaping the ESG transformation and growing regulatory pressure (Christiane Conrads)
- 1.1 Introduction
- 1.2 Milestones at international, European and national level
- 1.2.1 International framework for solving the core problems of global change
- 1.2.2 ESG measures at European level
- 1.2.3 National sustainability measures
- 1.3 Increasing importance of sustainability in society: Science and jurisprudence
- 1.3.1 Social rethinking
- 1.3.2 The establishment of sustainability science
- 1.3.3 Climate and environmental protection jurisprudence
- 1.4 Summary and outlook
- 2 Market trends and value drivers (Christopher Jäger and Mareen Benning-Linnert)
- 2.1 Introduction
- 2.2 Market-oriented real estate management
- 2.2.1 Exogenous parameters of influence on a revolutionizing financial system
- 2.2.2 ESG-oriented real estate management in the context of the financial revolution
- 2.3 Valuable real estate management
- 2.3.1 Simplified relationship between the assets or capital, the value and the purchase price of a company and/or a enterprise
- 2.3.2 Strategic dimension of value-based real estate management
- 2.3.3 Operational dimension of value-based real estate management
- 2.3.4 Control-oriented dimension of value-based real estate management
- 2.4 Outlook
- References
- 3 ESG in the international context (Dr Elaine Wilke and Christiane Conrads)
- 3.1 Introduction
- 3.2 Elements of sustainable investment policy and regulation
- 3.2.1 Disclosure of ESG criteria by companies
- 3.2.2 Stewardship codes
- 3.2.3 ESG requirements for investors
- 3.2.4 Taxonomy
- 3.2.5 National strategies for sustainable finance
- 3.3 Implementations of ESG regulations in selected countries
- 3.3.1 United States
- 3.3.2 Australia
- 3.3.3 The Netherlands
- 3.3.4 United Kingdom
- 3.3.5 Japan
- 3.3.6 China
- 3.4 Summary and outlook
- 4 Climate risks and benchmarking (Dr Daniel Piazolo)
- 4.1 Amazing momentum among the public, governments and investors
- 4.2 Climate risks
- 4.2.1 Causes of climate risks
- 4.2.2 Physical climate change risks
- 4.2.3 Transitory climate change risks
- 4.2.4 Understanding risk
- 4.3 Benchmarking
- 4.3.1 Challenges
- 4.3.2 New building
- 4.3.3 Redevelopment projects
- 4.3.4 Operating real estate
- 4.3.5 Stranded assets
- 4.3.6 Value-at-risk approach for all properties
- 4.3.7 Ratings
- 4.4 Outlook
- References
- 5 Digitization as a prerequisite and instrument of ESG transformation (Thomas Veith, Volker Wergen, Frederik Walbaum and Florian Huber)
- 5.1 Introduction
- 5.2 State of digitization and increasing pressure to act through politics and regulation
- 5.3 Overview of existing initiatives, scoring and ratings to measure sustainability
- 5.4 Use of new technologies for data management and transparency on the financial market
- 5.4.1 Collection of ESG-relevant real estate data
- 5.4.2 Data availability and processing
- 5.4.3 ESG as a driver of the PropTech universe
- 5.5 The tension between digitalization and legal requirements
- 5.5.1 Fundamental rights relevance of the protection of personal data
- 5.5.2 Scope of data protection law and definitions
- 5.5.3 Duties of the responsible person
- 5.5.4 The Metering Point Operation Act
- 5.5.5 Processing of measurement data within the scope of application of the MsbG by real estate companies
- 5.5.6 The Business Secrets Protection Act
- 5.5.7 Challenges in the processing of ESG-relevant inventory data
- 5.6 The digital ESG transformation in corporate management
- References
- 237–356 Part II ESG and regulatory environment 237–356
- 6 Impact of climate change on the real estate industry (Approaches to managing climate opportunities and risks)
- Approaches to managing climate opportunities and risks
- 6.1 Trend topic climate in the real estate industry: What’s behind it?
