Is Green Finance a Deal Breaker for Investors?
Knight Frank surveyor Marina Campbell explains why green finance has become central to real estate investment as the UK works towards net zero by 2050, driven by tougher ESG requirements and demand for sustainable buildings.
Green finance covers financial products and investment that support environmentally beneficial projects. In property, this often means buildings must meet sustainability criteria to secure funding. Campbell says larger investors need to demonstrate green credentials for both existing buildings and developments, with higher expectations for new schemes where design and materials can be controlled. Certifications such as BREEAM and NABERS are increasingly standard, and greener buildings can attract better lending terms, including tighter debt margins, as banks, funds and institutions seek ESG-aligned assets.
She describes green credentials as a deal breaker for many investors, with the EU Taxonomy shaping what counts as sustainable. European buyers are particularly focused on these standards, and buildings that fall short may be heavily discounted or struggle to find funding or buyers.
Energy efficiency is a key focus because it is relatively easy to measure through EPC ratings, certifications and carbon metrics, and technology is making performance clearer for landlords and tenants. Embodied carbon, the emissions linked to materials and construction over a building's life, is also gaining attention for refurbishments and new builds.
Knight Frank's approach with clients starts with education on the relevant ESG requirements, followed by reviewing a building's credentials and making improvements to energy efficiency or carbon performance where needed, reducing the risk of devaluation.
Campbell expects ESG-led strategies to become the norm, a view supported by Knight Frank's ESG Property Investor Survey 2025, which found investors using ESG to create and protect long-term value.
Source: Knight Frank Newcastle, original article (28 April 2025)
