Climate Excellence for Real Estate

Your expert for questions

Gunther Dütsch
Partner, Sustainability Services at PwC Germany

Your concern

What climate change means for the real estate industry

The consequences of climate change are hitting the real estate sector particularly hard. The reason: buildings are responsible for around 35 percent of global CO2 emissions. In order to achieve the goals of the Paris Climate Agreement for limiting global warming to less than 2 degrees, around 75 percent of existing properties in the European Union alone would have to be renovated to make them more energy-efficient. The current renovation rate of around one percent would have to be drastically increased accordingly.

Regulatory initiatives such as the Renovation Wave or the Sustainable Finance Taxonomy of the European Commission, as well as market-driven recommendations such as the Principles for Responsible Investment (PRI), are putting high pressure on companies to minimize their (financial) risks and secure their future viability and competitive position.

According to the EU Commission, this transformation will require an annual investment of 275 billion euros in the energy refurbishment of buildings by 2030. These investments have a massive impact on the value and performance of real estate portfolios, but also offer great opportunities in a changing market.

Real estate companies are faced with the following questions, among others

  • What are my portfolio's current energy consumption and CO2 emissions - and what are scenario-based targets?
  • What temperature path are my buildings currently on?
  • Are my buildings at risk from natural hazards? 
  • How can I further develop my buildings to meet future requirements and which are the associated costs?

What we offer

What Climate Excellence offers the real estate industry

Climate Excellence analyzes the impact of climate change on your real estate portfolio for you. The tool enables you to translate the financial implications of different climate scenarios into risk and opportunity management and understand their material drivers.

The tool provides answers to the following questions, among others:

  • What are the returns, value, and investment costs at the portfolio and building level?
  • Based on a holistic modeling approach that includes not only CO2 prices, what are the qualitative drivers behind these values?
  • How do vulnerability and damage levels change due to physical damage?
  • Which measures(packages) enable a cost-efficient energy refurbishment?

Climate Excellence supports you in the following topics, among others:

  • Assessing your assets CO2 emissions and energy consumption
  • Formulation of reduction targets
  • Basis for non-financial reporting
  • Understanding your assets geo-specific risks by natural hazards 
  • Creating renovation plans to make your buildings fit for a net zero future 

The services of Climate Excellence for the real estate industry in detail:

  • Use of scientific, internationally recognized scenarios from the Intergovernmental Panel on Climate Change (IPPC) and the International Energy Agency (IEA).
  • For transitory risks:
    • Choice between currently three scenarios, which are continuously supplemented and expanded.
    • 224 different transition pathways, specific per country and building type.
    • Benchmarking with internationally recognized energy and emission reduction pathways by CRREM
  • For physical risks
    • Choice between currently two scenarios, which are continuously supplemented and expanded.
    • Geo-location-specific analysis of natural hazards
  • Retrofit: Building-specific analysis of refurbishment costs and efficiency potentials 
  • Adaptability: sensitivity analyses along the user's level of adaptation to climate change (inactive versus adaptation).
  • Holistic modeling: consistent scenario modeling that goes beyond CO2 price to include criteria such as land growth, energy demand and mix, and rent changes. 
  • Representation of taxonomy capability of the portfolio and individual buildings (currently under development).  
  • Outstanding development platform: SAP provides a high-performance, secure, cloud-based environment that supports interfaces to SAP's own and other user-specific systems.
Portfolio Overview

Your benefits

How real estate companies benefit from Climate Excellence

  • Leverage qualitative and quantitative outputs for cross-functional integration of climate risks and opportunities across the enterprise
    • Climate strategy and business unit development
    • Risk management
    • Acquisition process
    • Portfolio management and development
    • Design of (non-financial) reporting and fund prospectuses
  • Introduction of climate scenario analysis in line with the best practice recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD).
  • Climate Excellence supports portfolio analysis in relation to EU taxonomy and CSRD.
  • Direct use for the annual status report for members of the Principles of Responsible Investment (PRI)

Climate Excellence – Location-specific physical risk analysis

With this extension, you can assess how much your assets are affected by potential physical climate risks on the basis of geo-coordinates. Taking into account different climate scenarios, you will receive a risk assessment for seven significant climate-related hazards enabling you to evaluate the current risk but also the potential change in risk over time.

Download flyer (0,3 MB)

Climate Excellence – Real Estate: Retrofit Analysis

With our latest extension, you can assess how your building would develop in comparison to market leading climate scenarios emphasizing the specific energy and emission intensity. You can model different renovation measures to stay aligned with the scenario pathways while estimating your (cost-optimised) renovation and investment needs.

Download flyer (0,3 MB)

Contact us

Gunther Dütsch

Gunther Dütsch

Partner, Sustainability Services & Climate Change, PwC Germany

Tel: +49 160 3739019

Johannes  von Richthofen

Johannes von Richthofen

Senior Manager Valuation, Modeling & Analytics Real Estate, PwC Germany

Tel: +49 69 9585-6505

Follow us