Investors start to respond to building efficiency regulations

Europe’s rules on the energy performance of buildings are beginning to affect the investment decisions of pension funds and other financial institutions, said Tatiana Bosteels, the head of Responsible Property Investments at Hermes Funds Managers.

Although renovation rates in Europe are low – at around 1% of total building stock – anecdotal evidence appears to suggest a pick-up in the energy efficient housing market.

“The pressure we are seeing from regulation on real estate markets is now affecting the financial model that we’re using,” she told EURACTIV.

“Investors sense and feel that the regulations and requests on standards for buildings refurbishment, rebuilding and upkeep will impact the long-term value of their real estate.”

Bosteels authored a recent study on the subject by the Institutional Investors Group on Climate Change, which represents investors and asset managers worth a claimed €7.5 trillion.

That paper found that low energy certificate ratings were increasingly being used to reduce acquisition prices in France, Germany and the UK.

No hard statistics quantifying the improvement exist, but requests for energy performance certificates and sustainability risk assessments are occurring increasing early in house-buying processes, more ‘green clauses’ are being introduced to standard tenant leases, and more minimum sustainability standards are being set.

Germany in particular appears to be leading the way in building economy because of what Bosteels called “a culture where there is a quest for it.”

“They’ve increased building regulations over time and provided incentives for refurbishment,” she said. “But it is difficult to duplicate that as in many other member states the culture of incentives would not work.”

The German development bank KfW recently produced a study claiming that every euro of public money invested in Germany brought back a return of four euros in the form of employment.

But a lack of harmonisation of building standards and efficiency certification by member states continues to dampen the prospects of a more generalised surge in investment for energy efficient buildings.  

“We would like to see the EU doing more work on harmonisation of definitions,” Bosteels said. “The Energy Performance in Buildings Directive requires energy performance certificates but their character varies widely across member states and makes it difficult for investors to compare.”


Buildings have an enormous role to play in the EU's attempts to slash greenhouse gas emissions, as they represent around 40% of all energy use.

The EU tried addressing the problem by introducing minimum requirements for the energy performance of buildings in a 2002 directive.

But having acknowledged that more needs to be done, it revised the legislation in 2009.

>> Read our LinksDossier: Energy Performance of Buildings Directive


  • 2014: EU pledged to review progress towards energy efficiency 2020 targets and consider binding measures if it is too slow.
  • 9 July 2015: Deadline for threshold raising energy performance requirement on public buildings to 250m2.
  • 2016: European Commission to review the Energy Efficiency Directive.
  • 1 Jan. 2019: Deadline for all new public buildings to become near-zero CO2 emitters
  • 2020: Deadline for EU states to meet voluntary obligation to reduce energy output by 20%, measured against 2005 levels.
  • 1 Jan. 2021: Deadline for all new buildings to become near-zero carbon emitters

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