- 6.2 Climate risks and their impact: The double materiality
- 6.3 Emerging risk and climate scenario analysis
- 6.3.1 Risk factors and their scientific basis
- 6.3.2 Methodological approach: Climate scenario analysis
- 6.4 Generated risk and decarbonization targets
- 6.5 Example of key figure management for climate risks
- 6.6 Outlook for climate risk management in the real estate industry
- 7 ESG criteria measurement tools and taxonomy (Simone Lakenbrink)
- 7.1 General background
- 7.2 Sustainable building certificates
- 7.3 Green rating – GRESB
- 7.4 EU decarbonization pathway – CRREM
- 8 Special features of energy law and economics in the context of ESG (Peter Mussaeus, Sophia Truong and Theresa Stollmann (with the collaboration of Christian Daniel Hein))
- 8.1 Introduction
- 8.2 The trends in the energy industry and their impact on real estate
- 8.2.1 Energy law: A brief introduction
- 8.2.2 Decarbonization
- 8.2.3 Decentralization
- 8.2.4 Digitization
- 8.3 Conclusion
- References
- 9 Impact investing in the real estate industry (Sebastian Kreutel and Andreas Hofstätter)
- 9.1 Introduction
- 9.2 Impact investing in interaction with the UN Sustainable Development Goals (SDGs)
- 9.3 Differentiation of sustainable investment forms
- 9.4 What are impact investments and how are they measured?
- 9.5 Implementation of impact investments in practice
- 9.6 Social impact investing as a special form of impact investment
- 9.7 Conclusion and outlook for real estate impact investments
- 10 ESG – tax law requirements and effects (Dr Leila Momen and Sven Behrends)
- 10.1 Tax and ESG – responsible tax policy
- 10.1.1 Fiscal sustainability reporting
- 10.1.2 Excursus on public Country by Country Reporting
- 10.1.3 Application of the GRI Tax Standard in the real estate industry
- 10.2 Real estate and environmental taxes, government subsidies and support programmes with a tax reference
- 10.2.1 International level: OECD/IMF Tax Policy and Climate Change report
- 10.2.2 European level – draft of the new guidelines for climate, environmental and energy aid and decision of the European Climate Change Act
- 10.2.3 Legislation in Germany
- 11 ESG in the context of real estate insurance (Oliver Götz, Patrick Prüss, Heike Schmitz and Svetlana Thaller-Honold)
- 11.1 Sustainability in the insurance industry
- 11.2 Demand for sustainable insurance products in the real estate industry
- 11.2.1 Private customers
- 11.2.2 Industrial and commercial customers
- 11.3 Challenges in the design of sustainable property insurance
- 11.4 Possible sustainable insurance products for the real estate industry
- 11.4.1 Product structure in the insurance market
- 11.4.2 Market offer
- 11.5 The property insurance of the future
- 357–508 Part III ESG and real estate management 357–508
- 12 Practical experience in the development and implementation of sustainability strategies (Roger Baumann and Jens Müller)
- 12.1 Preliminary considerations
- 12.2 Problem
- 12.2.1 Real estate in the light of corporate strategy
- 12.2.2 Different priorities and potential conflicts of interest
- 12.2.3 Different risk dimensions
- 12.2.4 Long-lived asset versus granularity of data
- 12.3 Strategy development
- 12.3.1 Transfer to the real estate segment
- 12.3.2 Interaction of reporting and standards
- 12.4 Strategy implementation
- 12.4.1 Practical excursus: Operation Optimization and Energy Controlling project (BOEC)
- 12.4.2 Costs and profitability set the pace
- 12.4.3 Integrating data platform and uniform data language as the key
- 12.4.4 Digital twin as nucleus
- 12.4.5 Transparency as the highest premise and benchmarking as the goal
- 12.5 Closing words – or because it’s just the right thing to do
- References
- 13 ESG in asset management (Jens Boehnlein)
- 13.1 In the beginning is the vision
- 13.1.1 Individual target definition
- 13.1.2 Strategy definition
- 13.2 From vision to implementation
- 13.2.1 Requirements
- 13.2.2 Responsibility
- 13.3 Stakeholder involvement
- 13.3.1 Service provider
- 13.3.2 Tenants and users
- 13.3.3 Investors
- 13.4 Practical implementation
- 13.4.1 Data flow
- 13.4.2 Profitability calculation
- 13.4.3 Pilot projects
- 13.4.4 Outlook
- 13.5 Vision
- 14 ESG due diligence as a value driver for real estate acquisition and portfolio management (Thomas Veith, Thorsten Loose and Alexia Tsiter)
- 14.1 Why ESG due diligence?
