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THE IMPACT OF ESG CRITERIA in the Italian real estate market

ESG (Environmental, Social and Governance) criteria in the Italian real estate sector are becoming increasingly relevant in investment and business practices. Sustainability, which involves several aspects as explained in the acronym: environmental, social, and governance, is becoming a crucial element in real estate investment and management decisions. Asset Management Companies (AM) are adopting innovative organizational solutions, such as dedicated committees and the integration of these factors into the Risk Management Framework. In line with this development, a recent report by JLL indicates that in 2024 the demand for occupiers will remain persistent, with a particular emphasis on ESG criteria.

ESG in Real Estate in Italy

ESG criteria provide an assessment of the sustainability of companies or real estate investments, considering environmental, social and governance aspects. These focus on the impact of business activities on the environment, social effects on communities and working conditions, and the governance structure of companies. Compliance with these factors is no longer an option, but an absolute requirement.

CBRE’s latest report, on the outlook for investments in Europe in 2024 reveals that 80 percent of Italian investors say they have implemented sustainability strategies to meet these criteria. One example is green “retrofitted” buildings, which are more attractive to occupiers: in fact, more than 60 percent say they have acquired or developed this type of property. In this context, emerging trends such as bioarchitecture are gaining in importance. Structures made with environmentally friendly materials, along with resource optimization, play a crucial role in steering the market toward greener and more ethical choices; without neglecting people’s well-being, which results in healthier environments. The prospect of eco-sustainable buildings becomes not only a responsible choice, but also an investment in the overall improvement of quality of life and living experience. In Italy, LEED (Leadership in Energy and Environmental Design) certified buildings are becoming increasingly popular, this reflects the growing interest. Considering that the construction sector is responsible for 40 percent of the world’s energy consumption, an ESG-based approach emerges as an essential element in this new era, helping to shape a more sustainable future for the Italian real estate sector.

Case Study: COIMA

As part of its commitment to the energy transition, COIMA has announced an investment of more than three billion euros for the three-year period 2024-2026. COIMA’s Impact Fund, the first Italian closed-end investment fund with measurable ESG impact goals, aims to reach 1 billion euros in funding by year-end. The shareholders’ meeting approved a 1 billion to 2 billion equity increase, with the goal of amplifying the economic impact to 10 billion.

Manfredi Catella of COIMA stresses the importance of cohesion among different actors to achieve energy, social and technological transition goals. COIMA is focusing on investments dedicated to urban regeneration and building reuse, establishing Italy as a strategic market for sustainable development worldwide.

A specific example is the urban regeneration project of the Porta Romana Scalo in Milan. This redevelopment project aims to transform a brownfield site into a new sustainable landmark, with the 2026 Winter Games Olympic Village to be later transformed into Italy’s largest student residence in Social Housing.

In conclusion, the ESG approach is becoming increasingly integrated in the Italian real estate sector, with initiatives such as those of COIMA highlighting the potential for positive impact on sustainable urban development and energy transition.

Proptech and Sustainability in the Real Estate Sector

The integration of innovative technologies in real estate, known as Proptech, is playing a key role in advancing ESG practices. Innovative access control technologies, for example, offer valuable data that can significantly improve property management. By digitizing processes, these technologies enable better data collection and analysis, contributing to the optimization of resource use and reduction of energy consumption.

Another important aspect is the reduction of the carbon footprint. Proptech solutions, through hardware virtualization, help decrease the use of physical devices and dependence on plastic. This not only reduces resource consumption but also reduces the environmental impact associated with the production and disposal of hardware devices.

In addition, the adoption of software-as-a-service (SaaS) and other service-based solutions promotes long-term partnerships with vendors committed to sustainability. These business models emphasize the importance of constant collaboration and continuous improvement, keeping pace with technological evolutions and growing sustainability needs.

Overall, Proptech technologies are essential tools for property managers who aim to optimize the management of their properties, reduce environmental impact and promote long-term sustainable practices in the real estate sector.