Is your building on track for 2050? Why CRREM is becoming a must for real estate investors.

Name: Wanaka Partners
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04 Aug '26 Sustainability

Is your building on track for 2050 Why CRREM is becoming a must for real estate investors Wanaka Partners Header

The European real estate industry is navigating one of the most significant regulatory and market transitions in its history. Decarbonisation requirements are accelerating, financing conditions increasingly reflect climate risk, and tenants are paying closer attention than ever to the energy performance of buildings.

Against this backdrop, real estate owners and investors need tools that go beyond compliance and provide meaningful insight into how their assets perform today, and how they are likely to perform tomorrow.

At Wanaka Partners, one of the key tools we rely on is the Carbon Risk Real Estate Monitor, better known as CRREM. In this article, we explain what CRREM is, why it matters, and how it helps us assess climate risk and support better long-term investment and asset management decisions.

What is CRREM and why does it matter?

CRREM is a science-based framework that translates the Paris Agreement's 1.5°C and 2°C global warming targets into asset-level decarbonisation pathways for real estate. For each building type and country, CRREM defines the maximum allowable energy intensity (kWh/m²) and greenhouse gas emission intensity (kg CO₂e/m²) a building can reach in a given year while remaining aligned with climate targets.

In simple terms: if your building's energy or carbon performance exceeds the CRREM pathway for its asset class and location, it is considered “stranded”. This means it faces a growing risk of losing value and liquidity, higher financing costs and reduced attractiveness to quality tenants.

Stranding is not a distant theoretical risk. It is already influencing property valuations, financing conditions and occupier expectations, and is increasingly considered by investors and buyers across Belgium, Luxembourg and the wider European market.

This is why CRREM has gained significant traction among institutional investors, banks and ESG-focused asset managers. It provides a common framework for assessing climate-related financial risk in real estate portfolios and is increasingly referenced in due diligence processes, and investor ESG frameworks.

What is CRREM and why does it matter Wanaka Partners

From theoretical scores to real performance: why CRREM beats EPC alone

Energy Performance Certificates (EPCs) are the most widely recognised measure of a building's energy performance. They are mandatory, standardised and familiar. Yet for active asset management and strategic investment planning, EPCs have an important limitation: they are based on theoretical consumption rather than actual measured performance data. In addition, each EU Member State applies its own EPC methodology, making direct comparisons between assets in different countries impossible.

An EPC score is calculated using a standardised model based on fixed occupancy patterns, standard user behaviour and normalised weather conditions. These assumptions are necessary to make certificates comparable across buildings. However, they also mean that an EPC can differ significantly from how a building actually performs and consumes in practice. A building with a strong EPC rating may still consume considerably more energy than expected because of the way it is operated, occupied or maintained.

CRREM takes a different approach. It benchmarks actual measured energy consumption and carbon emissions, using real utility data and verified consumption figures, against science-based decarbonisation pathways. The result is a picture of how a building performs in reality, rather than a theoretical model of how it was designed to perform. For asset managers and investors, this distinction is critical. It is the difference between understanding a building's theoretical performance and understanding its actual performance today.

At Wanaka Partners, we carry out CRREM pathway alignment assessments across our managed assets every year. Based on verified consumption data from the previous calendar year, these assessments give both us and our clients a clear, evidence-based understanding of where each asset stands today and the trajectory it is following.

Why CRREM beats EPC alone Wanaka Partners

Benchmarking: understanding how your asset compares

One of the greatest strengths of the CRREM framework is its ability to provide standardised, asset-class-specific benchmarks that enable meaningful comparisons across assets. By expressing performance in kWh/m² and kg CO₂e/m², CRREM creates a common metric for buildings of different sizes, ages and configurations.

This has significant practical value. When managing a portfolio of office buildings, comparing actual energy consumption and carbon emissions across assets provides genuine strategic insight, regardless of each building's individual characteristics. Which assets are performing well relative to their peers? Which are outliers? Which buildings are closest to exceeding their decarbonisation pathway, and therefore most exposed to stranding risk?

This benchmarking capability also provides a powerful communication tool for property owners and investors. Rather than presenting energy consumption in absolute terms, which can be difficult to interpret, CRREM shows precisely how each asset compares with both its decarbonisation pathway and similar buildings within the same asset class. It transforms ESG data from a reporting obligation into a strategic decision-making tool.

CRREM Benchmarking understanding how your asset compares Wanaka Partners

Simulating the impact of interventions

Understanding where a building sits on the CRREM pathway today is only the starting point. The real value for asset managers and investors lies in using CRREM to model the impact of potential energy and carbon reduction measures before capital is committed.

Because CRREM is based on actual measured data, it allows us to simulate how specific interventions, such as replacing an HVAC system, installing photovoltaic panels, improving insulation or switching from gas to heat pump heating, would affect a building's energy consumption and carbon emissions.

These simulations help us to:

Identify which measures deliver the greatest impact for every euro of CAPEX invested
Determine whether a planned renovation is sufficient to bring an asset back within its decarbonisation pathway, or whether additional measures are required
Prioritise actions across a portfolio based on stranding risk and the cost-effectiveness of different mitigation options
Build credible ESG Action Plans grounded in real data and measurable targets

In practice, this means that when we present an ESG Action Plan to a client, we are not relying on generic sustainability principles. We are working from the actual consumption profile of their building, benchmarked against the CRREM pathway, with quantified projections of what each proposed measure is expected to achieve. This is evidence-based sustainability management, giving investors the confidence to make informed capital allocation decisions.

What this means for real estate owners and investors

For real estate owners and investors, the message is becoming increasingly clear: buildings that are not on a credible decarbonisation pathway will face growing headwinds. Selling a stranded asset becomes more challenging. Financing becomes more expensive and more difficult to obtain. Tenants with sustainability reporting obligations, whether under CSRD or their own ESG policies, increasingly expect transparency around energy and carbon performance. At the same time, valuers are actively developing methodologies that increasingly reflect sustainability performance in asset valuations.

CRREM does not solve these challenges on its own. But it provides the analytical foundation for a credible, data-driven response. Knowing where your buildings stand, relative to science-based climate targets, comparable assets and where they need to be in five, ten or fifteen years, is essential for making informed decisions.

That is why, at Wanaka Partners, CRREM alignment is not simply a reporting exercise but rather an integral part of our approach to sustainable real estate management.