- 14.2 For whom does ESG due diligence make sense?
- 14.2.1 Who can?
- 14.2.2 Who must?
- 14.3 At what stage in the transaction process should ESG due diligence be conducted?
- 14.4 What is analyzed in ESG?
- 14.4.1 General
- 14.4.2 Environmental: What are the environmental features of the building?
- 14.4.3 Social: What are the social features of the building?
- 14.4.4 Governance: Are stakeholders behaving properly?
- 14.5 Opportunities/risks
- 14.6 Outlook
- 15 ESG integration in investment management (Martin Brühl)
- 15.1 Setting the Scene
- 15.1.1 The New ESG imperative
- 15.1.2 Mitigating sustainability risks through transaction management
- 15.1.3 Sustainability first
- 15.2 Sustainability assessment in the acquisition process
- 15.2.1 Everyday practice
- 15.2.2 Dealing with new taxonomy requirements
- 15.2.3 Mind the gap
- 15.2.4 Built before »Green Day«, 1 January 2021
- 15.2.5 Allocation of capital to sustainable refurbishments
- 15.2.6 Above it all hovers »do no significant harm«
- 15.3 Conclusion and outlook
- 16 ESG criteria in ESG real estate finance (Dr.-Ing. Anja Henrike Kleinke)
- 16.1 Introduction
- 16.2 Importance of real estate and real estate investments in achieving the climate goals of the EU and Germany
- 16.3 Sustainable finance and ESG integration
- 16.3.1 Sustainable finance as a contribution of financial markets to the transformation of social, environmental and economic factors
- 16.3.2 Integration of ESG criteria for sustainability classification
- 16.4 Sustainable finance strategy at EU level and ESG integration
- 16.5 Status quo on ESG integration: From voluntary commitment to the goal of uniform classification standards for sustainability
- 16.6 Selection of existing self-commitment standards on sustainability goals
- 16.6.1 UN PRI – Principles for Responsible Investment
- 16.6.2 Agenda 2030: 17 Sustainable Development Goals (SDGs)
- 16.7 German Sustainable Finance Strategy
- 16.7.1 Structure of the German Sustainable Finance Strategy
- 16.7.2 Field of action: Strengthening sustainable finance at the global and European level
- 16.7.3 Field of action: Improving transparency
- 16.7.4 Field of action: Strengthening risk management and supervision
- 16.7.5 Field of action: Improving and implementing impact assessment methods
- 16.7.6 Field of action: Financing transformation
- 16.7.7 Field of action: The German federal government in capital markets
- 16.7.8 Field of action: Strengthening institutions, generating and sharing knowledge
- 16.7.9 Field of action: Creating efficient structures for implementing the Sustainable Finance Strategy
- 16.8 Summary and outlook
- References
- 17 ESG in real estate valuation (Dirk Kadel, Johannes von Richthofen and Dr Florian Hackelberg)
- 17.1 Introduction
- 17.2 Valuation basis
- 17.2.1 Assessment occasions
- 17.2.2 Value and price
- 17.2.3 Value concepts and value definitions
- 17.2.4 Evaluation process
- 17.3 Framework conditions and Real Estate Valuation Ordinance
- 17.3.1 Standardized procedures (ImmoWertV)
- 17.3.2 Basic principles for the valuation of land
- 17.4 Valuation of buildings and outdoor facilities
- 17.4.1 Comparison method
- 17.4.2 Capitalized earnings method
- 17.4.3 Depreciated cost method
- 17.4.4 Non-standardized methods and DCF methods
- 17.5 ESG in real estate valuation
