Sustainable Investing in Real Estate

The world is in transition. We are seeing the shift towards a low carbon economy. The transition is a response to climate change, technological innovation as well as demographic shifts. The transition to a low carbon economy requires collaboration across all sectors, from investors, regulators and customers.

At BlackRock, we believe that climate risk is an investment risk. By investing in properties that take into consideration financially material physical and transition risks, alongside other information, investors may create a more resilient and valuable portfolio. It supports responsible business practices and leads to risk-adjusted financial benefits in the long term.

Sustainable investing in real estate can be a powerful way to align positive environmental and social outcomes with financial goals. As investors, part of the decision-making process is to incorporate financially material environmental, social and governance considerations, alongside other information to enhance risk-adjusted returns.

Decarbonizing hard-to-abate sectors requires technological innovation. It requires the deployment of clean energy technologies and the decarbonization of heavy industries. Government policies and regulations also play a role in low carbon transition and help provide incentives to invest in clean technologies. It is a complex and challenging task.

Improving property design and operations is crucial to reducing carbon footprint as they become resource efficient and support healthier and livable communities. The use of renewable energy, energy-efficient design, better building materials and smart technologies are some of the ways that asset owners and managers can prioritize to add value to the property. Smart technologies can be used to monitor energy use, water consumption and other aspects of building operations. The use of renewable energy in real estate can be one of the best ways to reduce carbon footprint and reduce energy costs in the long run.

In addition to these strategies, asset owners can also focus on creating more sustainable communities. Building designs that connect to public transportation and cycling paths and incorporating amenities such as green spaces can promote a healthier lifestyle.

Overall, real estate has a significant role to play in sustainability, and by adopting sustainable practices and technologies, real estate owners can future-proof their assets by reducing their environmental impact, improving their communities, and creating a more sustainable future.