As part of this week’s focus on forward‑looking sentiment, we revisit the progress being made on one of the industry’s most important and complex topics: integrating environmental considerations into investment underwriting.
In early 2025, INREV brought together the Environmental Underwriting Focus Group to develop a more consistent approach to evaluating environmental capex and its impact on asset values. In this new IQ blog, we share insights from Constantin Sorlescu, INREV’s Director of Professional Standards and Sustainability, on what has been learned so far and where the industry still needs to go.
The blog highlights several key developments:
- The identification of six core environmental factors most relevant to underwriting — energy consumption, energy ratings, GHG emissions, climate transition alignment, physical climate risks and building certifications.
- Practical testing of these factors through an adapted DCF model and real‑life case studies, offering clearer visibility into how environmental data influences asset performance, payback periods and capex decisions.
- A recognition of remaining challenges, including data gaps, inconsistent definitions and the need for stronger collaboration across valuers, managers and investors to achieve more comparable and evidence‑based approaches.
While meaningful progress has been made, the work is far from complete. Larger datasets, clearer assumptions and greater industry alignment will be essential to move from early frameworks to a fully established methodology.
Read the full IQ blog to explore the findings and what they mean for environmental underwriting.