Energy and Sustainability

January 2026 Forecast

Regulatory change will increasingly shape real estate decisions

A wave of energy and sustainability regulatory changes are and will increasingly influence decisions for investors and occupiers. This includes the Omnibus package negotiations for the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), the revision of the Sustainable Finance Disclosure Regulation (SFDR), and the transposition of the revised Energy Performance of Buildings Directive (EPBD). The EPBD introduces phased minimum energy performance standards (MEPS) that target the poorer performing 16% of buildings by 2030 and 26% by 2033. Regulations are transforming real estate operations and commercial real estate values.

Midyear review

• The first half of the year brought regulatory change. The EU's Omnibus I Directive, which amends the and the CSDDD, was adopted in February and came into force in March 2026, narrowing the scope of both. At the same time, the deadline for the transposition of the revised EPBD into national law, due by 29 May 2026, has not been met by many member states.
• The Commission published a draft delegated act for the revised European Sustainability Reporting Standards (ESRS) in May 2026 that cuts mandatory data points by more than 60%, a revised EU Taxonomy delegated act came into force in March, and the Council agreed its negotiating position on the SFDR reform in June. On the EPBD, France is among the few markets to have nearly completed full transposition, while large markets including Italy and the Netherlands remain in progress.
• For companies still in scope, the substance of what must be measured and disclosed has not changed, even as the volume of reporting falls. With the framework still being finalised across the ESRS, the SFDR, and national EPBD rules, due diligence, energy auditing, building certification, and disclosure remain important as owners work to keep assets compliant and investment-ready.

January 2026 Forecast

Transition plans will catalyse value creation despite regulatory shifts

Transition plans will act as a forward-looking blueprint for keeping assets compliant and resilient as the market moves toward net zero. Beyond compliance, these plans will help owners manage climate risk and protect long-term value, particularly for assets most exposed to physical hazards.

Midyear review

• Physical climate risk has moved up on the agenda. Europe suffered from record high heatwaves in June 2026, breaking temperature records in more than a dozen countries, which reinforces the case for accelerating the transition to a low-carbon and resilient real estate industry.
• Resilience is becoming a core measure of asset quality, as buildings that keep occupiers comfortable and remain usable during extreme heat protect their income and long-term value.

January 2026 Forecast

CapEx implementation will test the move from strategy to action

Turning sustainability strategy into delivery will test CapEx implementation. Owners will manage the cost through phased investment, green financing such as sustainability-linked loans, and digital performance monitoring, prioritising projects that combine strong returns with compliance benefits.

Midyear review

• Rather than treating sustainability upgrades as standalone projects, owners are increasingly aligning them with the building's life-cycle replacement plans, so that one round of investment serves several goals.
• Synchronising a retrofit with equipment replacement or a refinancing supports compliance, lending requirements, tenant turnover and equipment replacement together. Green and sustainability-linked finance, such as sustainability-linked loans, can fund this work and reward measurable improvement.
• Approaching CapEx this way turns compliance spending into an opportunity to create value and improves the return on each investment. Connecting energy auditing, certification and reporting into a single plan lets one investment advance decarbonisation and resilience, while satisfying disclosure requirements.

H2 2026 Outlook

The framework will keep shifting, but the obligations remain

The Omnibus I Directive has narrowed the scope of the CSRD and the CSDDD, so fewer companies report with fewer data points, though disclosures still need to be robust and support informed decision-making. Most member EU states are expected to complete EPBD transposition into national law later in 2026, and the revised ESRS and the SFDR reform will continue to work through the approval process into 2027.

Physical resilience will become central to the transition

Physical resilience is expected to move from a reporting requirement to a core part of asset strategy. The record heat has made this a near-term priority for owners. Investors and asset management firms are expected to prioritise buildings that can navigate more extreme and frequent weather events, which keeps the wider transition moving throughout the second half. Acting early on the most exposed assets gives owners more room to plan and budget, while physical climate risk assessment and resilience planning will help them identify where to act first.

Smart timing of CapEx deployment is critical to realise value

The clearest opportunity for the second half of 2026 lies in the timing of capital deployment. Planning these interventions across the portfolio, and connecting energy auditing, certification, and reporting into one plan, is how owners extract the most value from each round of capital expenditure.

Energy price volatility will strengthen demand for on-site flexibility

Safe passage through the Strait of Hormuz remains uncertain, confirming the short-lived disruption that markets had expected at the start of the year could turn into a structural supply gap with no clear end date.

European gas storage sits at 50% of capacity and is currently projected to reach c. 70% full by the 1st of November, well below the 90% official target. The backwardated gas curve, where today's spot prices sit above year-end contracts, also removes the economic incentive to quickly refill inventories. That points to higher energy price volatility risks, especially in gas-reliant markets such as the Netherlands, Italy and Germany. Higher-than-usual power burn over the summer months could compound the gas shortfall in the winter, as prolonged above-average heat would extend that pressure. Solar growth will offset high daytime summer demand, but evening hours will remain exposed to high gas prices. An El Niño season (a periodic warming of Pacific Ocean surface temperatures that alters global weather patterns) may ease Europe's winter heating demand, if winter temperatures stay mild, though that relief would arrive well after the window to hedge autumn and winter positions has closed.

For real estate occupiers and investors in gas-reliant markets, price volatility feeds straight into operating costs and sharpens the case for on-site generation and storage that can hedge exposure to volatile energy costs.