- 17.5.1 Consideration of the EU taxonomy in the real estate industry
- 17.5.2 ESG impact on the value of real estate companies
- 17.5.3 Impact on property valuation
- 17.5.4 Impact on gross income
- 17.5.5 Operating costs
- 17.5.6 Useful life
- 17.5.7 Capitalization rate/property rate
- 17.5.8 Interim conclusion
- 17.5.9 Procedure for the adjustment of the interest rate
- 17.6 Summary
- References
- 18 Implementation of ESG criteria in real estate contracts (Christiane Conrads, Mario Lindner and Dr Philipp Schott)
- 18.1 Introduction
- 18.2 General considerations
- 18.2.1 Legal requirements
- 18.2.2 Regulation of common understanding in relation to ESG
- 18.2.3 Increase transparency and ensure reporting and benchmarking
- 18.2.4 Compliance (social and governance clauses)
- 18.2.5 Adjustment of current contracts to changed/higher ESG requirements
- 18.3 Special features of individual contract types
- 18.3.1 Purchase contracts
- 18.3.2 Rental agreements
- 18.3.3 Management contracts (property and facility management)
- 18.4 Recommendations for the design of projects and contract negotiations
- 18.5 Outlook
- 19 Compliance and risk management (Nina Günther and Jan Gerd Möller)
- 19.1 Introduction
- 19.1.1 Classification
- 19.1.2 Definition of compliance
- 19.1.3 Compliance in the context of ESG
- 19.2 Framework conditions for sustainable compliance
- 19.2.1 Creation of a sustainable corporate structure (governance in the narrow sense)
- 19.2.2 Sustainable compliance organization
- 19.3 Conclusion
- References
- 509–570 Part IV ESG in urban and project development 509–570
- 20 ESG project development – planning and construction processes (Thomas Oebbecke)
- 20.1 Introduction
- 20.2 A classification
- 20.3 Sustainability: From the introduction of the term until today
- 20.4 The »Green Deal« as a driving force
- 20.5 The dovetailing with the project development of new construction and refurbishment
- 20.6 Certification systems as guides
- 20.7 Encourage and challenge
- 20.8 Planning measures
- 20.9 Conclusion
- 21 ESG and property development – Legal requirements for construction and planning contracts (Sabine Wieduwilt)
- 21.1 Introduction
- 21.2 Property development – legal classification of contracts
- 21.3 Construction phases
- 21.4 Define targets and align with ESG strategy early on
- 21.5 Sustainability requirements beyond EU taxonomy
- 21.6 Certification: Contracts with certification body and auditor (DGNB)
- 21.7 Performance descriptions in construction and planning contracts
- 21.8 Data preparation and collection
- 21.9 Building Information Modelling (BIM)
- 21.10 Excursus: Monument protection and § 105 German Building Energy Act (GEG)
- 21.11 Excursus: Photovoltaics
- 21.12 Miscellaneous
- 21.13 Summary and outlook
- 22 Sustainable urban development (Constantin Alexander)
- 22.1 Human settlements
- 22.2 From forestry into more and more areas of the economy and society
- 22.3 Long-term and holistic
- 22.4 Effective and efficient interventions
- 22.5 Many stakeholders with high diversity
- 22.6 Many factors for resilience
- 22.7 Nothing succeeds without positive externalities
- 22.8 Planning and development intertwine
- 22.9 Anti-fragile, sustainable systems are good for life – and for business
- References
- 571–572 The editorial team 571–572
- 573–585 The authors 573–585
