Chapter 1: RICS - Reducing Risk and Driving Sustainability by incorporating ESG considerations into Property Valuation

CHAPTER 1 SUMMARY:

RICS: Reducing Risk and Driving Sustainability through ESG in Property Valuation

The Royal Institution of Chartered Surveyors (RICS) provides an overview of how ESG considerations are influencing property valuations. This chapter makes a case for a consistent and transparent approach to embedding ESG requirements into the valuation process, and highlights the potential benefits to sustainability and risk reduction.

Key findings:

• Professional standards have a vital role to play in ESG property evaluation. Examples include the RICS Red Book and INREV Guidelines.

• ESG valuations should be understood in terms of value drivers, risk drivers and cash flow drivers. Everything from sustainable design, to regulatory compliance and low operating costs inform a holistic understanding of a property’s value.

• RICS predicts an increase in investor demand for ESG-aligned properties, along with greater data availability and advanced analytics increasing the sophistication and accuracy of valuations.