ESG did its job – and the financial materiality is ever present. The sector is now mature enough to evolve the language to match. So, let’s call it what it has always really been: Performance, and hopefully stop the ESG acronym from becoming ‘white noise’.
ESG has been one of the most important acronyms in real estate. A decade ago it gave the industry a shared language for an idea it had too often overlooked: That how a building performs environmentally and socially is bound up with how it performs financially. That was a genuine step forward, and it worked. ESG put sustainability on the boardroom agenda, into fund mandates, and onto valuation reports. It did exactly what a good idea is supposed to do.
But language evolves as a sector matures. ESG has come to mean slightly different things to different people, and the term now carries more interpretation than the original idea ever intended. That isn’t a failure, it’s a sign the concept has travelled far enough to be ready for its next chapter.
Because here’s what hasn’t changed: The money. If anything, it matters more than ever…
ESG is Financially Material.
ESG is more financially material today than when the term was coined. SFDR Article 8 turned what was once a marketing message into a binding, fund-level commitment; managers who promote environmental and social characteristics now evidence them as a matter of course. And as of January 2025, the RICS Red Book makes the consideration of ESG factors mandatory at every stage of a commercial valuation – inspection, investigation, recording and reporting – with the supporting professional standard on ESG and sustainability in valuation taking effect in April 2026.
In other words, the idea behind ESG is now woven into how assets are valued and how funds are regulated. It has moved from aspiration to infrastructure. That’s a remarkable achievement in little over a decade, and it’s exactly why the language deserves to keep pace with it.
We Led with the Upside. The Fuller Story is Even Stronger.
For years the sector championed ESG through the lens of the “green premium” – do the right thing, and the market will reward you for it. It’s an inspiring idea, and in pockets it genuinely holds true. But it has been difficult to isolate and evidence consistently, which left room for the more cautious corners of the market to question it. The encouraging part is that the premium was only ever half the story.
The other half is far easier to demonstrate. We can increasingly show, in hard numbers, how a well-run building protects and grows value: Lower running costs, greater resilience to energy price swings, smoother transactions, cleaner due diligence, and a valuation framework that now actively accounts for it. Strong sustainable performance isn’t only the right thing to do, it’s measurably the commercially astute thing to do.
The Word We Should be Using is “Performance”.
That’s the rebrand. Not a new acronym, not a cleverer synonym for sustainability – a shift in emphasis from values to value. We keep everything ESG built, and we frame it as what it has always really been: Building performance – a financial characteristic the market already prices.
Performance is a word the whole room can rally around. An investor understands it. An operator lives it. A valuer is now required to assess it. And it puts the focus exactly where the evidence is strongest – on what a building actually does, day to day, in real numbers.
None of the progress gets left behind. Article 8 funds raised the bar on disclosure, GRESB gave portfolios a common benchmark, and a generation of operators now capture data they simply didn’t a few years ago. We’re not replacing the substance, we’re giving it a name that travels further, so the conversation can spend less time on definitions and more on results.
The Ones Who’ll be Ready.
The move from “ESG” to “performance” might sound semantic. The commercial upside isn’t. As valuation, regulation and capital increasingly ask the same question – show me how this asset actually performs, in granular, verifiable detail – the operators who can answer instantly will move faster, transact more cleanly, and tell their value story with the evidence to back it.
We see it across the portfolio every day. Across 85,000 rooms in 13 countries, the assets with real-time performance data behind them are easier to finance, easier to value, and easier to sell. CBRE put the return on that data at nine times its cost. ESG opened the door to that conversation. Performance is how we walk through it.
The Proof is Already in the Portfolio.
Reframed as performance, value becomes measurable, and the market is already pricing it. Two examples from the Utopi portfolio set out what good performance is worth:
GRESB covers more than USD 8.6 trillion of real estate worldwide, and a strong score now correlates directly with asset value and trading liquidity. Utopi influences 49.75 points of the current scorecard – close to half – across energy efficiency, resident engagement and Net Zero targets. Better data produces a stronger benchmark position, and a stronger position is reflected in value.
Across 8,542 PBSA beds in the UK, Ireland and Spain, Harrison Street recorded a 15% reduction in energy consumption after deploying Utopi. CBRE independently validated a 9x return on investment and reflected the lower running costs within its formal valuation of the portfolio. This was not a stronger ESG narrative; it was financial value, quantified and confirmed by a third-party valuer.
See how building performance data is already protecting and proving asset value across our portfolio – explore our case studies.