Q: How has the global real estate industry’s approach to ESG evolved over the past decade?
Over the past decade, the global real estate industry has significantly advanced its approach to ESG. Initially focused on energy efficiency and green building certifications, the sector has evolved toward a more holistic integration of ESG across investment, development, and operations. Climate risk assessments, decarbonization targets, and net-zero commitments have become central, driven by regulatory pressures, investor expectations, and complaint with global frameworks like TCFD and IFRS S2.
Social aspects, including health, well-being, affordable housing, and tenant engagement, have gained prominence, particularly post-COVID. Real estate investment trusts (REITs) and institutional investors now routinely report ESG performance, often using standards such as GRESB, CDP, and the UN PRI. As the industry faces increasing scrutiny on climate resilience and social equity, ESG is no longer optional, it’s a strategic imperative
Q: What should Indian developers and regulators learn from these frameworks, and how might they be adapted to an Indian urban context?
Indian developers and regulators can draw valuable lessons from global ESG frameworks by prioritizing integrated, transparent, and accountable sustainability practices. Adopting frameworks like TCFD, GRESB, and IFRS S2 can guide better climate risk assessment, energy efficiency, and long-term value creation. These frameworks emphasize lifecycle emissions, resilience, stakeholder engagement, and governance, which are critical in India’s rapidly urbanizing cities.
To adapt them locally, India must consider its socio-economic realities, affordability, urban density, informal housing, infrastructure gaps, and climate vulnerability. ESG metrics should include access to affordable housing, water efficiency, waste management, and inclusive urban planning. Regulators can support this shift by aligning building codes and planning norms with ESG principles and incentivizing green finance and disclosures.
For developers, ESG must go beyond compliance to become a strategic tool integrating renewable energy, low-carbon materials, and digital monitoring in projects. By contextualizing global ESG standards with local needs, India can build cities that are not only climate-resilient but also equitable and livable.
Q: With AI, IoT, and predictive analytics becoming embedded in smart building systems, how do you see technology enabling or complicating ESG performance tracking and reporting?
Technology particularly AI, IoT, and predictive analytics is transforming ESG performance tracking in real estate by enabling real-time, data-driven insights. Smart sensors can monitor energy use, water consumption, air quality, and occupancy patterns, providing granular data for accurate emissions calculations and operational efficiency. AI helps detect anomalies, forecast maintenance needs, and optimize energy loads, directly supporting sustainability goals and cost savings.
Predictive analytics enhances long-term planning by modeling climate risk impacts, lifecycle carbon emissions, and retrofit strategies. This improves transparency, supports frameworks like TCFD and GRESB, and strengthens investor confidence through credible reporting.
However, technology can also complicate ESG efforts. Data overload, inconsistent standards, and interoperability issues between systems can create challenges in aggregating and interpreting ESG metrics. Cybersecurity and data privacy concerns also emerge as more building systems go digital.
To fully leverage tech, the industry must invest in skilled ESG-data professionals, adopt standardized protocols, and ensure governance frameworks keep pace. When integrated effectively, technology becomes a powerful enabler turning ESG from a reporting exercise into a proactive, performance-driven strategy.
Q: From an investment lens, how are ESG metrics influencing real estate valuations, and what are global institutional investors really looking for when they say they want “climate-aligned” portfolios?
From an investment lens, ESG metrics are increasingly influencing real estate valuations by signaling long-term resilience, regulatory readiness, and risk-adjusted returns. Assets with strong ESG performance such as energy-efficient buildings, climate risk mitigation features, and robust governance often command premium valuations and lower operating costs. Poor ESG performance, on the other hand, can lead to stranded assets, higher insurance costs, and regulatory penalties, all of which erode value.
When global institutional investors seek “climate-aligned” portfolios, they look for assets with clear decarbonization pathways, net-zero commitments, and transparent climate risk disclosures (aligned with TCFD or IFRS S2). They prioritize green-certified buildings, ESG performance benchmarking (e.g., GRESB scores), and data on Scope 1, 2, and increasingly Scope 3 emissions. Additionally, they expect climate resilience such as flood or heat stress preparedness and strong governance practices that embed ESG into decision-making.
Ultimately, climate-aligned portfolios are seen as future-proof, offering stability, compliance, and reputational strength in a rapidly shifting regulatory and climate landscape.
Q: What are your thoughts on “Green Leases”? Can they realistically align tenant behaviour with landlord ESG goals, especially in commercial real estate?
Green Leases can be a powerful tool for aligning tenant behavior with landlord ESG goals, particularly in commercial real estate where energy use, water consumption, and waste generation are shared responsibilities. By embedding sustainability clauses like energy efficiency requirements, data sharing, or cost-sharing for upgrades Green Leases create a formal mechanism for collaboration.
However, their success hinges on transparency, mutual incentives, and tenant engagement. Without clear benefits for tenants (e.g., cost savings, brand alignment), compliance may lag. Also, not all tenants have the same ESG priorities, especially in multi-tenant buildings.
That said, growing ESG scrutiny and regulatory pressures are pushing both landlords and occupiers to adopt greener practices. When well-structured, Green Leases can bridge operational gaps, enhance building performance, and strengthen ESG reporting—making them increasingly viable and strategic in today’s market.
Q: Looking ahead to the next 5–10 years, what’s the one ESG risk that you believe is being most underestimated by real estate stakeholders today?
Looking ahead, the most underestimated ESG risk in real estate is climate-related physical risks, especially those linked to extreme weather events and long-term climate shifts. While many stakeholders focus on energy efficiency and emissions reduction, there is often insufficient attention on the resilience of buildings and infrastructure to flooding, heatwaves, wildfires, and storms. These physical risks can cause sudden and severe asset damage, disrupt tenant operations, and inflate insurance costs, directly impacting property values and investment returns.
Moreover, many real estate portfolios lack granular climate risk assessments, leaving owners and investors exposed to blind spots. As climate events grow in frequency and intensity, regulatory pressure and market expectations for resilience will increase, raising potential liabilities for those unprepared.
In essence, the undervaluation of physical climate risk could result in significant financial and reputational damage making it the critical blind spot real estate stakeholders must urgently address alongside traditional ESG priorities.
