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Reducing emissions and increasing energy efficiency are high on the agenda for many asset managers and property owners. The E in ESG, and thus the environmental sustainability of properties, plays a central role in achieving climate goals and directly impacts asset value. Legislative requirements such as the EU Taxonomy, SFDR, and national carbon taxes, along with increasing demands from investors and tenants, are intensifying the pressure for building renovation. The German government recognises this and is introducing new funding programmes at the beginning of the year to support climate-neutral construction and renovation. This is urgently needed, as by 2033, the average primary energy consumption of residential buildings is required to at least match the level of overall energy efficiency class D. In 2021, this target seemed far off, as 45% of residential buildings were in the lower F, G, or H classes.

But how can existing buildings become more environmentally friendly? In building renovation, energy efficiency, water consumption, and waste management are the key levers to reduce emissions and, consequently, the ecological footprint. In this article, we present 16 measures for implementing the E in ESG.

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Energy Efficiency and Emissions Reduction

The good news first: Primary and final energy consumption has been declining across all sectors for several years. The share of renewable energy sources has been steadily increasing since the 1990s, but too slowly to replace the dominant fossil fuels, oil and gas. The consequences are painfully evident in the ongoing energy crisis, affecting not only wallets but also emission levels. An energy-efficient building renovation aimed at improving energy efficiency and reducing emissions enhances environmental friendliness and ESG performance. This increases asset value and keeps the property attractive to tenants and buyers in the long term.
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These measures can improve energy efficiency and reduce emissions:

• Improved Insulation: Installing more efficient insulation in walls, roofs, and floors can help reduce heating and cooling costs and lower energy consumption. Experts suggest that well-insulated facades can reduce energy consumption by up to 18%.
• Renewable Energy Sources: Installing solar panels or wind turbines on the building can generate clean, renewable energy, reducing the reliance on fossil fuels and CO2 emissions.‍
• Energy-Efficient Ventilation and Heating: In 2021, space heating accounted for 80% of the final energy consumption of residential buildings. For non-residential buildings, the share was still 71% (more details in the Building Report 2023). Installing highly efficient heating and cooling systems can reduce energy consumption and emissions. Depending on the building type and location, geothermal systems, air or ground source heat pumps are suitable for energy-efficient renovation.‍
• Sealed Windows: Installing windows with highly efficient glass, frames, and seals reduces heat loss in winter and heat gain in summer.
• Energy-Efficient Lighting: Replacing traditional incandescent bulbs with LED lighting can reduce energy consumption.‍
• Smart Building Management Systems: The impact of technical building equipment should not be underestimated. Optimising operating times, for instance, by adjusting to actual building use, can have a significant effect. Installing automated building management systems helps optimise heating, cooling, lighting, and ventilation systems, thereby reducing energy consumption.

The specific measures best suited for a building depend on factors such as usage type, location, and lifecycle status. The location of the building is relevant not only because of the available renewable energy options but also in terms of mobility, especially for office buildings. If users primarily drive to the location, the resulting emissions also impact the ecological footprint.