Real estate asset managers ‘most at risk’ from new E.U. green rules

Real estate asset managers will be most at risk if new E.U. rules on the classification of environmentally sustainable activities are not amended, according to a new report published by Bloomberg Intelligence (BI).

The E.U.’s classification — or taxonomy — of environmentally sustainable activities is expected to increase costs for asset managers, as they will have to invest heavily in ESG data and research, BI says.

The new rules also will affect asset allocation as firms will look to achieve higher taxonomy-related scores with a potential impact on performance and a switch away from companies with limited data to large cap shares, BI believes.

Real estate asset managers face the biggest challenges, however, as few buildings built before 2021 would be eligible under the proposed rules and would not, for instance, have class A energy performance certificates.

“If regulators exempt ESG from MIFID II’s research unbundling rules, asset managers may