Real estate and ESG – what do I need to know?

Buildings across Europe are climate-neutral by 2050. This also has implications for owners of single-family and two-family homes. But what does this mean specifically for those building new homes and owners of older properties who live in their own homes?

Climate protection has become increasingly important in the real estate sector in recent years. Sustainable construction is gaining importance in light of global resource scarcity. To achieve climate goals, requirements for new and existing buildings have been raised. The latest trend, ESG ( Environmental, Social, and Governance), which has now also reached the real estate industry, goes even further.

What does ESG mean?

ESG is an abbreviation for the English terms Environmental, Social, and Governance. Translated into German, this means nothing other than ecological, social, and corporate management. ESG therefore deals with sustainable, social, and corporate concepts that should be reflected in the real estate and housing industry.

However, whether a construction project or a property is ESG-compliant is something that real estate companies, investors and property developers need to consider.

For private owners, the sustainability aspect is more relevant. Whether a single-family or two-family house is ESG-compliant is generally irrelevant in a normal real estate sale, unless the property is offered as an investment for investors.

Sustainability in the construction of single-family and two-family houses

For homeowners and those building their own homes, the Building Energy Act (GEG) is more important than ESG compliance. Existing buildings must be retrofitted. This applies to water and energy consumption systems. The government is providing financial support for switching to electric heat pumps until 2025.

When constructing a new building, owners must pay attention to energy consumption figures. This can be calculated either by determining the future primary energy consumption or the CO2 _emissions caused by the new building. There are limit values ​​for both. Additionally, a report is required from the owners one year after construction is completed. The new building must meet the requirements stipulated in the German Building Energy Act (GEG).

Sustainability in existing buildings

Owners who have lived in their property since February 2002 are not obligated to retrofit it or replace heating systems. Only when the existing property changes hands do the buyers have to comply with the GEG (German Building Energy Act). However, there are exceptions to this replacement obligation.

In general, property owners can also improve the climate for themselves and the environment through measures such as green roofs or facades, which are not stipulated in the German Building Energy Act (GEG). Resource-efficient building materials contribute to climate protection.

Would you like to know how to retrofit or build your property to be climate-neutral and resource-efficient? Then contact us. We would be happy to advise you.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where necessary for the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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