Extreme climate change has become a concern for all the countries around the world and real asset investing has a key role to play in the transition towards a sustainable future, writes Aviva Investors. Mark Meiklejon, Head of Real Asset Investment Specialists at Aviva, says that 37% of the carbon emission happening globally are from the construction and maintenance of properties.

However, these infrastructure assert can help in building a sustainable world as well. For instance, the building of green homes, electronic vehicle charging networks to popularize EVs, and similar infrastructure can help in the decarbonization efforts, presenting real asset investors with immense opportunities.

The asset management firm suggests that the prices of energy-efficient real assets will rise in the time to come while older buildings and infrastructures will become obsolete. Meiklejon states, “European Commission is proposing changes to the Energy. Performance of Buildings Directive, mandating that badly performing properties must be renovated to meet higher standards. Inefficient buildings are also likely to become less attractive to occupiers for cost reasons. Owners of these assets may need to buy carbon
offsets to meet net-zero commitments. Because of these dynamics, we expect the prices
of energy-efficient assets to rise over time.”

To achieve the net-zero target by 2050, the investments in sustainable assets need to grow and governments across the globe, especially in the UK and the Eurozone, are working towards renewable energy supply to meet the targets. The investment management firm believes this will lead to an increase in the prices of solar and wind power assets while bringing down the prices of coal and gas assets.

While there are certain challenges in collecting accurate data on the environmental performance of real estate, it is crucial for investors to understand the impact of their portfolios on decarbonisation goals with an eye on financial performance.

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