Beyond reporting: Why sustainability
in real estate is an economic imperative

In December 2025, EU policymakers reached a political agreement on the so-called ‘Omnibus’ package aimed at simplifying sustainability reporting under the CSRD framework and related regulations.

Anna Bernhart is management member at EPH European Property Holdings PLC

The agreement reinforced proportionality by narrowing the reporting scope and concentrating detailed disclosure requirements on a smaller group of large companies. As a result, CSRD reporting obligations apply to EU companies with more than 1,000 employees and a net annual turnover exceeding €450 million. This is expected to significantly reduce the number of mandatory reporters. Yet while the regulatory framework has been refined, the fundamental drivers of sustainability in European real estate have not changed.

Even before the recent adjustments, sustainability in real estate was not primarily shaped by reporting obligations. It was shaped by capital markets. Banks and other lenders have long integrated environmental criteria into their credit assessments. Energy performance, emissions trajectories and asset-level data quality increasingly influence financing conditions regardless of whether a company is subject to detailed taxonomy disclosure. In practice, eligibility for favourable loan pricing often requires concrete evidence, such as an EPC class A rating or top-15% primary energy performance, alongside climate risk assessments and compliance with minimum social safeguards.

This dynamic has not changed. Under the initial CSRD implementation, companies were required to capture and disclose an extensive range of metrics, many of which offered limited incremental insight into asset performance or investment quality. Recent EU decisions have refocused sustainability reporting on a smaller group of large companies, while financing conditions are becoming an even more decisive force.

With a more proportionate framework now taking shape under the Omnibus reforms, companies have greater discretion to prioritise economically meaningful sustainability measures over an exhaustive, one-size-fits-all reporting approach. At the same time, reduced disclosure demands free up capacity for operational decision-making, while the availability and quality of asset-level data increasingly determine whether sustainability considerations translate into credible investment, refinancing and capital allocation decisions.

In real estate, sustainability ultimately manifests at asset level. Buildings that meet contemporary sustainability standards are more resilient to changing market conditions, and more readily financeable, often on more attractive terms. Energy performance, tenant health and safety, data protection and robust governance directly shape long-term value and risk profiles, and therefore steer investment decisions regardless of reporting scope. Assets that fail to meet the standards face rising obsolescence risk, regardless of the extent of reporting.

Importantly, sustainability has also become a decisive factor from the demand side. Large corporate tenants increasingly prioritise modern, energy-efficient and future-proof office space to meet their own ESG targets and workplace requirements. Assets that fail to meet these expectations risk declining occupancy and increased income volatility.

This has direct implications particularly for long-term investors without a predefined exit strategy. Capital expenditure decisions are increasingly evaluated against their impact on long-term usability, tenant demand and income stability rather than short-term compliance metrics. The key question is no longer whether a measure improves a sustainability score, but whether it strengthens an asset’s competitive position, supports stable rental income and underpins long-term value over its expected holding period.

In a market characterised by constrained capital availability, this distinction matters. Sustainability investments must be scalable, cost-effective and aligned with realistic return expectations. Symbolic actions without operational impact are unlikely to withstand sustained financial scrutiny. As a result, sustainability is increasingly standardised through market practice rather than legislation. This form of discipline is less visible than formal reporting obligations, but often more effective. It ties sustainability performance directly to financial outcomes and long-term value retention.

The Omnibus-driven adjustments of December 2025 may ultimately contribute to a more mature sustainability landscape in European real estate. With less emphasis on the volume and granularity of disclosure, attention can return to substance.