Issue link: https://resources.tangoanalytics.com/i/1508313
Common worries and challenges surrounding sustainability for commercial real estate firms include the upfront costs of efficiency projects and renewable power, split incentives where property owners are responsible for upgrades but do not reap the benefits of lower energy bills, and competing priorities amongst property developers, banks, architects, engineers, and tenants. Despite hurdles in altering current operational strategies, prioritization of sustainability will create a competitive advantage, future-proof your assets, and allow you to better navigate the complex landscape of net zero commitments, regulations, reporting requirements, and incentives across local, national, and global regions. WHY PRIORITIZE SUSTAINABILITY Innovative finance models are becoming more widely available. These are energy performance contracts that reduce up-front costs and guarantee savings in the long term. In contract financing models, energy service companies take on the up-front payment and administrative burden and guarantee a particular energy service; the investor, often the building owner, pays a monthly fee until the costs are paid off. Governments and utility companies also provide grants, loans, tax credits, and feed-in tariffs to support the development of renewable energy and energy-efficient technologies. A V O I D I N G R I S K : A F F O R D A B L E F I N A N C I N G O P T I O N S : P O S I T I V E R O I A N D C O S T R E D U C T I O N S : From rising sea levels that sweep away coastal properties to heat waves that cause energy bills to spike, real estate assets face a diverse set of threats from climate change. Do not fail to consider the monetary impacts of insurance, maintenance, and repair costs associated with physical damages from extreme weather or a sudden forced transition to new technology in order to comply with regulations. MSCI's Climate Value-at-Risk Index is a strong measurement tool for investors to quantify the potential impact of climate change. The payback period on green building investments and upgrades is shortening exponentially as the cost of these new technologies is driven down by wide-scale adoption. Additionally, energy efficiency measures are proven to significantly lower utility bills and increase property values. Sustainability & Energy Management Simplified