Our industry is engaged in an important dialogue to improve the efficiency and resilience of real assets through transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
The real estate sector has spent the last decade building the infrastructure for decarbonisation. Targets have been set. Disclosure frameworks have been adopted. ESG teams have been hired. And yet when you look at what is actually happening at individual assets, the carbon is often not moving.
GRESB’s 2025 data captures this plainly. 81.5% of participating entities have ESG policies. Global like-for-like greenhouse gas emissions fell by just 0.23%. The ambition is there. The delivery is not.
This is not primarily a technical problem. It is a structural and behavioural one.
The financial case is not landing
The metrics the sustainability industry relies on—CRREM pathways, carbon intensity, science-based targets—are not the metrics capital allocators make decisions with. Energy efficiency is. Net operating income is. Exit liquidity is. Until decarbonisation is framed in those terms, it will continue to compete with other capital priorities and frequently lose.
This plays out at transaction level too. A significant deal completed recently where the buyer, a sophisticated institutional investor, asked zero ESG questions. EPC compliance was the only requirement. Where buyers do not ask, sellers have no commercial reason to invest ahead of exit. Ambition ends up being set by the most passive participant in the chain.
The barriers are structural not individual
Green lease obligations are routinely negotiated away. Decarbonisation capex sits outside core business plans rather than embedded within them. Sustainability teams and asset management teams are often working in parallel rather than together. These are not failures of intent. They are failures of alignment—in incentives, in decision-making authority, and in the language used to make the case internally.
The skills gap compounds this further. Asset managers are carrying responsibility for large portfolios where ESG sits alongside many other priorities. The industry simply does not have the human infrastructure to deliver at the pace the pathways require.
The valuation system is part of the problem
Valuers can only formally reflect risks already visible in transaction evidence. They follow the market, they do not lead it. So until brown discounts show up consistently in comparable transactions, they cannot be formally priced in. But this framing misses something important. Conventional valuation inputs are not actually more certain than climate risks. They are simply more familiar. Climate transition risk is just as measurable and just as credible. It is not yet embedded in standard models, but that is
a question of convention not evidence. And conventions change—usually when the market forces them to.
The window is still open
Brown discounts are beginning to appear in live transactions. Climate Value-at-Risk remains materially underpriced relative to the forward-looking exposure many portfolios carry. When markets correct mispriced risk, they tend not to do it gradually.
The delivery gap is not inevitable. The barriers are well understood. What is missing is the alignment of incentives, data quality, and decision-making authority needed to act on them at scale. The organisations that build that alignment now will be better positioned when the market stops giving the benefit of the doubt to paper targets.
This piece draws on EVORA’s whitepaper, The Delivery Gap: Why Real Estate’s “Paper Targets” Are Becoming a Pricing Risk, and findings from EVORA’s Decarbonisation Breakfast Workshop held in April 2026.
This article was written by Bhoomika Brahmbhatt, Managing Consultant, Lucy Davies-Knight, Climate Resilience Lead, Paul Sutcliffe, Founder and Director, and Marianne Fabius, Vice President at EVORA. Learn more about EVORA here.