ESG Standards Shaping Real Estate Valuation

ESG standards (Environmental, Social & Governance) have taken center stage in the real estate sector, influencing property valuation and sustainable classification. The international valuation standard IVS 2025, which came into effect in February 2025, emphasizes the integration of ESG factors into the valuation process. Key principles of this approach include professional judgment, regulation, measurability, and relevance.

At Retta Management, ESG Is an Integral Part of Valuation

At Retta Management, we have adopted a sustainability-focused valuation approach. Our ModelTree valuation tool enables the seamless integration of ESG factors into property valuation, supported by our in-house sustainability services.

ESG at the Core of Property Value

IVS 2025 firmly embeds ESG factors into real estate valuation. No longer just a “nice-to-have,” they are now essential components of the valuation process. The new standard includes an appendix that details ESG considerations from environmental, social, and governance perspectives.

• Environmental (E) is a significant and easily measurable aspect of valuation. Key factors include energy efficiency, use of renewable energy, emission reduction measures, and climate risks, such as a property’s exposure to extreme weather conditions.
• Social (S) relates to user experience, accessibility, and community engagement. Building design should promote well-being, and good public transport connections can enhance rental potential.
• Governance (G) influences investor confidence and risk assessments. Transparent sustainability reporting and regulatory compliance strengthen market position and credibility.

A New Valuation Approach Requires ESG Expertise

Incorporating ESG factors into property valuation demands a new perspective from valuers, where financial aspects are assessed alongside environmental impacts, social dimensions, and governance practices.

The valuation process now requires even more precise risk assessment—climate-related risks, for example, can impact a property’s insurability, financing opportunities, and long-term value development. Additionally, ESG reporting requirements and sustainability practices influence investor interest and risk perception.

Ultimately, integrating ESG standards into valuations leads to more transparent and comprehensive property assessments, benefiting investors, owners, and other stakeholders. ESG compliance is not just about meeting regulations; it is a competitive advantage that differentiates responsibly managed properties and enhances their long-term value.

Retta Management Supports ESG Compliance

With increasing ESG requirements, valuers must leverage new data sources and methodologies for ESG data collection and analysis. Retta Management’s ModelTree tool provides valuable support in this process, but the expertise and professional judgment of the valuer remain crucial.

Retta Management offers comprehensive support in integrating ESG factors into real estate valuation. Our ESG team ensures that the valuation process meets the latest standards and supports property value development. With Retta Management, you can be confident that your property valuation aligns with the latest ESG requirements and enhances its long-term value.

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Okan Yüzlü
Junior Analyst
Retta Management
okan.yuezlue@rettamanagement.fi

Marianne Halinen
Valuer M.Sc. (Econ.), AKA, KHK, LKV, LVV, APV 1-2, ESG, Team leader
Retta Management
marianne.halinen@rettamanagement.fi
+358 50 422 6367