Assessing the ES Performance in Swiss Real Estate, a conversation with Eric Jondeau and Nathan Delacrétaz

Fabio Alessandrini, Eric Jondeau and Nathan Delacrétaz, from the Center for Risk Management at Lausanne (CRML), based at HEC Lausanne within UNIL, have been analyzing ESG performance in real estate investments. Their latest E4S white paper takes a deep dive into the environmental and social impact of institutional real estate in Switzerland—moving beyond fund-level assessments to evaluate sustainability at the building level. In this interview, they explain the key findings of their research and what it means for the future of real estate investment.

Q: What does the CRML do, and how does it contribute to ESG transparency in real estate?

The Center for Risk Management at Lausanne (CRML), based at HEC Lausanne within UNIL, specializes in risk management and quantitative methods in asset management. Its mission is to study systemic risks that impact the economy and identify sustainable solutions to mitigate them. As part of this effort, CRML evaluates ESG performance in real estate investments. We initially focused on scoring real estate funds, and our ESG scores at the fund level are publicly available on the CRML website. By relying on public data, we aim to promote transparency and informed decision-making in the sector.

Q: What is the focus of this E4S White Paper?

This research expands our ESG analysis beyond funds to assess environmental and social performance at the building level. By examining individual buildings, we provide a more precise view of sustainability trends across the Swiss institutional real estate market.

Q: Why go down to the building level?

At the building level, we can assess two additional dimensions. First, we gain much more granular insights—looking at heating systems, emissions, rent prices, accessibility to public transport, and more. This allows us to evaluate the heterogeneity of environmental and social indicators across buildings managed by investment vehicles. Second, this approach also allows us to compare not just funds, but also cities or regions.

Q: What methodology do you use?

We leverage extensive data sources, particularly from our industry partner Quantum, which provides detailed building-level data. We gathered information on nearly 20,000 institutional buildings across Switzerland. We then apply a methodology we originally developed for real estate funds to calculate ES scores at the building level. Environmental factors include energy consumption and CO₂ emissions, while social factors encompass a building’s affordability—how its rental prices compare to the surrounding market—its accessibility to public transport, schools, and essential services, as well as tenant stability, measured through turnover rates. We also assess factors like business clustering for commercial properties and exposure to noise pollution, which can impact residents’ well-being.

Q: What are some key findings?

One key takeaway is the regional disparity in Switzerland. For example, Basel has made rapid progress in the energy transition, partly due to its widespread adoption of district heating. In contrast, the real estate stock in French-speaking Switzerland tends to be older and more reliant on fossil fuels, meaning there’s a lag in the transition.

While the construction sector has already contributed significantly to reducing Switzerland’s CO₂ emissions, the hardest part is still ahead. Renovation rates need to triple to meet national climate targets, but workforce and communication bottlenecks are slowing progress.

Q: What are the implications for investors?

There’s a critical distinction between ESG investing and impact investing. Simply selecting assets with good ESG scores doesn’t necessarily drive the transition. If capital only flows to already high-scoring buildings, it may create a two-speed transition, where properties most in need of improvements struggle to secure financing. Investors who want to push real change may need to engage more actively, setting milestones and supporting the transition of lower-rated assets.

Q: What’s next for your research?

Now that we have a picture of the state of the real estate stock, our next research will focus on how real estate funds are implementing the energy transition by looking at renovation efforts. Switzerland has ambitious climate goals, but current renovation rates are too low to meet them. By analyzing building permits, we can assess whether the sector is on track—and so far, the data suggests we are far behind. Our next report will explore how investment strategies and policies can accelerate the transition.

Read the full white paper for a detailed breakdown of the methodology and findings!