The real estate industry is undergoing a significant transformation as Environmental, Social, and Governance (ESG) considerations become increasingly central to business strategy. A recent comprehensive study examining ESG data management practices among Finnish real estate investors and asset managers reveals both the challenges companies face and the opportunities that lie ahead.
Sustainability is no longer a nice-to-have feature in real estate—it's become an essential component of business strategy. The study, which analyzed 11 major Finnish real estate companies and included interviews with six real estate sustainability professionals, shows that organizations are putting substantial effort into ESG reporting using established frameworks such as GRI Standards and conducting or preparing for Corporate Sustainability Reporting Directive (CSRD). Despite the increased thresholds in the upcoming EU Omnibus legislation package, many companies are planning to continue CSRD reporting even if they weren’t required to.
The regulatory landscape is driving much of this change for corporate sustainability and sustainability reporting. With the EU's CSRD requiring detailed sustainability reporting and the EU Taxonomy framework defining green economic activities, companies are driving to ensure compliance while maintaining competitive advantage.
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Despite the growing importance of ESG data, the study sheds light on the actual situation: data collection and maintenance remain significant challenges across the industry. The research found that data collection and summarization are largely manual processes, with Excel spreadsheets serving as the primary tool for master data management—even when companies use dedicated applications for specific functions like energy management.
This fragmented approach creates several problems. Companies often use multiple software solutions for different aspects of ESG reporting — e.g. Enerkey for energy management, ZeroWaste for waste tracking, and various other specialized tools. However, no comprehensive master software for ESG has achieved widespread adoption in the Finnish market.
The manual nature of data management not only increases the risk of errors but also creates inefficiencies that can hamper effective decision-making. When sustainability managers spend significant time consolidating data from various sources, they have less time to focus on strategic initiatives and improvements.
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The study identified several key trends in ESG reporting frameworks:
Universal Adoption of GRI Standards: All companies in the study use GRI (Global Reporting Initiative) Standards, making it the most widely adopted framework in the Finnish real estate sector.
Growing TCFD Implementation: The Task Force on Climate-Related Financial Disclosures (TCFD) framework is gaining traction, with many companies incorporating climate-related financial risk disclosure into their reporting.
EU Taxonomy Assessment: Companies are actively assessing their alignment with EU Taxonomy criteria, with some already achieving significant compliance rates.
Double Materiality Assessments: There's a clear shift toward double materiality assessments, which consider both how companies impact the world and how global issues affect company performance.
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Building certifications remain crucial for demonstrating environmental performance. LEED and BREEAM certifications dominate the market, with many companies targeting 100% certification of their portfolios. The Global Real Estate Sustainability Benchmark (GRESB) participation is common among larger players, serving as an important benchmarking tool.
However, external assurance practices vary significantly. While some companies engage firms like EY, Deloitte, and KPMG for limited assurance on key environmental KPIs, others operate without external verification. This inconsistency suggests an opportunity for standardization in the industry.
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The study identified the most commonly tracked metrics across the three ESG pillars:
Environmental (E) Factors: Energy efficiency (kWh/m²/year), carbon emissions (kgCO2e/m²/year), and renewable energy usage lead the pack. These quantitative metrics are inherently easier to measure and track, making them natural starting points for ESG programs.
Social (S) Factors: Health and wellbeing (often measured through BREEAM HEA credits), accessibility features, and tenant satisfaction (typically using Net Promoter Score) are key focus areas.
Governance (G) Factors: Board diversity, risk management frameworks, and transparency in reporting are primary concerns for real estate companies.
Notably, environmental factors are the most quantifiable and thus represent the greatest opportunity for systematic data management solutions.
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The study's findings point to several clear opportunities for the industry:
Integrated Data Management Solutions: There's a significant market opportunity for platforms that can seamlessly connect general real estate data with ESG metrics, reducing reliance on Excel-based master data management.Â
Focus on Environmental Data: Given that environmental factors are the most quantifiable and widely tracked, solutions should prioritize energy, water, waste, and carbon emission data management.
Customer-Centric Approach: Rather than assuming what data is most important, successful solutions should engage directly with customers to understand their specific priorities and pain points.
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The Finnish real estate industry is developing. While companies recognize the importance of ESG and are investing in sustainability initiatives, the current data management landscape is inefficient and fragmented. CSRD requirements have intensified the need for robust, integrated ESG data management solutions.
Companies that can successfully bridge the gap between general real estate data and ESG metrics will find themselves with a significant competitive advantage. The question isn't whether ESG data management will become more important—it's how quickly the industry can evolve to meet these growing demands.
The study's findings suggest that the time is right for solutions that can improve how real estate companies collect, manage, and report on their ESG performance. Those who act now will be best positioned to lead the industry's sustainable transformation.
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This analysis is based on a comprehensive study of ESG data management practices among Finnish real estate companies, including desktop research of 11 major firms and interviews with six real estate sustainability professionals from leading organizations in the sector.
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