Future-Proofing Real Estate: 5 Climate Disclosure Practices for Resilient Funds
Future-Proofing Real Estate: 5 Climate Disclosure Practices for Resilient Funds
As climate risks intensify and regulatory expectations rise, real estate funds are under increasing pressure from clients and stakeholders to improve the transparency and quality of their climate-related disclosures. One way to stay ahead of the curve is by adopting best practices in climate reporting. Transparent and comprehensive disclosures not only meet investor demands but also position funds for long-term success.
Drawing on insights from BDO’s recent analysis of 15 real estate funds in the Netherlands and Belgium, this article outlines five key practices that real estate funds can implement to elevate their climate disclosures.
1. Align with recognized frameworks
To ensure climate disclosures are transparent, complete, and aligned with investor expectations, real estate funds should report in accordance with established frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and the International Financial Reporting Standards S2 (IFRS S2). Aligning with these frameworks improves comparability, enhances credibility, and prepares organizations for future regulatory requirements.
2. Identify and disclose climate risks
Identifying and disclosing both physical and transition climate risks is essential for investors and for the fund itself to understand the exposure and resilience of its assets under various climate scenarios. One of the most effective ways to assess this is through climate scenario analysis, which allows funds to evaluate how their assets might perform under different climate futures. This approach supports long-term strategic planning and helps demonstrate the fund’s preparedness for climate-related challenges.
3. Use building certifications to signal sustainability commitment
Disclosing building certifications is a strong indicator of a property’s sustainability performance and has become increasingly important in the real estate sector. Certifications such as BREEAM (Building Research Establishment Environmental Assessment Method) and LEED (Leadership in Energy and Environmental Design) evaluate a wide range of environmental and operational criteria.
For internal stakeholders, certifications often serve as a solid starting point in decarbonization roadmaps, providing organizations with specific targets that are often aligned with international climate ambitions. For external parties, these certifications not only reflect a commitment to sustainable practices but also offer a competitive advantage in a market that increasingly prioritizes environmental responsibility.
4. Be transparent about targets and transition plans
Real estate funds should clearly disclose their climate-related targets and publish detailed transition plans outlining how these goals will be achieved. Transparency in this area allows stakeholders to assess the credibility and feasibility of a fund’s sustainability strategy.
5. Integrate climate into corporate strategy
Climate considerations should be embedded into the organization’s corporate strategy and not be treated as a separate compliance exercise. Integrating sustainability into business operations ensures long-term resilience, aligns with stakeholder expectations, and unlocks new opportunities for value creation. Funds that embed climate into their strategic planning are better positioned to manage risks, attract capital, and deliver sustainable returns.
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Drawing on insights from BDO’s recent analysis of 15 real estate funds in the Netherlands and Belgium, this article outlines five key practices that real estate funds can implement to elevate their climate disclosures.
Five practices that make a difference
1. Align with recognized frameworks
To ensure climate disclosures are transparent, complete, and aligned with investor expectations, real estate funds should report in accordance with established frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and the International Financial Reporting Standards S2 (IFRS S2). Aligning with these frameworks improves comparability, enhances credibility, and prepares organizations for future regulatory requirements.
2. Identify and disclose climate risks
Identifying and disclosing both physical and transition climate risks is essential for investors and for the fund itself to understand the exposure and resilience of its assets under various climate scenarios. One of the most effective ways to assess this is through climate scenario analysis, which allows funds to evaluate how their assets might perform under different climate futures. This approach supports long-term strategic planning and helps demonstrate the fund’s preparedness for climate-related challenges.
3. Use building certifications to signal sustainability commitment
Disclosing building certifications is a strong indicator of a property’s sustainability performance and has become increasingly important in the real estate sector. Certifications such as BREEAM (Building Research Establishment Environmental Assessment Method) and LEED (Leadership in Energy and Environmental Design) evaluate a wide range of environmental and operational criteria.
For internal stakeholders, certifications often serve as a solid starting point in decarbonization roadmaps, providing organizations with specific targets that are often aligned with international climate ambitions. For external parties, these certifications not only reflect a commitment to sustainable practices but also offer a competitive advantage in a market that increasingly prioritizes environmental responsibility.
4. Be transparent about targets and transition plans
Real estate funds should clearly disclose their climate-related targets and publish detailed transition plans outlining how these goals will be achieved. Transparency in this area allows stakeholders to assess the credibility and feasibility of a fund’s sustainability strategy.
5. Integrate climate into corporate strategy
Climate considerations should be embedded into the organization’s corporate strategy and not be treated as a separate compliance exercise. Integrating sustainability into business operations ensures long-term resilience, aligns with stakeholder expectations, and unlocks new opportunities for value creation. Funds that embed climate into their strategic planning are better positioned to manage risks, attract capital, and deliver sustainable returns.
Why practices are important
The path to a climate-resilient future starts with transparency and action. Listed property funds have a unique opportunity and responsibility to lead the charge in decarbonizing the built environment. Whether your company is just beginning its climate reporting journey or looking to elevate your disclosures, now is the time to act. Embracing these best practices is essential to future-proof your portfolio and meet evolving stakeholder expectations.How BDO can support you
BDO’s Climate and Decarbonization team is here to help. With deep sector expertise, we support real estate funds in navigating complex reporting requirements and identifying climate risks. Ready to take the next step? Contact us to discover how BDO can support your organization in building a resilient, sustainable future.Contact
