What role do ESGs play in the real estate sector, and how important is it to invest in energy efficiency to create attractive returns for investors? What are the values that must guide real estate to create the ecological transformation? We spoke with Caroline Hills, CEO and Head of ESG for Blackstone Real Estate in Europe.
(Rinnovabili.it) – Faced with the constant rise in the price of energy and materials in a sector such as real estate that is still too inefficient from an energy and environmental point of view, there are those who have chosen the path to robustness and value. We are talking about Blackstone propertya global leader in real estate investing, but with a clear vision for the future in mind.
If you look deeper into society, a basic principle that governs all society’s choices emerges clearly: There is a solution to every problem, and the higher the quality of the solution, the greater the economic, social and environmental benefits.
For the company with a global real estate portfolio value that exceeds $ 550 billion, (Value of Global Real Estate Portfolio) that preparing for a robust future means setting a course low carbon emissions.
To learn more, we discussed it directly with Caroline Hill CEO and Head of ESG for Blackstone Real Estate in Europe.
What is Blackstone Real Estate’s mission and where does the company operate?
Blackstone is the largest alternative asset manager in the world, and our real estate is the largest owner of commercial real estate globally and owns assets in all major geographic areas and sectors. This includes a strong presence in Italy, which we consider a particularly interesting market that offers growth and new opportunities.
Our mission in Italy and in the rest of the world is to create value. By having a positive impact – whether by creating jobs, implementing new sustainable projects and creating more energy-efficient homes for families – on our corporate portfolio and the communities they serve, we believe we can lead the value for our investors .
One of the most interesting things about Blackstone Real Estate is the extent of what we are able to do given our scale and our team experience. By owning assets in various asset classes, including logistics, housing, research laboratories, offices, content creation and hospitality, we aim to provide better returns to our investors, while contributing to employment, inward investment and skills development of the workforce.
Putting our portfolio companies on a low-carbon path not only increases their value, but also prepares them for the future.
How important is it for Blackstone to act on the remodeling of existing buildings rather than new ones? And how important are technological innovations linked to efficiency for the real estate sector?
Buildings and structures represent 39% of global greenhouse gas emissions. It is clear that the real estate sector still has a long way to go to improve sustainability and energy efficiency.
Modernizing and renovating our buildings is extremely important to our real estate investment teams. By supporting Europe’s transition towards cheaper and cleaner energy in a way that does not force daily tenants to bear the costs, and at a time when rising energy prices are on the agenda of millions of people across Europe, we can increase resilience of our portfolio. Without private investment in these properties, these renovations would otherwise often not have been possible.
Technology has an important role to play when it comes to providing new homes that Europe desperately needs. Since 2019, we have engaged approx $ 16 billion in investments which we believe is consistent with the broadest energy conversion use our capital well and ensure that innovation in climate technology receives the support it needs to grow and become widely available to the mass market. We also see the opportunity to invest approximately $ 100 billion in energy conversion projects and climate change solutions over the next decade.
What could be an effective solution to the global housing shortage we have seen in recent years? Why is it still worth investing in construction?
There is a chronic shortage of new housing throughout Europe and a lack of capital to invest to make European housing more sustainable in the long run. On the one hand, we must pursue policies that free up private investment in new homes, but on the other hand, this debate is investing in existing real estate assets.
The current energy crisis across Europe has underscored the need for ensure that housing is efficient from an energy point of view, where many households are facing large increases in their energy bills this year. Investments can be part of the solution to meet this demand.
Governments across Europe face the enormous challenge of making existing real estate assets safe and sustainable. By supporting private investment in housing, we can seize a golden opportunity to create value by providing sustainable quality housing that millions need.
Forecast for the near future?
We see the sector as a whole moving towards greater energy efficiency and the prioritization of green initiatives. The energy transition has become a theme for Blackstone across several asset classes. Since 2019, we have committed to approximately $ 16 billion in investments that we believe are in line with the broader energy transition.
A lot of work is done with regard to measurement of energy consumption through green building certifications, markings and evaluations. This has been an important way for the real estate sector to measure sustainability and make changes.
A related topic that is interesting to map for the future is how operators engage their tenants with sustainability measures, which are a key component in keeping energy consumption low. In our portfolio we use “ecological leases“In all new commercial leases, so we can engage and collaborate with our tenants on ESG initiatives. For us, this has been a great way to bring tenants and businesses together on a low-carbon path that helps make our portfolio companies stronger and more climate-resistant.
Given the importance of sustainable real estate across Europe, can you give examples of investments in sustainability that are already in place?
We own thousands of assets, so to make ESG a priority for ourselves, we try to make it a priority among the assets and companies we own, to increase the resilience of our portfolio.
E.g, Kryaloswhich handles most of our real estate investments in Italyworked on getting the certificates BREEAM Used for refurbished office assets that adapt to high sustainability standards, energy efficiency commitments and emission reduction targets.
Another interesting example is included St. Modwena property developer based in The United Kingdom owned by Blackstone, which builds some of the first CO2-negative houses at affordable prices of the United Kingdom. The houses in the system will be some of the most energy efficient in the world – they are expected to deliver 125% reduction of carbon emissions. Our goal is for the project to be commercially scalable and for the technology to be an example of how to build homes that fit the future with the right support from private capital.
These projects talk about the value of making sustainable housing scalable and meeting Europe’s sustainability goals, which we believe are the key to creating a robust portfolio.