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Impact of CSRD on property owners and investors

Sustainability and climate impact have been on the real estate industry’s agenda for a long time, and property sustainability performance is, for most investors and owners, a key variable when making investment decisions. In recent years, the regulatory environment has also become more stringent and comprehensive as, among others, the Non-Financial Reporting Directive (NFRD) has been succeeded by the Corporate Sustainability Reporting Directive (CSRD).

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The main goal of CSRD for companies is to perform better on sustainability

CSRD came into force on January 1st, 2024, and is putting even greater requirements on transparency and validity of companies’ Sustainability Performance reporting. The introduction of CSRD has already greatly affected the direction of the real estate industry. Sustainability has become a topic in management and boardrooms because of their legal responsibility for the company's sustainability performance.

The standardization, transparency, and accuracy requirements of the CSRD push all companies to become aware of their impact, risks, and opportunities and will minimize the risk of greenwashing. Even though reporting is important, the end goal of the new directive and corresponding performance measuring is, however, for companies to perform better on sustainability and, when needed, adjust their business model to be aligned with the sustainable future we need to create.

“We are happy to see that among many of our clients, conversations are starting to turn from mere compliance focus to actual improvements and the overall strategic direction of the business”, says Silja Nopanen, Director, Sustainability Services from Newsec Finland.

Newsec’s experts help clients to fulfil their CSRD matters

Because the directive and the corresponding ESRS (European Sustainability Reporting Standard) were released so close to the date they came into force, worries about non-compliance arose in the market.

“We encounter worried property owners and investors wondering about who is required to report and what they need to do to ensure compliance. In early 2024, Newsec conducted a client survey that showed that about 85 % of the respondents only partly fulfil CSRD requirements, and 15 % consider themselves not ready for the requirements. This shows that fast-paced improvement activities will be necessary for many companies, as all the respondents in the survey will need to comply either in fiscal year 2024 or 2025”, says Anna Aaltonen, Director, Sustainability and Quality from Newsec Finland.

Providing property data has become an increasingly important part of our client services

At Newsec, we consider sustainability transformation vital for our society, and therefore, we welcome the new regulations. It has meant that we are able to support our clients with sustainability in a much more comprehensive way, and we are now able to integrate sustainability into all our services from property valuations, technical management, procurement to long-term investment strategies for client portfolios.

The focus has also expanded from only climate emissions reductions and energy efficiency to include social sustainability, pollution, and biodiversity. Sustainability has also become more data-driven, meaning that the activities carried out are based on real consumption data, ensuring that the implemented improvement activities have a real impact. Collecting, managing, and providing property data to our clients has become an increasingly important part of our client services.

As one of the largest property asset management and consultancy firms in Northern Europe, we have both the competence and broad coverage of market property data to ensure impact-driven sustainability and can advise our clients on investments that have a long-term positive impact on property values.

CSRD will have a long-term impact on property owners and investors. The reporting requirements mean that property owners will need to have a much better understanding of the real impact and risks of their investments on society and the environment.

This requires collecting relevant data from the properties, tenants, and users and managing and analysing the data efficiently and strategically. Automation and AI solutions will become an integral part of property asset management to manage the large amount of data. Utilizing the best consultancy support, with the right competencies and experiences, will become vital to ensure a focus on activities with the highest relevance and impact.

The opportunities of the new regulations have a positive impact on many sustainability areas

At Newsec, we see the opportunities of the new regulations and the positive impact they can have on society, the environment, and businesses, and long-term business values.

With the right competencies and a holistic approach to sustainability, future-proofing properties will be easier, and investments into properties will be used efficiently and can serve multiple sustainability aspects simultaneously.

“Together with our clients, we are looking beyond the necessary reporting and strive for real impact, building awareness of the risks and tapping into the multiple opportunities that lie within developing sustainability performance”, Nopanen says.

Additional information:

For more information, please contact:

Pauli Autio
Head of Sustainability & Energy Management services
+358 50 440 0802
pauli.autio@newsec.fi


Silja Nopanen
Director, Sustainability Services
+358 50 465 5789
silja.nopanen@newsec.fi


Anna Aaltonen
Director, Sustainability and Quality
+358 40 179 398
anna.aaltonen@newsec.fi

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