ESG CULTURE: WHAT IS IT AND WHY IT HAS TAKEN A TOLL ON GERMANY’S REAL ESTATE MARKET

by André Piti On 06/17/2022

ESG is an approach that highlights the importance of evaluating sustainable and ethical factors in the process of making investments in order to identify growth opportunities.

It’s an acronym that stands for Environmental, Social and Governance. More specifically:

Environmental criteria address the importance of considering elements such as climate change, the global depletion of resources and overall environmental sustainability.
Social criteria focus on the urgency to preserve local communities by enhancing safety and health in the pursuit of avoiding social decay.
Governance aims to reduce bribery and corruption, lobbying and other related issues.

The real estate field is source of around ⅓ of global carbon emissions and consumer of about 40% global energy. This is why it’s mandatory for investors to eye up more sustainable opportunities.

So, if you look for sustainable investments, you should definitely dig deeper into ESG culture.

INTERESTED IN ESG CULTURE? DISCOVER GERMANY’S GOLDEN EXAMPLE

Germany looks like the best place to make sustainable investments in real estate, and especially in the so-called green buildings. But why and what does that exactly mean?

Who’s interested in the housing market might know that Germany has a timeless tradition:

Prioritizing the usage of sustainable and local materials
Making sure that suppliers are in line with their own social standards

This has been real even before the term “ESG” became so popular.

Back in 2019, when asked about the definition of “green building”, Hermann Horster, Head of Sustainability at BNP Paribas Real Estate Germany, stated that “The term is actually somewhat misleading”.

In fact, more often than not the term “green” seems to be used and abused, while “[…] today it’s not just about ecological specifications like an office building’s energy efficiency or which building materials were used”.

According to Horster, other factors are important, with a focus on social issues such as employee wellbeing in the workplace.

Plus, as we stated here, Germany also offers attractive tax incentives for investors which want to buy residential properties.

Then, why not choose green?

ESG TRENDS IN GERMANY: GREEN IS THE NEW CEMENT

Since then, Germany has proven to be interested in increasing concrete-wood combinations, especially in the residential field. In fact, wood structures prove to be more sustainable than concrete-heavy buildings.

And it looks like the trend to use wood in the house building sector will grow more and more significantly.

If you don’t live in Germany but still wish to invest in the real estate market in the most sustainable way, you may be interested in this article.

Plus, don’t forget to keep up with our Real estate news section here.