Who is going to pay for sustainability? This was a common question not too long ago. Today, brown discounts show that not investing is more expensive in the long term. What happened, and how to capitalise?

Sustainability in real estate has shifted from a moral choice to a financial necessity—and the market is already pricing in the difference.

2022: Who pays

Before 2023, the question was, “Who is going to pay for sustainability in buildings?” As sustainability was seen as a cost centre, each investment needed to be explained.

2025: Who doesn’t pay

A couple of things changed:

The now-famous Omnibus retracted large parts of the CSRD. This lessens the reporting burden and shifts the focus towards execution.
Investors are asking for data, as they still must report. They want to know the risks they are exposed to and how companies they invest in address them.
There is evidence that actions in sustainability have positive financial outcomes. Meaning the benefits are no longer hypothetical.

Together, these shifts have fundamentally changed how sustainability is priced into buildings and investment risk.

A new reality

Due to the changes described, there is a new reality regarding sustainability and its importance. Markets are already discounting buildings that fail to meet sustainability standards.

A second reality is that banks will charge higher interest rates as soon as risk increases, and a lack of sustainability is a risk.

How to adapt

The first step is to audit the portfolio. Which buildings in your portfolio have the highest risk of receiving this brown discount?

Once you recognise the buildings at risk, the second step is to start focusing on long-term improvements. Start with energy performance, as this is where there is much to gain.

Lastly, leverage financing. Green bonds and sustainability-linked loans can and should be used to raise the funds required to finance improvements.

Conclusion

Sustainability in real estate is no longer a question of values or vision—it is a question of risk and return. Markets, lenders, and investors are already pricing in the consequences of inaction, and buildings that fail to keep pace are becoming more expensive to hold, finance, and ultimately exit.

The choice, therefore, is not whether to invest in sustainability, but when and how. By understanding portfolio risk, acting early on energy performance, and using the right financing instruments, owners can protect value and position their assets for the next market cycle. In a world where the brown discount is becoming the norm, proactive sustainability is no longer a cost—it is a competitive advantage.