New report from Carbon Intelligence looks at impact of net zero initiatives on real estate asset valuations

IPSX, the UK’s newest stock exchange, together with Carbon Intelligence, has published a new report revealing the full impact that ‘net zero’ carbon emission initiatives are likely to have on the valuations of UK commercial property and what action real estate investors and owners now need to take.

Net Zero refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere and is increasingly a metric used by investors to assess vital ESG standings of investments. Today, real estate is responsible for almost 40 per cent of energy and process-related emissions – a fact not unnoticed by investors who are increasingly calling for reductions.

The UK Government is committed to a 78 per cent reduction in greenhouse gas emissions by 2035. Before then, around 90 per cent of UK buildings face reduced valuations as new laws with more stringent energy efficiency standards come into effect. The report makes clear that assets without net zero plans will depreciate significantly over the next five years. It goes on to explain that the transition to net zero carbon emissions will change real estate valuations, as investors seek to avoid assets at risk of stranding and penalties associated with non-compliance.