Research towards a uniform and integral ESG assessment instrument for investments in real estate projects in The Netherlands

In today’s world, the urgency of sustainability and sustainable development is increasingly
pronounced, driven by challenges such as climate change, resource depletion, and
environmental degradation. The building sector, as a major contributor to global greenhouse
gas emissions and energy consumption, is at the forefront of these issues. Despite the global
embrace of sustainability principles, as reflected in the United Nations’ Sustainable
Development Goals (SDGs), there remains a lack of universally accepted definitions and
standardized assessment methods for ESG and SFDR, particularly in the real estate sector.
Therefore, this research aims to develop a uniform and integral ESG assessment instrument
tailored to investments in real estate projects in the Netherlands. By conducting a systematic
literature review and conducting a Best-Worst experiment to rank the importance of various
ESG criteria, the study proposes a reliable and standardized method for evaluating the
sustainability performance of real estate projects. The study also suggests aligning the
assessment outcomes with SFDR requirements, providing a crucial link between real estate
investments and sustainable finance regulations. Findings highlight that for Environment, the
use of sustainable materials has the largest impact on the total ESG score. For Social, providing
affordable housing is identified as most important, and for Governance, compliance to
regulations and policies is deemed most important. The developed ESG assessment tool was
validated through case studies, showing consistency in results and alignment with established
standards like BREEAM labels. The results of this study offer significant benefits to the real estate
industry. It provides investors and building owners with a means to identify strengths and
weaknesses in their projects, promoting sustainable development through consistent and
reliable sustainability assessments. The study also contributes to the broader effort to
standardize ESG assessments and offers a valuable instrument for evaluating real estate
investments. Future research should focus on further defining the identified criteria, expanding
the instrument’s applicability, and exploring the impact of building users on sustainability
performance. Overall, this research represents a significant step towards establishing
standardized and reliable ESG assessments in the real estate sector, enhancing transparency,
and supporting the industry’s commitment to sustainability goals.