The real estate sector is at the heart of the challenges of energy and climate transition. In Europe, buildings account for around 40% of energy consumption and 38% of CO₂[1] emissions, which has led public authorities to multiply energy and ESG (environmental, social and governance) legislation in order to make real estate more sustainable. However, some of these regulations – notably the new European CSRD directive on sustainability reporting – are now being criticized and could be made more flexible. Going back on these standards would be a major strategic error for real estate players, both in terms of market transparency and the long-term competitiveness of the sector. Here’s why.
1. The CSRD under pressure: a contested directive
The Corporate Sustainability Reporting Directive (CSRD), adopted in 2022, will impose enhanced extra-financial reporting on major European companies, including medium-sized listed companies, from 2024-2025. This directive aims to standardize and increase the publication of ESG indicators (CO₂ emissions, energy consumption, social criteria, etc.) in order to enlighten investors and stakeholders. The volume of data required is significant – up to 1,600 ESG disclosures to be published for the largest companies, although in practice this number will be reduced to 500-600 indicators for a typical industrial group[1].
Despite the introduction of the materiality principle (companies declare only “significant” information) to moderate the effort[1], many voices were raised in late 2023 and early 2024 against the CSRD, deemed too complex and costly. The Draghi Report submitted to the European Commission in September 2024, for example, considers that “the EU Sustainability Report […] is a major source of regulatory burden, amplified by a lack of benchmarks to facilitate the application of complex rules”[2]. Under pressure from certain political coalitions, demands for simplification or a moratorium emerged[3]. In response, in February 2025 the European Commission proposed a relaxation via an “Omnibus” package: this would involve raising the application thresholds (exempting companies with fewer than 1,000 employees and €50 million in sales), which would exempt around 80% of companies initially covered by the CSRD[4].
2. The risks of backtracking on ESG: transparency and attractiveness at risk
Giving in to these criticisms and relaxing ESG requirements would run serious risks for real estate markets. Firstly, a regulatory rollback would weaken the financial and extra-financial transparency enjoyed by investors. Organizations such as WWF warn that the proposal to exclude 80% of companies from CSRD would create significant data gaps, adding opacity and uncertainty to the markets[5].
Secondly, a retreat on ESG would undermine the attractiveness of real estate assets to investors, particularly institutional investors. Today, most funds and investors include ESG in their decision-making: 69% of management companies consider ESG criteria to be a priority for value creation, and 56% of institutional investors have already abandoned a transaction for ESG reasons[6].
In 2023, the GRESB real estate sustainability index covered $8,600 billion in real estate assets, and more than 170 institutional investors ($51,000 billion in assets under management) use this ESG data to steer their investments[7]. To reduce reporting obligations would be to run the risk of seeing capital diverted away from the least transparent or least virtuous players.
3. Real estate players boosted by ESG: increased competitiveness and easier financing
In France, homes rated A or B sell for an average of 6% to 22% more than those rated D[8]. Conversely, the price of “thermal flats” is falling, and renting them out is prohibited in the short term, accelerating the depreciation of poorly renovated assets[9].
According to CBRE, 75% of investors or occupiers now factor climate resilience into their decisions, and 40% are willing to pay higher rent for a building that offers better climate guarantees[10].
In 2023, global green bond issuance reached over $600 billion, with a growing share dedicated to sustainable real estate projects[11].
4 Why scope 3 in buildings must become a priority
In addition to energy consumption during operation (scopes 1 and 2), scope 3, which covers all indirect emissions from the building value chain, is the tip of the iceberg. It includes the carbon impact of materials, transport, construction, maintenance operations and successive renovations.
For property managers, it is essential not to underestimate the carbon obsolescence contained in the very components of a building. Joinery, facades, technical equipment, floor coverings… each of these elements has a significant carbon weight which, multiplied by the volume of a property, can rapidly represent a discount factor.
Faced with the growing demands of investors and the arrival of regulations concerning the overall performance of assets, taking scope 3 into account is becoming a strategic challenge. This not only enables us to anticipate the financial impact of future upgrades, but also to promote low-carbon renovation and the reuse of materials as part of a circular economy.
5. An irreversible trajectory: low-carbon real estate as a long-term necessity
The European Union has set a clear course with the Green Deal, aiming for carbon neutrality by 2050. The European Energy Performance of Buildings Directive (EPBD) calls for all housing to reach at least class E by 2030, rising to D by 2033[12].
Integrating ESG requirements and anticipating future regulations is no longer a “bonus”, but a prerequisite for remaining competitive. Delaying adaptation would mean taking the risk of much higher upgrade costs down the line, with no guarantee of maintaining asset value.
Footnotes
[1] European Commission, “Questions and Answers on the new CSRD”, 2023.
[2] Mario Draghi Report, “The future of European competitiveness”, European Commission, September 2024.
[3] Politico Europe, “EU considers CSRD delay amid industry pushback”, February 2025.
[4] WWF, “Proposed CSRD rollbacks threaten EU Green Deal goals”, February 2025.
[5] Euractiv, “MEPs resist attempts to weaken EU sustainability reporting rules”, March 2025.
[6] PwC, “ESG Investing: How real estate is adapting to investor demands”, 2023.
[7] GRESB, “GRESB Real Estate Results”, 2023.
[8] Notaires de France, “Les effets du DPE sur les prix immobiliers”, 2023.
[9] Ministère de la Transition écologique, “Loi Climat et Résilience : calendrier d’interdiction des passoires thermiques”, 2023.
[10] CBRE, “European Occupier Survey: Sustainability and Real Estate”, 2023.
[11] Climate Bonds Initiative, “Green Bond Market Summary”, 2023.
[12] European Parliament, “Proposal to revise the Energy Performance of Buildings Directive”, 2024.
