How can mandatory ESG investments create financial value?

Name: Wanaka Partners
Price range: $

07 Oct '26 Sustainability

Existing buildings face growing requirements for energy performance, building automation and other sustainability measures. For owners, meeting those requirements can mean substantial capital expenditure.
The question is how to use that investment to improve the asset’s long-term performance.

The financial return of an individual measure is rarely straightforward to calculate.
A new heating system may reduce energy consumption and improve comfort, but its effect on rent or valuation will depend on the building, its location and market demand. Limited transaction evidence also makes it difficult for valuers to attribute a precise uplift to a specific upgrade.

At Wanaka Partners, we assess required works in the context of the whole asset: its technical condition, its tenants’ needs and the owner’s investment objectives.
This helps identify where compliance expenditure can create additional value.

Where can that value appear?

For tenants, better building systems can mean greater comfort, improved indoor air quality, lower energy consumption or clearer information about the source of their energy. These benefits can give existing tenants a reason to stay and help attract new ones. Depending on market conditions, they may also support rental levels.

For owners, tenant retention and lower vacancy protect income. A building that meets evolving requirements and responds to tenant expectations may also be better positioned for a future sale.

For lenders, a building’s sustainability performance forms part of the assessment of its long-term risks. Clear evidence of compliance and measurable improvements can support refinancing discussions and, in some cases, access to more favourable financing conditions.

None of these outcomes are automatic. Owners need to select measures that make sense for the asset and demonstrate their results.

An example from our portfolio

For a high-rise office building in Antwerp City center, our ESG assessment identified compliance risks related to energy performance and building automation. A partial replacement of its ageing fuel oil heating system could have met the minimum EPC requirement. Together with the owner, we developed a broader upgrade: a new building management system and heat pumps designed to cover around 90% of the building’s heating demand, with a small gas boiler to meet peak demand in winter.

The roof could not accommodate enough solar panels to supply the building. Through an energy community, it can instead source 100% renewable solar power from another rooftop in Antwerp at a lower, fixed price.

The combined measures are expected to:

achieve an EPC rating of C or B, above the minimum label E requirement considered for the project,
reduce the buildings carbon emissions aligning it with the CRREM pathways objectives,
reduce the tenants’ energy costs, and
increase transparency on the (renewable) origin of their electricity supply.

This approach addresses compliance while improving the building’s offer to tenants through more efficient heating, cooling and access to renewable electricity.

Measure the impact and make it visible

To establish the value of an upgrade, owners need to track what changes after implementation. Energy consumption and service charges can show the financial effect of new systems. That information should be shared with the people making decisions about leasing, financing, buying and selling the building.

Through clear measurement and communication, tenants can assess the benefits they receive. Valuers can take completed works and available performance data into account. Investors and lenders can use the evidence when reviewing an asset’s risk profile.

The precise effect of ESG measures on rent and valuation will continue to vary by asset and market. By making considered investment choices and measuring their impact, owners can move beyond meeting regulatory requirements and build a stronger case for letting and the long-term value of their buildings.