Occupiers and Investors’ ESG Focus Intensified in 2022

Investors more than ever are looking for commercial real estate assets to focus on ESG initiatives, according to a new global report from CBRE.

Higher energy prices and government-imposed ESG disclosure requirements are the primary impetus behind 70% of survey respondents expressing that prerogative. Government policy was more prevalent in Europe compared to the US.

While driven more by investors, occupiers plan to meet net-zero targets sooner and under a more robust set of principles, CBRE said.

It pays to do so. “Investors and occupiers are most often willing to pay a premium for buildings with on-site renewable energy generation and/or smart technology to monitor and adjust energy usage,” according to the report.

Tenant and employee well-being is another benefit. More than 80% of respondents indicate that proximity to public transit (or lack thereof) impacts property value because easier commutes are associated with better employee demeanors, the report indicated.

The lack of quality data is the most concerning impediment to achieving ESG goals, according to more than half of the respondents.

Sixty-seven percent of survey respondents reported more focus on ESG strategies in 2022. The two biggest reasons for this, particularly among investors, were government-imposed ESG disclosure requirements and higher energy prices.

Occupiers are focused on a more diverse set of ESG initiatives than investors. In addition to the top-three initiatives, 53% of o

Occupiers took more of an aim at bettering society, as many expressed that “reducing air, water or land pollution” and “improving social mobility, social justice, equality and/or diversity” as very important.

65% Make Net-Zero Pledges

Sarah Spencer-WorkmanLEED AP & WELL AP, Global Director of Decarbonization, Global Workplace Solutions, CBRE, cited that 65% of respondents reported that their companies have made a public net-zero pledge, “making it no surprise that reducing greenhouse gas emissions is most often cited as part of organizational goals,” she said in prepared comments.

“Occupiers plan to achieve their targets more quickly than investors, aided by the fact that lease terms are generally shorter than the average holding period for investors.”

Half of the occupier respondents said they are establishing science-based targets (SBTs) versus 39% of investors and 56% of respondents categorize their emissions into scopes, as defined in the Greenhouse Gas Protocol.