JLL calls for more green real estate tools to boost investment, as France tops index

JLL says tools to show investment benefits of green real estate are too rare

Property giant JLL has called for wider adoption of standardised carbon reporting instruments to boost investment into sustainable real estate, as well as more financial performance indicators for the asset class.

On the back of its third Real Estate Environmental Sustainability Transparency Index, released today, the London-based firm’s Head of Global Sustainability Research said “the pace of progress in creating new tools and regulation [for sustainable real estate] is slow”.

Franz Jenowein singled out carbon reporting frameworks as an important means of encouraging investment into green real estate which was currently “missing in too many countries”. The report said the absence of such tools was “becoming a stumbling block” in relation to global aims to reduce emissions.

“Most countries depend on regulation to get investment into green real estate moving,” Jenowein told RI. “So countries have to regulate regularly and thoroughly, and they have been slow at doing that.” He added that last year’s Paris Agreement on climate change would “hopefully” stimulate the implementation of more “standardised reporting instruments”.

France, which hosted the summit, landed the top spot in this year’s index, following the introduction of mandatory carbon reporting for institutional investors earlier this year. Of the 36 other countries to be analysed – all of which were identified by JLL as “leaders” in the field – 17 improved their overall score, while only three declined: Australia, Singapore and the UK.Finland, Taiwan, Thailand and Malaysia were all included in the index for the first time, having “shown significant activity” in relation to sustainability transparency. Dubai was promoted to the ‘semi-transparent’ category – the third lowest out of four tiers in the assessment – following the introduction of mandatory green building specifications for new buildings. Japan was upgraded to the top tier, ‘highly transparent’ alongside France, Australia and the UK.

One of the seven tools assessed in the research is a financial performance indicator for green real estate – a system that evaluates the difference between the financial performance of green and non-green buildings.

“Interestingly, there is only one provider of this system in the world,” points out Jenowein, referring to MSCI-owned IPD. IPD operates a conventional real estate benchmark, but also offers a comparison between green and non-green assets. However, it only serves four countries: France, Australia, Canada and New Zealand.

“These indicators are the crown jewels of tools. They are absolutely key to helping investors understand the benefits and performance of green real estate,” said Jenowein, adding wider adoption of similar tools would offer “a major boost” to investment in green buildings globally.