Wednesday, 27 September, 2023
The real estate industry is faced with the challenge of driving decarbonization forward while at the same time ensuring efficient processes. ESG reporting aims to reduce the carbon footprint and promote digitalization, making these key topics for the industry.
First published in Frankfurter Allgemeine Zeitung.
ESG reporting obligation
More and more real estate companies have become subject to ESG reporting requirements. By 2026 at the latest, all large companies that have not yet been required to report must also disclose their ESG efforts. This makes the topic of decarbonization increasingly relevant. At the same time, modernization measures such as energy refurbishments can also increase the profitability of properties.
ESG data and modernization programs are becoming more relevant
Exclusive in-depth interviews with leading experts and decision-makers in asset and portfolio management, property management and the FM services sector; Lündendonk & Hossenfelder // © Eucon
The industry is already responding: In recent years, a number of studies have looked at the impact of ESG criteria on the profitability of real estate. Most of these studies concluded that properties with a better carbon footprint achieve higher rental or sales prices and are more efficient in terms of consumption. What’s more, real estate companies must pay fewer levies – in the form of carbon taxes – for more sustainable portfolios. Refurbishments are therefore not only more attractive, but may even become mandatory depending on the condition of the property portfolio. Environmental criteria play a particularly important role here. For companies, this means that they will have to collect and evaluate more data on ESG criteria to gain a better overview of measures that can be taken and their benefits.
To be able to measure decarbonization, it is essential to obtain data relating to consumption and disposal as well as emissions. However, this data is often only available in paper format or as PDF files stored in various folders, utility portals and diverse software solutions. According to a Eucon market study, real estate companies are still spending a considerable amount of time manually transferring their consumption data from scanned invoices and energy certificates into Excel spreadsheets. This manual procedure is both prone to errors and time-consuming as well as cost-intensive. Moreover, with ever-increasing regulatory requirements and more and more data to be collected, the process will not be feasible in the long term. This is why Eucon has developed the innovative SmartSustain platform in close cooperation with the industry.
Digital tools help the industry to automatically extract data from existing documents such as invoices and energy certificates. ESG managers receive the data in a suitable format and with a clear structure, enabling them to gain an overview more quickly. As a result, real estate managers can plan specific decarbonization measures more efficiently and have more capacity to implement them.
Gradual digitalization and modular solutions offer benefits for real estate companies
More information about SmartSustain is available here. © Eucon
The vision to have buildings that would provide consistent data in real time all by themselves will continue to be a wish for the next few years, at least on a broader scale. A large part of the existing real estate simply has not yet installed the sensor technology and smart meters required for such a vision. Yet many companies cannot afford to wait for the universal tool of the future that will simultaneously fulfill various digitalization requirements. EU taxonomy and advancing technological progress are already increasing the pressure to upgrade digitally. The longer a company continues to collect data manually, the more work will accumulate until the reporting date. Therefore, it makes sense for many companies to digitalize sub-processes first and upgrade with compatible solutions later.
“Modular solutions reduce the threshold to start digitalization projects,” says Christine Grondkowski, Head of Real Estate Data Products at Eucon, “making it easy to take the first steps quickly. As things stand today, the great all-rounder tool is still years away, but by then a lot needs to have happened in terms of decarbonization. To wait and see is to give away valuable time in the fight against climate change, while risking loss of value for the portfolio and tying up valuable resources with inefficient activities.“ When choosing a digital service provider, real estate companies should make sure that opportunities exist to expand the solutions in a modular fashion and according to need so as to complement the digital mapping of the portfolio in the best possible way. At the same time, the service provider should possess the necessary industry expertise gained from direct contact with the market.
“To gradually transition the often manual workflows to digital processes offers advantages for employees as well,” says Christine Grondkowski. “Changing all processes over in one fell swoop using an all-rounder tool would pose great challenges for staff. Such major changeover processes often lead to uncertainty and opposition –projects are negatively received and threaten to fail.”
There is no denying that real estate companies need a digital upgrade. By successively switching to digital tools, they can drive decarbonization more efficiently while increasing their profitability at the same time. This not only benefits the companies, but also reduces the burden on the environment.
Find out more about Eucon and its digital solutions for the real estate industry here.
Written by Eucon Group