A wind turbine, a source of renewable energy. Real estate should focus on sustainability.

Creating a sustainability strategy in real estate

Building a strong foundation to get the basics right.        

A sustainability strategy is now a ‘must have’ for those in real estate. This may seem a formidable task, but the best place to start is with the basics and getting them right.

For real estate firms looking to create a sustainability strategy, the process can seem daunting. While it’s tempting to start with issues that can be most easily ticked off, this can lead to an assortment of disconnected initiatives rather than a comprehensive and quantifiable strategy.

Every company’s approach will be different, but it’s always best to begin with the basics and invest in getting them right.

Ensuring compliance

For most real estate businesses, getting the basics right should start with compliance. Firms need to ensure they’re complying not just with all the real estate regulations currently in force today, but consider any new rules coming in the near future, such as the changing minimum energy efficiency standards (MEES).

Firms must also take account of the wider regulatory environment, such as the mandatory climate disclosures coming into force.

Of course, rules in other sectors can also have consequences for real estate. For example, the UK’s intention to ban all new conventional petrol and diesel cars and vans from sale by 2030 will impact parking spaces in development.

Assessing the basics

Beyond regulatory compliance, firms may want to conduct a materiality assessment. These are the backbone of reporting and can help to identify a company’s most material issues by reaching out to internal and external stakeholders for input.

A range of stakeholders should be involved in identifying the sustainability themes that are most important to them and the company. This should allow the company to factor in the direct and indirect influence it can have on those issues when developing its strategy.

For example, a developer can directly influence the energy efficiency of a property it is building and managing. But if a company is only an asset owner, it will need to form a partnership with the tenant to continue to ensure energy efficiency throughout the property’s lifetime.

Unintended consequences

While the real estate sector is, rightly, increasing its focus on its environmental footprint, other social and governance issues are also growing in importance to stakeholders. When considering their priorities, companies should be careful to ensure that their goals are mutually supporting.

For instance, a big drive to decarbonise a firm’s supply chain may result in the firm stipulating net zero targets or zero carbon products in its contracts with suppliers. But such clauses may inadvertently exclude from the supply chain many local SMEs that don’t have the necessary resources and capabilities.

Even at the individual building level, a strong focus on energy efficiency might have a negative impact on occupant comfort or the health and well-being aspects of users of the space.

A balanced approach is key to the success of a firm’s sustainability strategy.

A sustainability strategy checklist


Check compliance with real estate and wider sustainability regulations


Consider the changing regulatory environment


Conduct a materiality assessment and consult with internal and external stakeholders


Focus on areas where you can have the biggest impact and the highest level of control


Remember the law of unintended consequences.

For more information on developing a sustainability strategy, contact us.

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