Demand for sustainable assets keeps expanding relentlessly. In the real estate market, a progressive decarbonisation of portfolios is happening, and an increasing percentage of assets have some sort of environmental labelling.

Yet, at the same time, most investable stock does not comply with the criteria required by investors and tenants. It falls short of upcoming regulations and targets regarding energy efficiency. As a result, some commentators have highlighted the risk of many assets becom-ing stranded, unlettable to potential tenants, and too expensive to upgrade to an accept-able standard of use. As investors are progressively committing to achieve net-zero targets, these risks have important implications for real estate allocations.

Public policies and guidance are also expanding with the EU Taxonomy for Sustainable Activities and the UN Principles for Responsible Investment, among others. While Europe is probably the most advanced region in terms of ESG policie