Where are markets lagging behind in sustainability transparency?

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JLL’s 2016 Real Estate Environmental Sustainability Transparency Index analyses sustainability transparency in real estate for 37 markets across the globe. The index identifies those markets that are leading the charge for sustainability, as well as those markets that are lagging behind, based on analysis of seven environmental sustainability indicators. Read on to learn where the greatest opportunities to improve sustainability transparency lie.

The 2016 Sustainability Transparency Index suggests that minimum energy efficiency standards and green building certification programs continue to be the most widespread environmental transparency instruments. But where are the biggest gaps – and areas for improvement?

Financial indicators remain few and far between

Sustainability transparencyOf the 37 markets analysed, only four countries – France, Canada, New Zealand and Australia – have established financial performance indicators for green buildings.

As a result, there is a considerable gap for most major real estate markets to assess the relative performance of more environmentally-friendly real estate assets. Calculating performance of sustainably-designed and operated assets, for example, is practically impossible without a framework to establish appropriate financial benchmarks and performance targets.

Carbon reporting frameworks are rare

Similarly, carbon emission reporting frameworks for real estate investors have only been adopted as mandatory obligations in four markets and as a voluntary tool in seven countries.

This reality is particularly challenging as it relates to the Paris Agreement. There’s little doubt that the built environment will play an important role in reducing global greenhouse gas emissions. But without consistent greenhouse gas reporting schemes, it is difficult to quantify the impact of real estate assets (and drive improvement) in this area.

As we look to the future, financial indicators and carbon reporting frameworks will both be important opportunities for improvement. There is still a long way for the real estate industry to evolve towards being a more transparent investment environment; however, the 2016 Index suggest that progress continues to be made, slowly but surely.

Franz Jenowein is Director of Sustainability Research at JLL. In this role, Franz writes about sustainable buildings, energy efficiency, climate change and related issues as they impact the real estate sector. 

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