New research has revealed the financial benefits that can be gained from energy efficient, sustainable buildings…
Buildings that are energy efficient perform better than their less sustainable counterparts, according to new research.
The study, The Financial Rewards of Sustainability: A Global Performance Study of Real Estate Investment Trusts, collated data from 56,000 buildings with a collective value of $2.1 trillion. Compiled by the University of Cambridge, the research used information from the Global Real Estate Sustainability Benchmark (GRESB) survey.
It showed a strong correlation between the sustainability of a building and the financial performance. In sustainable buildings both assets and equity performed better than buildings with lower GRESB scores.
Additionally, the research also revealed a strong correlation between the real estate portfolio indicators of sustainability and performance on the stock market.
Jose Maria Figueres, chair of the board for Carbon War Room, the non-profit organisation that commissioned the report, said: “The message has never been clearer: in real estate, smart business managers are investing in sustainability.
“This study complements thought leadership and direct industry engagements that prove time and time again that what’s good for the environment is good for business, and that sustainable buildings offer higher returns for real estate investors.”
The research used data from more than 442 detailed sustainability ratings to global real estate investment trusts (REITs). It covered the period 2011 to 2014. The key finding to come out of the report was the establishment for the first time that sustainability pays off for investors in REITs.
Nils Kok, co-founder and CEO of GRESB, commented, stating: “GRESB provides institutional investors with the tools they need to actively engage with their real estate investments, with the aim to improve the sustainability performance of their investment portfolios, and the global property sector at large.
“The positive relationship between GRESB scores and REIT performance documented in this report strengthens the foundational argument that engagement and focus on sustainability performance is critical to achieve a long-term competitive advantage for real estate investors and owners.”
Franz Fuerst, faculty member in the Department of Land Economy at the University of Cambridge, said: “Previous studies have established links between sustainability and improved cash flow at the building level, but this study widens the lens to the level of institutional investors.
“Using datasets provided by GRESB, we evaluated key financial indicators of REITS and uncovered a clear link between building portfolio sustainability and stock market performance.”