Beyond Compliance: Certification as a Core Investment Tool

History dictates that the KPIs investors must consider on acquisition and disposal are scarcely static. One case in point is Environmental due diligence (EDD) which has evolved significantly in recent years: it is now a strategic lens, extending beyond immediate risks into deeper portfolio-level thinking. Green building certifications — particularly BREEAM New Construction and BREEAM In-Use — provide a framework to assess operational performance, energy use, and tenant engagement.

The Old EDD Isn’t Enough

Once, EDD focused on familiar and widely understood routine concerns such as asbestos, contamination, or basic EPC compliance. That approach is outdated. Investors must now consider how assets will perform under tightening regulations, shifting tenant expectations, and ESG benchmarking schemes like GRESB. Without this lens, funds risk acquiring buildings that underperform or become operationally obsolete.

KPIs That Make a Difference

Leading managers now embed sustainability KPIs into their investment strategy:

• Acquisition Baselines: Prefer assets with New Construction certification, setting the stage for operational performance tracking.

• Transition Plans: Ensure certificates migrate to operational equivalents to maintain reporting integrity.

• Energy Capabilities: Assets with demand-side management, cogeneration, or grid-balancing features earn higher certification credits and are insulated against energy price shocks.

• Portfolio Coverage: Clear certification roadmaps across sectors — logistics, retail, offices — prevent gaps that weaken ESG reporting.

  
  

The Expiry Challenge

GRESB now applies a time factor to certifications: older certificates carry less weight. Assets certified under New Construction schemes must transition to operational frameworks like BREEAM In-Use to maintain scoring. This shifts certification from a static achievement to a dynamic, ongoing process.

Strategic Implications

• Screening: Certification readiness must influence acquisitions.

• CapEx Prioritisation: Retrofit or upgrade assets nearing certification expiry.

• Portfolio Consistency: Partial adoption risks uneven reporting and performance metrics.

• Exit Strategy: Certified buildings remain more liquid and attractive to institutional buyers.

  
  

Bottom Line

EDD today is about embedding sustainability at every stage — from acquisition to long-term asset management. Certificates provide a framework, but execution ensures buildings remain resilient, compliant and operationally sound.

^[1] https://www.gresb.com/nl-en/building-certifications-how-to-impose-an-expiration-date/