The built environment accounts for approximately 40 percent of energy consumption and 36 percent of greenhouse gas emissions in the European Union, making real estate one of the highest-priority sectors in the EU's decarbonisation agenda. For real estate developers, investment managers, and property companies, ESG reporting is not simply a compliance exercise — it is directly tied to asset valuations, financing conditions, and the ability to attract institutional capital. Three regulatory frameworks intersect in this sector: CSRD, the EU Taxonomy for Sustainable Activities, and the Sustainable Finance Disclosure Regulation (SFDR).
EU Taxonomy Alignment: The Central Disclosure
The EU Taxonomy's first two environmental objectives — climate change mitigation and climate change adaptation — are directly relevant to real estate. For a property to be taxonomy-aligned for climate mitigation, it must either meet the energy performance requirements for nearly zero-energy buildings (NZEB) or achieve a Primary Energy Demand at least 10 percent below the NZEB threshold. Renovation activities qualify if they achieve a 30 percent reduction in primary energy demand. Under CSRD and the associated ESRS E1, large real estate companies must disclose the proportion of their portfolio that qualifies as taxonomy-aligned — a disclosure that requires Energy Performance Certificate (EPC) data for every asset in the portfolio.
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SFDR Obligations for Real Estate Investment Managers
Real estate investment managers subject to SFDR must disclose how they integrate sustainability risks into their investment decisions (Article 6), promote environmental or social characteristics (Article 8), or make sustainable investments (Article 9). For Article 8 and 9 funds, the principal adverse impact (PAI) indicators include specific real estate metrics: exposure to fossil fuel activities, energy intensity of investee assets, and share of non-renewable energy consumption in the portfolio. These SFDR disclosures must be consistent with the ESG data reported under CSRD by listed real estate companies.
Building Energy Performance: Data Infrastructure Challenges
The most persistent operational challenge in real estate ESG reporting is energy data collection. Landlords frequently lack access to tenant energy consumption data, particularly in multi-tenanted commercial properties where tenants pay utility bills directly. The Global Real Estate Sustainability Benchmark (GRESB) has long tracked this gap — typically 40 to 60 percent of portfolio energy data is unavailable to landlords without green lease provisions. Under ESRS E1, real estate companies must disclose energy consumption and intensity across their portfolios, which requires green lease clauses that obligate tenants to share consumption data, or smart metering installations that allow direct landlord measurement.
Key ESG KPIs for Real Estate Reporting
- Weighted average Energy Use Intensity (EUI) in kWh/m²/year — ESRS E1, GRESB indicator
- Portfolio EU Taxonomy alignment (% by asset value) — CSRD and Taxonomy Regulation
- Scope 1 and 2 emissions intensity (kgCO2e/m²) — ESRS E1
- Percentage of portfolio with EPC rating A or B — transition plan indicator
- CRREM-aligned stranded asset risk exposure — climate risk indicator (ESRS E1)
- Green lease penetration rate (%) — data collection enabler
- Affordable housing provision — ESRS S3 community impact indicator
- BREEAM/LEED certification rate across development pipeline — quality indicator
The GRESB Benchmark and CSRD Alignment
GRESB is the most widely used ESG benchmark in the real estate investment industry, with over 2,000 entities participating globally. Its methodology — covering management, performance, and development components — was designed before CSRD, but GRESB and EFRAG have worked to align GRESB's data collection framework with ESRS requirements. Real estate companies already completing GRESB assessments will find significant overlap with their CSRD disclosure obligations, reducing duplication of effort. The GRESB Data Partner Programme allows direct data submission to both GRESB and ESRS-compliant reports from a single system.
