15 May 2025, Amsterdam – The European Association for Investors in Non-Listed Real Estate Vehicles (INREV) today shared a progress update on its ESG Valuations Focus Group, which is working to address the integration of Environmental, Social, and Governance (ESG) factors into real estate investment valuations and underwriting.
Since its launch earlier this year, the focus group has prioritised environmental factors with quantifiable impact on asset value, collaborating with members and industry experts to develop practical approaches for incorporating these considerations into real estate underwriting. Amid growing investor demand for clear guidance on the financial implications of environmental factors, the group sought specific insight from several leading pension funds, insurance companies and banks. Following this in-depth research, the group has now published a pathfinder report which highlights six key environmental factors impacting underwriting and identifies four practical scenarios for investment managers and investors when assessing environmental impacts on future value:
- Ambitious environmental goals: Incorporating comprehensive environmental improvements to enhance long-term asset value.
- Economically feasible environmental goals: Implementing targeted measures where they deliver clear financial benefits.
- Compliance-only limited environmental goals: Meeting only the minimum regulatory requirements to avoid potential devaluation.
- No defined environmental goals: Taking no deliberate action on environmental issues, thereby accepting potential financial and reputational risks.
The focus group, made up of senior investment managers, institutional investors, valuers, and representatives from the Big Four accounting firms is developing an underwriting model to assess how these scenarios influence asset valuation and financial outcomes. Currently in an early stage, the modelling exercise aims to support real estate professionals in understanding the potential financial implications of varying levels of environmental ambition.
Constantin Sorlescu, INREV’s Director of Professional Standards, said: “Testing the return impact of different ambition levels is an important step in helping the industry bridge the gap between environmental commitments and financial outcomes. By exploring different scenarios, we aim to deliver the transparency and consistency needed for informed decision-making.”
The INREV ESG Valuations Focus Group will continue to engage with industry stakeholders and collaborate with other bodies, such as RICS and ULI, as it works towards a set of best practices for real estate investment professionals.
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For further information, please contact:
Johlyn da Prato, johlyn.daprato@inrev.org | +31 (0) 621397456
Justin St Clair-Charles, inrevteam@firstlightgroup.io | +44 (0) 7769 644 059