Most “environmental” issues are dealt with under the traditional accreditation systems, but the selection of a project location and the cooperation with local communities, organizations and authorities happens in the “Social Framework” of our ESG strategy. For example, near one of our development sites, we found a homeless person living in a concrete shaft, which draw our attention to supporting a local NGO helping the homeless. I could also mention that we work together with a diverse selection of consultants, engineers and sub-contractors to provide opportunities to local businesses.

Norbert Schőmer

Country manager

Atenor Hungary

Sustainability certifications have been with us for more 30 years and continue to evolve. Developing a certification system that makes projects comparable on a global level and sets a common standard for every building is challenging. However, I believe the current trend of placing more emphasis on embodied carbon, operational carbon emissions, and potential net-zero strategies is a positive direction. These issues are becoming central to almost every stakeholder in the real estate market. Additionally, while social factors have always been part of these certifications, they are now gaining more focus and addressing the most relevant issues. I think it is crucial for various stakeholders to understand these certifications better and demand the implementation of the most sustainable features.

Norbert Szircsák

Head of ESG advisory services

Colliers Hungary

From my perspective as a sustainability manager, the development process for “A”-category office buildings is on a sustainable path, largely due to market expectations, but there remains significant room for improvement. The key issue is the lack of balance among environmental responsibility, economic viability, and social impact. Basically, and naturally, when investors must make decisions, economic viability tends to outweigh the other two factors. Another challenge I see is the need for strategic thinking and integrated planning. In speculative developments, where the developer intends to sell the building, operational performance often does not receive the attention it deserves. However, strategic thinking could benefit all stakeholders: future owners, occupiers, and facility managers, by reducing operating costs through smart technologies, creating healthier spaces, and ultimately increasing property values. Investors and developers should also focus on life-cycle costs rather than just initial capital expenses.

Henrietta Budai

Sustainability manager

CPI Hungary

The EU Taxonomy is likely to drive more sustainable architecture and urban development by setting clear standards for what qualifies as sustainable economic activity. It will influence developers to prioritize green building practices and energy-efficient designs. The taxonomy aims to provide a classification system for sustainable economic activities that can contribute to the EU’s goal of climate neutrality by 2050. The classification system is designed to help all property market actors contribute to the EU’s long-term climate goals, in which cities have a crucial role to play. The EU Taxonomy system can help cities identify sustainable economic activities that reduce their carbon footprint and contribute to their sustainable development goals. The key steps that cities need to take are decarbonizing energy systems (transitioning to renewable energy sources, such as wind, solar and geothermal to reduce their dependence on fossil fuels), investing in energy-efficient buildings, promoting low carbon transportation (for example, bicycle roads, pedestrian areas), preserving green spaces and promoting urban agriculture.

Viktória Molnár

Senior associate

DLA Piper Hungary

The increasing pressure of ESG expectations is creating a “double bind” for property owners. On the financing side, banks, funds, and financial investors are imposing stricter conditions, and in time, non-ESG-compliant developments may become unfinanceable. On the demand side, tenant and buyer expectations have shifted towards ESG. Consequently, a time will come when it will be impossible to finance, sell, or rent a building without it meeting ESG requirements. This will accelerate the renovation schedule, improving the quality of life for city residents and workers.

ESG investments impose substantial costs on market players in the short term. The renovation and retrofitting of properties to meet energy-efficiency and ESG standards require significant investments that tenants, owners, and buyers are often reluctant to make due to economic rationales. Consequently, EU-wide regulations are needed to expedite this process by mandating specific requirements and, more crucially, measures to curtail environmental damage.

Tibor Ruzsinszki

Head of asset and property management, Gránit Alapkezelő Zrt.

CEO of Grandum Property Management

A high level of green building certification has become a requirement for industrial properties in recent years, and high certification levels are an advantage for attracting international tenants. ESG reporting requirements have also naturally emerged for our tenants, and one of their key ESG requirements is now the need to receive ESG data for their own reporting purposes. From a sustainability perspective, the positive outcome of the energy crisis has been that the vast majority of building occupiers have shifted to much more energy efficient operations, for which they have much better opportunities in a newer, smarter building. The provision of renewable energy through local production, for example solar panels or even green electricity contracts, is also a daily topic in negotiations. In general, it can be said that sustainability needs related to day-to-day operations are in the foreground, but we are also increasingly seeing more demands [originating] from tenants’ own corporate ESG strategies.

Anna Bencze

Head of sustainability

HelloParks

Improving green building certification systems requires a comprehensive approach that addresses the various stages of a building’s life-cycle, from planning and construction to operation and maintenance. In the CEE region, sustainability systems should be extended to residential, healthcare, education, retail, and hospitality sectors to promote broader environmental benefits, enhance the quality of life, and ensure comprehensive sustainability across various types of buildings and community spaces. While additional ESG costs can pose challenges, they often lead to long-term savings, enhanced asset value, and reduced risks. Initial investments in ESG development are outweighed by benefits such as increased investor interest, tenant demand, and regulatory compliance, making ESG development a worthwhile endeavor, despite the upfront costs.

Zsombor Barta

Ambassador

Hungarian Green Building Council (HuGBC)

Sustainability systems should be extended to schools, healthcare institutions, sport facilities and all places that a large number of people visit. The residential sector could also be a game changer. In 2024 the International Well Building Institute launched the Well for Residential program with 25 pilot participants and nearly 30,000 enrolled homes. The Well for Residential program, informed by the evidence-based principles of the Well Building Standard and its 10 Well concepts, offers more than 100 strategies to create homes that prioritize resident health, comfort and well-being. Designed to empower builders and developers, operators, architects and designers and homeowners, the new health leadership framework is applicable to both single family homes and residences within multifamily buildings.

Regina Kurucz

Sustainability consultant

Rewell Consulting

The real estate industry has a lot to do in terms of implementing the principles of sustainable development. Buildings account for 39% of global emissions, therefore it gives a huge opportunity to reduce this. First of all, the construction process should be viewed holistically in terms of the possibility of implementing the principles of sustainable development – starting from the selection of the plot for investment, the selection of the leading and accompanying functions, construction and finishing materials, the method of construction, up to the configuration of the building and providing instructions to the users on how to use the facility in the most optimal way. Only joint actions of the investor, designer, contractor and user, based on shared values of supporting the planet, bring the most beneficial solutions. This requires trust and dialogue between stakeholders from the earliest possible stage of implementation.

Veronika Themerson

Center of Excellence director, Environment

Skanska CEE

A green lease is a long-term agreement focused on sustainability, outlining the shared responsibilities of both the tenant and landlord. It covers areas such as eco-friendly building management, energy-efficient operations, waste reduction, re-cycling, and the use of non-hazardous materials – all aimed at lowering the carbon footprint of both the tenant and the building. Landlords have already been motivated to create energy-efficient and sustainable buildings to meet market demands. On the building’s side, the landlord engages to operate the building in an environmentally friendly and efficient way. The goal of the parties is to jointly reduce the carbon footprint of the building through their operations, to which they also commit in writing in a greenlease.

Anita Hancz MRICS

Sales director for offices

Wing

This article was first published in the Budapest Business Journal print issue of September 6, 2024.