Relying on a new methodology, a recent study aims to address a shortcoming: the insufficient amount of empirical evidence allowing a systematic link to be established between ESG criteria and financial performance in real estate.
Still accounting for around a quarter of Switzerland’s CO₂ emissions, the real estate sector today faces a major challenge: its decarbonization. Despite recent criticism of ESG criteria, these criteria influence the entire industry, as noted by EY Switzerland: "ESG criteria exert a significant influence on the market value of real estate assets and must be taken into account in their valuation."
Like this analysis published in 2024, the desire to integrate ESG criteria into real estate is accelerating. A recent study — "From Buildings to Balance Sheets" — however highlights a gap: an insufficient number of empirical proofs to establish a systematic link between ESG criteria and financial performance in the real estate sector. "Most studies focus on individual buildings or on a single type of fund. Therefore, the heterogeneity of real estate investment vehicles (REIVs) remains largely unexplored."
The result of a collaboration between the Enterprise for Society Center (E4S) and the Center for Risk Management Lausanne (CRML), this research work involves a new methodology based on the in-depth analysis of a large sample of Swiss real estate investment vehicles (420 observations covering the period from December 2023 to June 2025), including listed and unlisted funds.
"In real estate, while the physical performance of buildings creates measurable value, internal policy initiatives pursue other objectives."
To examine the links between asset quality, operational performance and financial results, Fabio Alessandrini, Eric Jondeau and Nathan Delacrétaz compiled financial data, ESG indicators and physical characteristics of buildings (energy performance, technical quality, age and location). We summarize their conclusions in three key points.
This study has the advantage of providing several elements that help better understand the relationship between ESG — particularly its environmental dimension (E) — and the attractiveness of the real estate sector. In terms of purely financial performance, it is notably relevant to question the usefulness of aggregated ESG scores, in favor of sector-specific frameworks. "In real estate, while the physical performance of buildings creates measurable value, internal policy initiatives pursue other objectives."
These works thus contribute to the development of a more complete analytical framework, likely to help investors, asset managers and public decision-makers better align financial and climate objectives in the real estate domain.
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